Everton deducted two points for second financial breach

BBC Sport’s Simon Stone explains the impact of Everton’s latest points deductionEverton have been deducted two points for a second breach of Premier League financial rules.

Profit and sustainability rules (PSR) permit clubs to lose £105m over three years and an independent commission found Everton breached that by £16.6m for the three-year period to 2022-23.

They drop one place to 16th and are now two points above the relegation zone.

The Toffees had a 10-point deduction reduced to six on appeal in February for the three-year period to 2021-22.

Everton say the club will appeal against the decision.

Everton issue ‘makes mockery of Premier League’The Merseyside club could yet face a further points deduction in relation to interest costs associated with the building of the club’s new stadium at Bramley-Moore Dock, though that issue is unlikely to be resolved before the end of the season.

In its written reasons the independent commission said the Premier League had asked for a five-point deduction for the club.

The commission decided that any breach of PSR justifies a three-point deduction, with an additional two points because Everton’s breach of £16.6m – 15.8% above the £105m threshold – is deemed significant.

However, the commission accepted Everton’s arguments for mitigation in relation to the fact the club has:

Already been deducted points this seasonSuffered a loss of revenue because of the suspension of a sponsorship deal with Russian company USMMade an early admission of guiltThe commission concluded that the fact Everton have already been punished this season “for losses in years which overlap with the years at issue in these proceedings” merits a two-point reduction in punishment, with a further point for the loss of sponsorship revenue and early admission of guilt.

It also said that the club and league remain in dispute over costs related to the new stadium – with the Premier League saying these costs should count as PSR losses, while Everton argue they should be excluded and have capitalised them on their latest audited accounts.

The same independent commission will meet to decide the issue at a later date and, if it agrees with the Premier League, could issue further punishment.

However, the commission said this issue cannot be dealt with using the expediated PSR process introduced this season so is unlikely to be resolved before the end of the campaign.

Nottingham Forest have been deducted four points and have submitted an appeal. Everton have been deducted eight points (six plus two) and say they will appeal against their latest punishmentAn Everton statement read: “While the club’s position has been that no further sanction was appropriate, the club is pleased to see that the commission has given credit to the majority of the issues raised by the club, including the concept of double punishment, the significant mitigating circumstances facing the club due to the war in Ukraine, and the high level of co-operation and early admission of the club’s breach.”

The Toffees added that the club is “extremely concerned” at the “inconsistency” of the punishments, with four different commissions issuing four different points deductions this season.

The Premier League said the independent commission “reaffirmed the principle that any breach of the PSRs is significant and justifies, indeed requires, a sporting sanction”.

Nottingham Forest are the other Premier League club to have been charged with PSR breaches this season and were docked four points in March, although they have lodged an appeal.

Championship club Leicester have also been charged by the Premier League for allegedly breaking spending rules during their last three seasons in the top flight.

There is no guarantee that Everton’s appeal will be heard before the final games of the Premier League season on 19 May when Everton travel to Arsenal.

The 2023-24 season technically remains ‘live’ until the annual general meeting in June when relegated clubs transfer their certificates and 24 May has been selected as a ‘backstop date’ for the appeals process to be concluded.

Fight for Premier League survival – who will go down?Premier League clubs’ £1bn of losses in 11 chartsThe 2024-25 season is scheduled to be Everton’s final year at Goodison Park, their home since 1892, before they move to a new stadium at Bramley-Moore DockEverton in transitionThis second deduction comes at a time of significant uncertainty at Everton.

The club released their accounts covering the 2022-23 season on 31 March, reporting financial losses of £89.1m.

In September, owner Farhad Moshiri agreed to sell his 94% stake in the club to American investment fund 777 Partners. The takeover is going through the regulatory processes and the club is still waiting for that to be approved by the Premier League.

Everton are also in the process of building a new stadium on the banks of the River Mersey at Bramley-Moore Dock, which is due to open in 2024.

Giving evidence to the independent commission, Kevin Thelwell, Everton’s director of football, said the club was already changing and moving away from its previous business model towards a more sustainable recruitment strategy, but added that “it’s a big old ship to turn round”.

What are the financial rules?The PSRs are aimed at promoting financial stability within the Premier League.

They were introduced in 2015-16 although the demand to protect clubs from overspending can be traced back to Portsmouth, who in 2010 became the first – and so far only – Premier League club to go into administration after failing to find a buyer who would pay off spiralling debts of about £60m.

Current rules limit the losses clubs are allowed to make, although the figure can be inflated by external owner-driven funding.

However, the rules are due to be switched so, like Uefa, spending is linked to turnover.

Opponents of the rules argue they prevent significant investment from wealthy backers and, by definition, maintain the status quo of the biggest clubs remaining the richest and most successful.

Timeline guide to Everton cases24 March 2023: Premier League refers Everton to independent commission over alleged breach of financial fair play rules for the three-year accounting period ending with the 2021-22 season.

17 November 2023: Everton receive an immediate 10-point deduction after being found to have breached the Premier League’s financial rules.

15 January: Everton and Nottingham Forest are charged for breaches of the league’s profit and sustainability rules. The hearing has to be concluded within 12 weeks of this date, which is 8 April.

26 February: Everton’s first penalty for breaching Premier League financial rules is reduced from 10 points to six after an appeal.

25 March: Hearing for Everton’s second charge, relating to three-year accounting period ending in 2022-23, takes place this week.

8 April: Everton receive second points deduction of two points.

19 May: The final day of the Premier League season, when Everton visit Arsenal (16:00 BST).

24 May: The latest possible date for an appeal hearing to be concluded.

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