Everton’s Premier League points deduction, charges explained

An independent three-man panel convened by the Premier League on Friday chose to strip Everton by 10 points for breaching the competition’s Profit and Sustainability Rules (PSR). Everton said it would appeal the sanction and, in a written statement, said it would “monitor with great interest the decisions taken in any further matters relating to the Premier League’s profit and sustainability rules”.

This is a not-so-veiled reference to Manchester City, who face 115 charges of PSR breaches (along with Everton), and possibly Chelsea, who are currently under investigation for alleged wrongdoing between 2012 and 2019. Some suggest the hard line taken against Everton means some sort of seismic punishment awaits City and/or Chelsea if they are found guilty.

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As tempting as it may be to jump to the conclusion that if Everton lose 10 points for a single infraction, City will have 1,150 points deducted for their 115 infractions, that’s probably not how it will work. For what? Because there are very different accusations in very different circumstances.

Here is a question and answer session to understand.

OK, what makes the cases so different?

Everton have been accused of breaching PSR rules for the three seasons ending in 2021-22. The maximum losses allowed during this period – after taking into account all sorts of adjustments based on the impact of COVID, youth development and other costs – was £105m. The Premier League maintains its losses totaled £124.5 million, while Everton claims it simply accounted for some payments differently and disputes the interpretation of some accounting practices. They also dispute the amount of the sentence.

There is no indication that Everton were willfully dishonest or misleading. Manchester City, on the other hand, is accused of not having given “a true and fair vision of the financial situation of the club”, of not having “included all the details” on the remuneration of players and managers, and of not having cooperated with Premier League investigators. .

I don’t see how you can compare the charges one way or another. Everton were profligate, took unnecessary and frankly stupid risks – such as budgeting to finish sixth when in fact they finished 16th – and in the opinion of the independent panel, took some liberties with accounting creative, perhaps in good faith. . City, on the other hand, are accused of outright cheating with some of their charges. These are not the kinds of things you hope to convey to regulators, and these are not mistakes you make in good faith. If this is proven, they are on a whole other level.

It’s the difference between getting caught speeding and getting caught speeding with some sort of radar jamming device in your car that lets you speed without getting caught.

Is this why UEFA banned City from European football for two seasons in 2020?

Instead. And keep in mind: this was the maximum ban they could hand out and it was based only on part of the accusations made against them by the Premier League.

But wasn’t UEFA’s ban overturned on appeal? What makes the Premier League think its case is stronger?

It’s true: it was annulled by the Court of Arbitration for Sport, which found that “most of the alleged breaches were either not established or time-barred”.

Regarding the “prescription”, the Premier League relies on the fact that unlike UEFA, there is no limitation. As for whether the breaches have not been established, they will need to be able to prove their case and, as we have seen with UEFA, this may not be simple. Regardless, City deny the accusations and say they “welcome” the opportunity to clear their name.

And Chelsea?

Again, very different. To begin with, they have not been charged and, in fact, they have turned themselves in to the Premier League and UEFA, highlighting some of the irregularities for which they are under scrutiny, which mainly concern undocumented and unofficial people. payments to clubs and intermediaries.

Why would they denounce themselves?

Well, when Todd Boehly and the Clearlake consortium acquired the club from Roman Abramovich after he was forced to sell it, they retained around £100 million of the £2.5 billion sale price because when they did their due diligence, they discovered irregularities and suspected they would face fines later. When these irregularities were discovered, they reported them to the authorities.

Chelsea have yet to be charged, but from what has been published in the media so far, it doesn’t appear the situation is on the same scale as City’s. And, more importantly, it was under the previous owner and the current owners reported it themselves.

It seems that in recent years the Premier League has taken a renewed interest – and a harder line – in the financial dealings of its clubs. Why is that?

Well, the first thing to remember is that when we say “the Premier League”, we mean the 20 member clubs, not the chief executive Richard Masters who, despite his name, is not some sort of master of the universe. The clue is in the name of the “Profit and Sustainability Rules” – “sustainability” – and the goal is to run the league at or near break-even.

For what? Three reasons. First, if a club suffers huge losses – even if an owner writes a check every year – that drives up the costs for everyone else. That full back you were going to sign for £20m could now cost you £40m and instead of £3m in wages, he might want £5m in wages.

Secondly, no club is happy to suffer huge losses (or rack up massive debts) forever and, if they suddenly pull the plug and go bankrupt, there is the risk of a chain reaction, with d other clubs they owe money to also go bankrupt.

Third, the Premier League likes to think of itself as a stable business that will attract investors. If you’re making huge losses every year – remember that despite being the most successful league at the moment, the Premier League makes an operating loss most seasons – it’s harder to attract investors.

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Ogden: Everton punishment suggests Man City could face huge penalties

Mark Ogden explains the wider implications for Everton and other Premier League teams after the Blues were deducted 10 points for breaching FFP rules.

So this increased surveillance is a good thing, right?

Yes, except that it raises a whole bunch of ethical and legal questions that, frankly, I’m not sure the Premier League is equipped to answer. Not yet anyway.

Take Everton. The case against them was opened last season and refers to the previous three seasons: is it right that the sanction is applied now? Shouldn’t the case have been judged and the sanction imposed in 2022-2023? This is what the three clubs relegated in 2022-23 (Leicester City, Leeds United and Southampton) believe, which is why they are reportedly considering taking legal action for compensation. In a perfect world, that’s exactly what the Premier League would have done, but it said the legal process could not be completed in time.

Then there’s the whole issue of points penalties. Ten points is a nice round number, but its material impact depends on the club. If Arsenal had been found wanting and dropped 10 points last season, they would have finished fourth instead of second and still qualified for the Champions League. If Fulham had lost 10 points, they would have finished 12th instead of 10th. Oops-of-do. A punishment, huh?

Then again, if Mark Zuckerberg drives his luxury vehicle 20 miles over the speed limit and Joe Schmo drives his Honda 20 miles over the speed limit, they both get the same ticket and the same fine, right? It’s not like we fine billionaires more than the average person in real life – except, of course, when our legal system allows us to do so and judges have the discretion to do it.

And it’s Everton, which is relatively simple. What would you, hypothetically, do with City if they were found guilty of the most serious offences? Striptease titles? Mega fines? Relegations? On what basis?

What about Chelsea, which is in even more of a mess due to the change in ownership? Should we view these sanctions as punishments for the owners, in which case it probably wouldn’t be fair to throw the book at Boehly & Co. since they weren’t in charge? Or are we just talking about the club and if you own it when past misdeeds come to light, tough luck?

If there is a legal argument for compensating the relegated teams in the Everton case (I’m not saying there is, but there might be), what would the compensation look like if City and Chelsea were found guilty? of the most serious offenses? And who would pay for it? The league, for not having enough supervision? The clubs that broke the rules? Without a time machine, can you even properly compensate someone?

Also keep in mind that in all of these cases – unlike in real life – there is no significant case law, or precedent on which to base things. Which only complicates things further.

So yes, surveillance is a good thing, but we are far from finding the best way to make it work. And the feeling is that the only people who will benefit in the short term are the lawyers who can bill more hours and the jurists who can debate the above issues endlessly.