Everton docked two points for second financial breach

In this article, Simon Stone from BBC Sport discusses the consequences of Everton's recent deduction of points.

The Premier League has punished Everton by subtracting two points due to their second contravention of financial guidelines.

The Profit and Sustainability Rules (PSR) allow clubs to have a financial loss of £105 million over a span of three years. However, a team like Everton was discovered to have exceeded this limit as they recorded a loss of £16.6 million for the period covering 2020 to 2023. This was discovered by an external commission which reviewed Everton's accounts.

Their ranking in the league has fallen to 16th position and they have a mere two-point lead over the area where teams are at risk of being relegated.

In February, the Toffees received a reduction in their 10-point deduction that was originally imposed on them. The deduction was lowered to six points and it is applicable for a span of three years, from 2021 to 2022.

The club Everton has declared that they will dispute the verdict.

There is a possibility that the club from Merseyside might receive more deduction points due to the costs of their new stadium construction at Bramley-Moore Dock. Nevertheless, it seems improbable that the matter will be settled until this season ends.

According to the independent commission's written explanation, the Premier League requested that the club be docked five points.

The committee made a decision that breaking the PSR rule results in losing three points. Additionally, Everton will lose two more points for going over the threshold by 15.8%, which is a significant breach of £16.6 million compared to the £105 million limit.

Even so, the commission agreed with Everton's explanation about the lessening of their actions due to the club's circumstances, which include:

The committee decided that Everton's previous punishment for financial losses that happened during the same time period as the ones being discussed in this case should result in a deduction of two points. Additionally, one more point was added for the loss of sponsorship revenue and for admitting their guilt quickly.

The blog stated that there's a disagreement between the club and league regarding expenses associated with building the stadium. The Premier League insists that these charges must be considered as PSR losses, but Everton opposes this view and believes that they should be removed from their latest audited accounts.

At a later time, the independent commission will reconvene to make a decision regarding the matter. Should they concur with the Premier League, they may impose additional sanctions.

The commission stated that this matter cannot be addressed through the accelerated PSR method that was implemented this season. As a result, it is improbable that a solution will be found before the end of the season.

Everton released a statement expressing satisfaction with the outcome of a commission, which took their concerns into consideration. The club believed that no further penalty was necessary and the commission seemed to agree. They also acknowledged the club's argument regarding double punishment, the extenuating circumstances created by the conflict in Ukraine, and how cooperative Everton was during the investigation.

The Toffees expressed their great concern about the inconsistent nature of the punishments they have received over the course of the season. They noted that four separate commissions issued four different points deductions, which is troubling.

According to the Premier League, the independent Commission has restated the principle that any violation of the PSRs (Premier League Salary Cap Regulations) is significant and requires a sporting sanction.

The football club, Nottingham Forest, has also been accused of breaking the Professional Standards Regulations this season and was penalized four points in March. However, they have appealed against the decision.

The Premier League has accused Leicester, a championship team, of violating expenditure regulations for the past three seasons while playing in the top division.

We cannot be sure that Everton's request for a hearing will take place before the last matches of the Premier League season, which are scheduled for May 19th, when Everton will play against Arsenal.

The 2023-24 season is still considered "ongoing" until the annual general meeting in June, during which time teams that were relegated transfer their certificates. To wrap up the appeals process, a deadline of May 24th has been set as a final cutoff date.

This additional cut occurs during a period of major unpredictability at Everton.

On March 31st, the club unveiled their financial accounts for the season of 2022-23, revealing that they had suffered a loss of £89.1 million.

Back in September, the club's owner Farhad Moshiri decided to sell his 94% share to an American investment company called 777 Partners. At the moment, the process of the takeover is still waiting to be approved by the Premier League's regulatory mechanisms.

There is some news that Everton is constructing a fresh stadium at Bramley-Moore Dock, near River Mersey. The stadium is anticipated to open in 2024, later in the year.

Kevin Thelwell, director of football at Everton, stated to the independent commission that the club is currently in the process of shifting away from their previous business model and moving towards a more sustainable recruitment strategy. Thelwell acknowledged that this is a substantial change and may take some time to fully implement, likening it to steering a large ship in a new direction.

Financial Rules: What Are They?

The main intention of the PSRs is to encourage stability in the monetary aspects of the Premier League.

The introduction of measures to prevent clubs from overspending dates back to Portsmouth's financial struggles in 2010. Portsmouth was the first and only Premier League club to enter administration, unable to find a purchaser who could pay off their debts which had reached approximately £60 million. These measures were subsequently introduced during the 2015-16 season to safeguard clubs from similar financial hardships.

At present, regulations restrict the amount of losses that organizations can incur. However, this amount can potentially be increased by funding from outside owners.

The regulations are set to change, meaning that similar to Uefa, expenses will be tied to revenue.

Critics of the regulations contend that they hinder substantial financing from affluent supporters and essentially sustain the current state where the largest clubs are the wealthiest and most prosperous.

"Everton Cases: Your Timeline Guide"

On March 24th, 2023, the Premier League sent Everton to an unbiased committee to investigate whether they violated the financial fair play regulations in the accounting period from 2019 to 2022.

On November 17th, 2023, Everton was given a punishment of losing 10 points right away for breaking the financial regulations of the Premier League.

On the 15th of January, Everton and Nottingham Forest received charges for violating the profit and sustainability regulations of the league. These allegations must be resolved within 12 weeks, specifically by the 8th of April.

On the 26th of February, Everton received their initial punishment for breaking financial regulations within the Premier League. However, after submitting an appeal, their penalty was decreased from a loss of ten points to only six points.

On the 25th of March, there will be a hearing for Everton's second offense. This offense is due to their accounting period that lasted three years and ended during the 2022-23 year. The hearing will take place sometime this week.

On the 8th of April, Everton has been given a second deduction of two points.

On May 19th, the ultimate day of the Premier League season, Everton will pay a visit to Arsenal. The match is scheduled to take place at 4:00 pm BST.

The appeal hearing must be finished by May 24th at the latest.