The Premier League has shown it is serious about enforcing FFP, all eyes will be on the Chelsea and Man City verdicts
NOW we know the Premier League really is serious about enforcing its financial rules.
And Manchester City as well as Chelsea in particular may need an industrial scale mop to soak up the sweat pooling at their feet.
For all the talk about scrutiny, rules and a determination to ensure clubs lived within their means, nobody really thought Prem chiefs meant it.
The general view was that it was all a bit of a show. Window dressing. Never actually going to be acted upon.
Yet, suddenly, with Everton sucker-punched with the biggest penalty in the League’s 30-year history — a ten-point deduction — and facing a likely season-long fight against a relegation that could be the final nail in the famous old Merseyside club’s coffin, the entire picture has been altered.
The Toffees, swinging in all directions, made clear they will push for equal action elsewhere.
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Attacking the “harshness and severity” of the punishment, Everton’s statement noted: “The club will monitor with great interest the decisions made in any other cases concerning the Premier League’s profit and sustainability rules.”
But a new standard has been set. In their 41-page written reasons, a three-man independent commission, headed by David Phillips KC, made clear that the Premier League — under fire from Westminster and other critics — has an obligation to come down hard on clubs who try to cheat the system.
They wrote: “The Commission has no doubt that one of the primary purposes of the sanction is to punish the transgressing club.
“We must not be swayed by sympathy — for example, the fact that the penalty might make the prospect of relegation greater.
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“The inference of a sporting advantage should properly be drawn from the fact of a breach, and that sporting advantage was enjoyed for four seasons.
“One of the purposes of a sanction is to provide a deterrent effect. That is a legitimate purpose.”
Unsurprisingly, Everton supporters have asked why they have been hit so hard, so quickly, when other cases drag on, seemingly endlessly.
Rival clubs have no expectation that the 115 charges against City will be concluded inside the next 12 months, while the League is still to charge Chelsea — although they were fined £8.6million by Uefa for issues they themselves flagged up.
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Even Liverpool legend Jamie Carragher, admittedly a boyhood Blue, wrote: “The ten-point deduction is excessive and not right.
“They have been working with the Premier League about this for the last couple of years. Would it have been better to be evasive and try and drag it out like other clubs? Until other clubs are sanctioned Everton will feel they are being used to show there is no need for an independent regulator, and they are right.”
Last summer, the Premier League clubs voted through new rules that mean “simple” sustainability rule breaches MUST be dealt with within three months of a charge being laid.
That did not apply to City’s case while it is understood the Chelsea issue is made more complicated by the non-involvement of any officials currently at the club.
Everton, though, now face the prospect of a major financial blow as well.
While Leeds, Leicester, Southampton, Nottingham Forest and Burnley were prevented from interceding in the case by a commission, they have 28 days to apply for compensation claims to be assessed.
In the cases of the teams relegated over the past two seasons that could run into millions of pounds — with Leeds likely to point out they were forced to sell Kalvin Phillips and Raphinha to comply with FFP.
Everton, in a parlous financial state and now staring at the real prospect of relegation, could not afford to be hit with such a payment demand.
But what is unquestionable is that the entire financial framework of the Premier League has now been transformed.
Everybody knows it. And it is why the ultimate outcome for City and Chelsea will be so scrutinised.
The Charges
EVERTON were hit with an unprecedented ten-point penalty after being found to have “taken chances” with the Prem’s financial regulations.
A 41-page independent commission report found their bid to improve results led to them acting “irresponsibly” to exceed permitted losses under the League’s Profitability and Sustainability Rules.
Its damning report stated: “This was a serious breach that requires a significant penalty.”
Despite posting £372million in losses over three seasons, the club were found to have breached the £105m allowed loss by £19.5m, spending £124.5m.
They persistently denied the charges — until the hearing, when they admitted breaching the regulations.
The panel confirmed Everton flagged up issues as early as January 2021 with the club wanting to claim £54m in stadium expenditure. That claim was rejected by the League.
The club recognised by early 2022 they would fail to meet Premier League guidelines.
That saw other clubs take advantage in transfer deals. Spurs bought Richarlison in a £60m deal, some £20m less than Everton had anticipated.
The Toffees argued the Ukraine war, which saw billionaire owner Farhad Moshiri’s business partner Alisher Usmanov placed on the UK sanctions list, cost £10m per year in lost sponsorship income.
In their official accounts of 2022, Everton tried to exclude £17.4m in stadium loan interest. The club also claimed £61m of Covid-related losses, dismissed by the League.
The 2023 accounts claiming a loss of just £87.1m over the three-year period were rejected.
In 2021, the Premier League warned Everton about signing new players but the commission stated that for the club to continue its transfer policy was “recklessness that constitutes an aggravating factor”.
It added: “It was unwise for Everton not to have curtailed player purchases.
“It was aware of potential Profitability and Sustainability Rules difficulties but pressed ahead in the hope that it would make sales of players that would enable it to achieve PSR compliance. Events have proved that to be a poor judgment.
“The position that Everton finds itself in is of its own making — it is Everton’s responsibility to ensure that it complies with the PSR regime. The excess over the threshold is significant.
“The consequence is that Everton’s culpability is great.
“Further, Everton was less than frank in its dealings with the Premier League over the stadium interest issue.
“The reality is that Everton failed to manage its finances so as to operate within the generous threshold of £105m.
“Its mismanagement led to that threshold being exceeded by £19.5m. A financial penalty for a club that enjoys the support of a wealthy owner is not a sufficient penalty.”
The Defence
EVERTON’S failed attempt to escape a record points deduction saw them claim they should be allowed extra wriggle room for NOT suing a player.
They said that after ‘Player X’ was arrested in July 2021, they sought to protect his “mental welfare” at a financial cost.
The player — who is not named in the independent commission report — was sacked the following month but Everton opted not to sue him for breach of contract.
Yet at the hearing, Everton argued the £10million they could have demanded should have been included in their losses, minimising the breach of League rules.
According to the written reasons, Everton claimed they were “entitled to credit for not pursuing an economically viable claim” against the player.
But the commission branded the argument “speculative”, adding there was “no evidence that Player X would have been able to meet whatever judgement might have been obtained”.
Prem chiefs were also underwhelmed by a claim that Everton missed out on the transfer value of another star — ‘Player Y’ — because of Covid.
Lawyers claimed the “factual reality” was that Everton had made a decision NOT to sell.
Prem rules allow losses of £105m over a three-year period but Everton’s up to 2021-22 were found to be £124.5m.
The club put forward various items they felt should be excluded from the calculation, including interest costs related to construction of their new stadium at Bramley-Moore Dock, the portion of the club’s transfer levy related to youth development plus the £10m lost by deciding not to seek damages against ‘Player X’.
Everton also argued that a depressed summer transfer market in 2020 owing to Covid-19 reduced the revenue they would have earned from player sales.
They also said they had lost out on a £200m stadium-naming-rights deal with conglomerate USM as a result of Russia’s invasion of Ukraine and sanctions imposed by the British Government.
USM’s single largest stakeholder is Russian billionaire Alisher Usmanov.
The club said in a statement: “Everton Football Club is both shocked and disappointed by the ruling of the Premier League's commission.
“The club believes that the commission has imposed a wholly disproportionate and unjust sporting sanction.
“The club has already communicated its intention to appeal the decision to the Premier League.
“Everton maintains that it has been open and transparent in the information it has provided to the Premier League.
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“The club does not recognise the finding that it failed to act with the utmost good faith and it does not understand this to have been an allegation made by the Premier League during the course of proceedings.
“Both the harshness and severity of the sanction imposed by the commission are neither a fair nor a reasonable reflection of the evidence submitted.”