Everton have launched an appeal after being ordered to pay Burnley £35m in compensation after they were sued over Premier League profitability and sustainability breaches from the 2021/22 season when the Clarets were relegated.
The Toffees were deducted 10 points in late 2023 for financial misdemeanours, a punishment reduced to six points on appeal a few months later, under the previous regime of Farhad Moshiri.
Everton finished four points above 18th-placed Burnley in 2021/22 but the Lancashire club successfully argued that had the six-point penalty for PSR breaches been applied that season then they would have survived at the Toffees’ expense.
Everton officials have lodged an immediate appeal at what they view as a “flawed” judgment. Sky Sports News understands that the club are astonished and will vigorously contest what they see as a flawed and hugely excessive judgment.
An Everton statement said: “Everton Football Club is surprised and angered by the decision of a Premier League Independent Disciplinary Commission to order a compensation payment to Burnley Football Club in relation to Everton’s PSR breach in June 2022,” said a club statement.
“Everton has appealed the decision and is clear in its belief the ruling is fundamentally flawed in both law and fact.
“The club does not recognise the findings of the panel in determining Burnley’s relegation from the Premier League in May 2022 was caused by a sporting advantage gained by Everton due to a breach of Profit & Sustainability Rules, for which a substantive sporting sanction has already been received.
“This ruling sets a dangerous and unworkable precedent for English football, given it is constructed on a principle that a club can be in breach of financial rules at any point in a financial year.
“Everton believes the panel’s ruling misrepresents the clear evidence presented by its legal representatives and that an appeal will be successful.”
Everton’s compensation order was £26m, plus interest of £9.1m. Burnley are believed to have sought £51.7m in recompense but Everton fundamentally disputed the calculation of the extent of the financial loss.
Burnley chairman Alan Pace also released a statement, praising the decision after stating the competition had been “compromised” by Everton’s breaches.
“When we were relegated in 2022, we disappointingly accepted the outcome on the pitch. What we could not accept and what no club should be asked to accept was competing in a competition later shown to have been compromised,” Pace said.
“We did not come to this lightly. When resolution through every available channel was declined, formal action was imposed as the only path left to us.
“The Independent Commission has now confirmed, in clear terms, that a rule was broken and a competitive advantage was improperly gained.
“Our action has always been about making football fair. Clubs that comply with the rules deserve to compete on a level playing field. Fans deserve it. The sport demands it.
“The Commission’s decision affirms the existing framework to protect the game.”
Other clubs had explored the possibility of suing but did not proceed and there are no further cases outstanding against the club.
Everton were judged to have overspent by £19.5m for the accounting period. However, they argue they were unaware they were going to be in breach and there were six weeks between Burnley being relegated and the end of their financial year when they could have taken steps to avoid the breach.
‘Decision potentially sets a precedent’
Analysis from Sky Sports News’ Geraint Hughes:
I’m going to have to take you back to 2022 to 2024. Everton in November of 2023 were deducted 10 points for breaches of PSR rules. That was reduced on appeal in February 2024 to six points.
The accounting period it relates to ended in 2022, so Burnley – under Premier League rules – are able to seek compensation from any club if they feel they have suffered losses due to a breach of Premier League rules – in this case, Everton breaking PSR rules.
Burnley were relegated in 2022 and their argument is that the Everton PSR breach relates to a period that ended when they were relegated. Everton’s counter-argument was yes, it was, but it was during the period when the accounting period hadn’t ended and nonetheless, around that point in May/June of 2022, they were completely unaware they had breached Premier League rules.
As you remember, the 10-point deduction came in November of 2023, so that’s all the legalities around it.
When Burnley were relegated in 2022, had they stayed in the Premier League and not been relegated to the Championship, they are going to be some financial differences there.
What is Everton’s punishment? Financial. It’s around the £35m mark, but that £26m to be paid to Burnley, plus interest.
They’ve effectively sued, because they are allowed to within the rules. This Premier League commission has come back and said Burnley are right in their legal argument and they should be awarded compensation of £35m.
Everton, clearly, are not happy with this and they released quite a strong statement as well.
Breaking it down in terms of the law, this is the first time this has ever happened. This rule that allowed Burnley to sue Everton is the first time a club has done that.
It’s effectively a test case. It potentially sets a precedent.
What’s next?
It’s too soon to say it sets a legal precedent. It does on its own, but Everton have immediately said they will appeal.
If you ask me what’s going to happen, the law works at a different pace of life. My best guess would be later this year at the earliest, but the outcome of the appeal could be where the test case ends and becomes a legal precedent.
We potentially have many other clubs watching this and they could be in the future, under Premier League rules, they have the right to sue a club for what they perceive as financial losses incurred due to a breach of rules by another club.
