February 25, 2024

Everton face administration if rival clubs are compensated

By Matt Hughes For Mailonline

, updated 

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Everton face being forced into administration and given another nine-point penalty that would almost certainly relegate them if a second independent commission rules that other clubs should be compensated for their spending breaches.

Mail Sport revealed on Friday that BurnleyLeeds and Leicester are pressing ahead with plans to bring a compensation claim against Everton, which would be heard by another three-person panel appointed by the Premier League before the end of the season.

Everton’s prospective buyers 777Partners have committed to providing around £20million-a-month to help with the club’s running costs whilst the Premier League are assessing their takeover bid, but Mail Sport has learned that they would not be willing to pay a compensation bill that could run into tens of millions of pounds.

The deal agreed by Farhad Moshiri and 777 in September contains clauses stipulating that the sale price will be reduced significantly if Everton are instructed to pay compensation or relegated from the Premier League.

Everton’s current regime lack the funds to settle a significant compensation bill, which would leave the club facing administration and the automatic nine-point penalty introduced by the Premier League in 2004.

Everton are set to face a £300million lawsuit from rival teams after their 10-point deduction for breaching Premier League spending rules, something they club are strongly appealing
Everton are set to face a £300million lawsuit from rival teams after their 10-point deduction for breaching Premier League spending rules, something they club are strongly appealing
Everton's current regime led by owner Farad Moshiri lack the funds to settle a significant compensation bill, which would like force the club into administration should it be ordered
Everton’s current regime led by owner Farad Moshiri lack the funds to settle a significant compensation bill, which would like force the club into administration should it be ordered
Josh Wander (left) is leading the 777 takeover, which still needs to be approved, but the group are not willing to pay a compensation bill that could run into tens of millions of pounds
Josh Wander (left) is leading the 777 takeover, which still needs to be approved, but the group are not willing to pay a compensation bill that could run into tens of millions of pounds

While Sean Dyche‘s side are just two points from safety despite being docked 10 points on Friday, the loss of nine more points would almost certainly seal their fate.

In an interim hearing held before the independent commission was appointed last May David Phillips KC ruled that Burnley, Leeds and Leicester, whose claim was first revealed by Mail Sport, had a case.

‘I am satisfied that the applicant clubs have potential claims for compensation,’ Phillips wrote in a judgement published for the first time on Friday.

The three clubs are understood to be preparing a claim for £100m each based on the loss of Premier League income as all suffered relegated in seasons during which Everton have been found guilty of overspending, although such claims are seen as wildly optimistic. The amount of compensation to be paid would be decided by a second independent commission if they deem Everton to be liable.

Burnley, Leeds and Leicester have 28 days from Friday’s judgement to formally lodge their claim, with the Premier League confident it will be heard before the end of the season, as will Everton’s planned appeal against the 10-point punishment.

‘Those claims and their validity depend on whether the complaint is upheld,’ Phillips added in his judgement in May.

Manager Sean Dyche sees his side in 19th place are the 10-point penalty, with any further deduction likely to result in Everton being relegated from the Premier League
Manager Sean Dyche sees his side in 19th place are the 10-point penalty, with any further deduction likely to result in Everton being relegated from the Premier League

777 have already loaned Everton over £40m on the understanding that this debt will be converted into equity in the club if their takeover takes place.

If the American investment firm withdraws or their proposal is rejected by the Premier League they would become secondary debtors, joining the back of the queue to be repaid by Everton behind their other funders Metro Bank and MSP Capital, as well as other creditors.

Everton have become just the third club in Premier League history to be given a points deduction.

Middlesbrough were docked three points in 1997 after refusing to fulfil a fixture against Blackburn due to illness in the squad, while Portsmouth lost nine points in 2010 after entering administration.

Both clubs were relegated to the Championship at the end of the respective seasons.

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