Everton have been referred by the Premier League to an independent commission, over an alleged breach of English football's financial fair play rules.
The specifics of the breach are yet to emerge – only that the breach occurred last season, when the Toffees escaped relegation by just four points in dramatic circumstances.
So could Everton be relegated over this financial mismanagement? Yes, they could – and here's FFT's Adam Clery in the video below to explain more.
FFT's Adam Clery explains why Everton are facing a points deduction
In March 2022, Everton announced losses of £120.9 million for the 2020/21 season. Losses over a period of three years totalled £372m – and that's over three times the £105m permitted under Premier League rules.
As Adam points out in the video, the Premier League were approached last season over fears that the Merseysiders were breaching FFP. They did not find them to have broken rules, making this latest news particularly interesting. The Prem have essentially admitted that they might have got it wrong last season by referring this case to an independent body.
"Over a three year period, you're allowed to lose £105m," Adam says. "A lot of teams have gone over that £105m threshold: you're allowed deductibles, you're allowed to put money into your women's team, your infrastructure, into community projects, etc., etc.
"There are things you can claim don't count towards this. Yes, they're looking at getting a new stadium, they have invested heavily in their women's team, there are definitely things they can write off but… that still puts them at a loss of £185m, some £80m over what they're allowed to spend."
As Adam also covers though, there is no timeframe for this investigation and that any punishment is unlikely – if not impossible – to be this season.
Just as well, given that Adam labels any loss of points, however small, in this season's relegation battle, as "fatal".
Everton are fighting the allegations, stating, "The club strongly contests the allegation of non-compliance and together with its independent team of experts is entirely confident that it remains compliant with all financial rules and regulations.
"The club has, over several years, provided information to the Premier League in an open and transparent manner and has consciously chosen to act with the utmost good faith at all times."
