Everton achieved 10 points, a Premier League record, in financial matters
Everton, a founding member of the English Premier League that has been mired in financial crisis, suffered further pain on Friday after being handed a 10-point penalty for breaching the league’s economic rules. The penalty, the biggest points deduction in the competition’s history, sent Everton to the bottom of the standings and left them under threat of relegation from England’s top division at the end of the season.
The penalty came as no surprise as the Premier League was under pressure to take action. by rival teams angry about Everton’s rule violations. But it will deepen the crisis that has engulfed Everton as it operates under a cloud of hundreds of millions of dollars in debt, and raised the prospect that wealthy rivals such as Manchester City and Chelsea could face far stiffer punishment in separate financial cases.
An independent competition committee that heard the case against Everton concluded that the club had breached the competition’s profit and sustainability rules. She ruled that the points deduction should be applied immediately, dropping Everton to 19th place in the 20-team league and on the same points total, 4, as last-placed Burnley.
At the end of each season, the three worst-finishing teams in the Premier League, the world’s richest national sporting league, are relegated from the division to the second tier of the Championship.
Everton said it was “shocked and disappointed” by the severity of the punishment, which its interim chief executive, Colin Chong, called “disproportionate and completely unjust.” The club immediately announced that it would appeal.
The team’s perilous financial situation required regular cash injections from outside sources to keep the club operating. The most recent loan came from 777 Partners, an American group that agreed to take over the legendary club in September. That deal has not yet been approved by the Premier League and the Financial Conduct Authority, a regulator, amid questions about 777 Partners’ own finances.
The Premier League referred Everton to an independent committee in March after Everton recorded financial losses for the fifth year in a row. Under league rules, teams are not allowed to lose more than 105 million pounds, or $130 million, over a three-year period. Everton acknowledged breaching these rules for the financial year to 2022.
The panel, according to a written opinion of 41 pagesagreed with the Premier League’s assessment that Everton had exceeded the allowable loss amount by £19.5 million (almost $25 million).
However, the magnitude of the punishment in Everton’s case suggested that a much bigger punishment could await the league’s dominant team, Manchester City, which is facing its own accusations of breaches of financial rules.
City have been accused of 115 breaches of league rules relating to its financial returns. The case, now in its fifth year, is being heard by a similar panel to the one that ruled in the case against Everton.
The Premier League is also investigating another traditional powerhouse, Chelsea recent revelations of inappropriate conduct under his former ownership.
“This is a landmark moment in the history of the Premier League and one of its most famous clubs, and will send shockwaves – particularly into the boardrooms of Chelsea and Manchester City,” the spokesman said. Simon Bladpartner and head of sport at Mishcon de Reya, a law firm based in London.
While the points deduction significantly increases the chances of Everton suffering a costly relegation to the second tier for the first time in its history, the low points totals achieved so far by some of its relegation rivals could still allow them to escape. Even with a 10-point penalty, Everton are just 2 points behind Luton Town, the team currently occupying 17th place – the final position that offers safety and a place in the league for next season.
A spokesman for 777 Partners said the firm had no comment on the penalty or what impact it would have on its proposed takeover of Everton, as that process is still ongoing.
Part of the reason Everton’s punishment was so severe, the panel said, had to do with an allegation, confirmed by the panel, that the team had failed to engage with the league in good faith, an accusation that the team still rejects.
“Both the severity and seriousness of the sanction imposed by the commission are not a fair or reasonable reflection of the evidence presented,” Everton said.
Everton blamed the cost of a new stadium project and the financial impact of the coronavirus pandemic for mounting losses. The Premier League responded by claiming that some of the losses were simply due to the poor running of the club, which resulted in overspending on recruitment and salary costs. Under the rules, Everton have seven days to appeal.
The amount of the penalty is one point more than the previous record, 9, which was awarded to Portsmouth after the club was forced into a form of bankruptcy protection in 2010. That fate could await Everton if its attempts to complete the sale of the club prove unsuccessful. .
Everton’s agreement to sell to 777 Partners, an investment company based in Miami, has led to the latter’s activities coming under scrutiny and its ability to remain a long-term investor in sports. That deal with Everton’s current majority shareholder, Farhad Moshiri, includes conditions for points deductions and even a possible relegation.
Mr Moshiri, a British-Iranian businessman, would only receive the full sale price of around £139 million if Everton did not drop any points, according to documents seen by The New York Times.
The amount 777 Partners will pay Everton will vary in stages depending on the severity of the points deduction, potential relegation from the Premier League and, in the event of relegation, failure to return to the top division within a certain time, the documents show.
