Why has the original 10-point punishment been reduced?
The appeal board has imposed a six-point deduction with immediate effect having concluded that “the commission made legal errors” when hitting Everton with the biggest sporting sanction in Premier League history last year. The commission was wrong, it said, to say that Everton had been “less than frank” about the debt incurred for the construction of the new stadium at Bramley-Moore Dock and had therefore breached another Premier League rule, B.15, that says clubs have an obligation to act in “utmost good faith”.
Secondly, the commission was wrong not to take into account available benchmarks when deciding the punishment. It was a material error not to consider the sanction formula used by the EFL, for example. Everton had argued that the fines and suspended points deductions given to the six Premier League clubs who attempted to join the European Super League should have been used as a benchmark.
So the appeal is a victory for Everton?
No. The club claim they have been “vindicated” by the appeal and that is true to an extent (a four-point extent, to be exact) but, importantly, the board rejected seven of the nine grounds of appeal put forward by the “super silk” Laurence Rabinowitz KC. Everton had presented as mitigating factors for their breach of £19.5m the loss of sponsorship deals with companies connected to the oligarch Alisher Usmanov, who was sanctioned by the UK government following Russia’s invasion of Ukraine in 2022. Usmanov, his former business partner and Everton owner Farhad Moshiri claimed, was close to signing a lucrative naming rights deal for the new stadium when the war broke out. The interest on loans taken out during the accounting period – which Everton claimed were connected to the stadium but the Premier League argued were for working capital – was another, along with the estimated £10m loss when Everton cancelled the contract of a player who was arrested on suspicion of child abuse.
The club’s cooperation with the Premier League over their spending, the failure to consider alternative sanctions such as a transfer ban or fine, and errors in approach to the club’s overspending and related sporting advantage were among the others. The appeal board found the commission was right to dismiss them all as mitigating factors.
So Everton remain at risk of another points deduction?
Yes. The details of the second charge, and the extent of Everton’s alleged breach for the three-year period up to 2023, have not been disclosed, but the case will be heard and, the Premier League hopes, settled by the end of the season. Had the appeal board accepted that the Usmanov sponsorship deals and the costs of the new stadium project were mitigating factors for the club’s losses, for example, then the defence against both charges would have been strengthened.
The second charge, after all, covers two of the three years for which Everton have already been found guilty. But both the original commission and the appeal board have now rejected the main thrust of Everton’s argument for breaching profit and sustainability rules (PSR) for the period up to 2022. “The board agree with the commission that the main reason for the club’s breach was that it did not manage its finances as prudently [as] it should have done,” reads its findings.
A victory for the Premier League then?
Not at all. The appeal board’s verdict not only highlights legal errors made by the commission but raises further questions over the Premier League’s regulatory processes, or lack of them. In the absence of an agreed sanctions formula for PSR breaches the Premier League adopted a sanctions policy specific to Everton’s case on 10 August 2023, five months after the club had been charged.
Richard Masters, chief executive of the Premier League, proposed a six-point penalty as a starting point plus one extra point for every £5m lost. The Premier League later clarified at a pre-trial review held in October 2023 that it was not seeking to impose a policy on the commission but making a submission, as it is entitled to do. The commission rejected the submission but ultimately imposed a 10-point deduction that was exactly in line with the Premier League’s proposal. Masters has rejected a request from the culture, media and sport committee to release the minutes of the meeting in August when the Premier League agreed its proposed sanctions policy for Everton.
The appeal board has rejected the Premier League’s view on the level of punishment a £19.5m breach should entail. Steve Rotheram, mayor of the Liverpool city region, said: “A 40% reduction in penalty shows just how heavy-handed that [initial] verdict was, though the club still potentially faces double jeopardy by being punished twice for alleged breaches over a similar period. But this is about far more than this individual case. Fans and clubs need confidence in the rules and processes that govern our beloved game. The Premier League’s culture of secrecy has done nothing to foster confidence or trust. How can any fan, club or player have any confidence in the Premier League sanctions process moving forward without a clear and transparent framework for sanctions? The league should now publish the formula it intends to use when calculating penalties for similar breaches moving forward. This is an urgent issue given the two outstanding cases to be dealt with this season.”
