February 25, 2024

On the news that Everton FC has been given an immediate 10 point deduction for breaching the Premier League’s Profitability and Sustainability Rules (P&S Rules/FFP), Simon Leaf, Partner and Head of Sport at Mishcon de Reya and Co-Author of the chapter on Financial Regulation in Football in the leading football law textbook Football and the Law says:

“This is a landmark moment in the history of the Premier League and one of its most famous clubs, and will cause shockwaves – particularly in the boardrooms of Chelsea and Manchester City.  It’s the first time that the Premier League has imposed a points deduction for breach of its P&S Rules/FFP in its history.

As a reminder, these rules were introduced back in 2013 and were designed to prevent clubs from incurring losses of greater than £105m over a 3 year period.

However, crucially, and this is where the controversy lies with Everton, there are a number of exceptions that have been introduced that enable clubs to incur greater losses – including infrastructure investments, which are certainly relevant to Everton given their new stadium that is under construction. The other controversial element is the pandemic. The Premier League released somewhat ambiguous exceptions to the P&S/FFP Rules at the start of the pandemic in recognition of the additional losses that were likely to arise – including the loss of match day income and the potential loss of transfer fees from the collapse in the transfer market.

It is the wording of these exceptions, in particular, that no doubt the Premier League and Everton’s lawyers have clashed over; with the latter arguing that greater leeway should have been afforded to the club.

The other interesting development here has been the attempt by a collection of clubs led by Leeds United but also including Nottingham Forest, Southampton, Leicester and Burnley who tried to intervene in the case by being added as interested parties, under a relatively untested regulation within the Premier League’s Rules. While this was given short shrift by a separate Commission, it, alongside today’s main ruling, paves the way for those clubs to potentially seek to bring a separate claim against Everton for losses that those clubs had incurred as a result of Everton’s breach.”

On the potential for an appeal, Tom Murray, Sports Lawyer at Mishcon de Reya and co-author of the ‘Financial Regulation’ chapter in Football and the Law states:

“This is almost certainly not the end of the story. We understand Everton has indicated that it will appeal the sanction imposed and also the finding that it failed to act with the utmost good faith.

However, the club will need to act fast. Perhaps, most surprisingly given the potential impact of the sanction, under the new P&S/FFP Rules Everton only have 14 days to submit its case for the appeal, which, given the amount of work that is involved, is not much time at all. We would then expect a further hearing to take place shortly afterwards and in any event, a final decision received, in advance of the end of the season.

After that, any further appeals would have to go to a separate arbitrator and would only be permitted on very limited grounds.”

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