Everton have had their 10-point penalty for breaching the Premier League’s financial fair play rules reduced to six in news that has sent another shockwave through the relegation battle.
Here’s what we know after another big day at Goodison Park.
So why has Everton’s 10-point penalty been reduced?
Everton said they felt “vindicated” by the decision of a new commission to reduce their 10-point penalty to six and it certainly represents a partial victory for the club – even if it is not quite the comprehensive win the Toffees’ legal team would have been seeking. Given they admitted the breach, winning back four points is probably towards the top end of what they could have hoped for.
Everton’s initial anger was both with the independent commission that docked them 10 points and the Premier League, who had originally lobbied for a 12 point tariff for the club overspending the allowable £105m rolling losses over a three-year period by £19.5m.
They argued it was a “wholly disproportionate and unjust” punishment and a new commission – made up of Sir Gary Hickinbottom (chairman), Daniel Alexander KC and Katherine Apps KC and sitting for three days on 31 January – partially backed up that judgement.
While they rejected seven of Everton’s nine mitigation arguments, crucially they found the original commission had made two “legal errors” that impacted the verdict. Those two errors were finding that the club hadn’t acted in “utmost good faith” over the new stadium debt they had accrued and also not taking into account benchmarks set by previous similar cases, including those presided over by the EFL.
They did, however, agree with the original commission that the main reason for punishing Everton was the club did not manage its finances as prudently as it should have, making a conscious note of the “generous” threshold of £105m.
The club’s statement was pointed, making note that they were “particularly pleased with the appeal board’s decision to overturn the original commission’s finding that the club failed to act in utmost good faith”.
They continued: “That decision, along with reducing the points deduction, was an incredibly important point of principle for the club on appeal. The club, therefore, feels vindicated in pursuing its appeal.”
This case also emphasises the Premier League is now in the era of the so-called “super silk”. Everton had hired Laurence Rabinowitz KC, widely renowned to be one of the best in the business, at substantial cost to beef up their legal team and succeeding in reducing the points penalty will both enhance his reputation in the sporting world and encourage others in a similar position to go out and hire the best and most expensive lawyers.
How do Everton feel about it?
The club are still digesting the decision, having been given little time before the Premier League’s announcement to come to conclusions about it. But it does feel like a victory against the odds for Everton.
While the club’s statement spoke of “vindication” and “satisfaction” there remains considerable frustration at the scale of the punishment the club have absorbed. Six points for a £19.5m overspend is still viewed as a hefty punishment and one source told i they will now be “monitoring closely” what happens to Nottingham Forest. While the size of Forest’s overspend has not become public knowledge yet, it feels as if a precedent has been set.
In the short term they pull further away from the Premier League’s drop zone – they now have five points on the bottom three – but there’s real anger at the way the original decision has impacted the mood around the club.
And – as one source pointed out to i this afternoon – the appeal’s success means the prospect of the relegation battle being settled long after the season ends is now a very real one. Forest will surely appeal whatever punishment they get and Everton will probably do the same if they are sanctioned in their second charge. It’s highly unlikely those appeals will be heard before the middle of May.
So what does it mean for Everton’s second charge?
Of course the ordeal is far from over for Everton. A second charge for breaching the Premier League’s profit and sustainability regulations (PSR) looms on the horizon, even if a date has not yet been set to hear it.
The size of the club’s alleged overspend is not yet public knowledge but some experts are warning that Everton should be braced for a second points deduction given the club did continue to spend on transfer fees in the summer of 2022.
“The Premier League will presumably be confident having assessed the submissions,” football finance expert Kieran Maguire told i.
Everton said in their statement they “remain fully committed to cooperating with the Premier League” on the ongoing proceedings. i understands they are confident in their case and are likely to retain Rabinowitz for the second hearing.
And there is some further good news: Maguire says that any subsequent punishment will surely be less draconian given the appeal commission’s verdict.
“I think there’s a case for saying that if the second commission views Everton’s position in isolation and reaches a verdict then there’s a very good case for reducing the penalty by two thirds given that there’s an overlap of two seasons in respect of the assessed periods,” he told i.
“So, for example, if they give a further three point reduction it could be reduced to one. If it’s six points it could be reduced to two and so on.”
Everton have always argued that the second charge is a case of double jeopardy. Because FFP breaches are calculated over a three year period, they have already been punished for two of the three seasons being assessed.
What does it mean for the Everton takeover?
The prolonged nature of the Everton takeover has been damaging and visited significant uncertainty on the club and the bad news is that we appear no closer to a decision on whether 777 Partners will be allowed to complete a full buyout of Farhad Moshiri.
Last week it emerged the Premier League have submitted further questions of the Miami-based firm about their ability to fund the club in the long term, which will push any decision on the takeover back into March at the earliest.
777 Partners were informed of the appeal commission’s decision at the same time as Everton as they continue to take a keen watching brief on the club. Sources told i they are “desperate to get to work” at Goodison Park.
i understands that they remain fully committed to the buyout despite the club’s ongoing PSR woes – and that won’t be shaken, whatever happens with the second charge. They have leant the club almost £190m to cover cash flow issues and fund the new stadium build, something sources close to the group told i illustrates their “total commitment to the takeover”. One way or another, a resolution is surely needed before the end of the season.
What next for Everton?
Uncertainty and anxiety continue to envelop the club. With increasing question marks over the club’s proposed takeover, what comes next if it collapses is uncertain. There has been talk of rival bidders and alternative interest but the prospect of administration if Moshiri cannot fund the clubs huge debts is especially frightening.
There are so many unknowns around the club: who will own the club in six months’ time? How will they fund the club? What happens with the second charge? Will they have to pay compensation to rivals who were relegated in 2021 and 2022? What happens next with the stadium development?
No-one can give definitive answers to these questions and even the division they will be playing in when the Bramley-Moore Dock stadium is opened is unclear.
At least the verdict is a partial boost for Sean Dyche and the team, who have struggled to find form recently. After an initial run of wins following the verdict they have not won in the league since December 16 and this reduction gives them some breathing space – for now.
Another points deduction for a second charge would be tough to take but at least it won’t be terminal for their hopes of staying up.
It is a club that desperately need some certainty off the pitch to plan for the future on it.
