On Monday 8 April 2024, a Premier League Commission (the “Commission”) determined that Everton FC (“Everton”) should receive an immediate deduction of two points for its breach of the Premier League’s Profitability and Sustainability Rules (“PSR”). James Drake KC was appointed as the Chair of the Commission. Kwadjo Adjepong and Michael Kaltz were appointed as members of the Commission. Dave Barnard was appointed as Clerk to the Commission.
The PSR require clubs within the Premier League to lose no more than £105 million over three assessment periods. Everton admitted that, over the assessment periods ending in 2023, it had exceeded the £105 million threshold by c.£16.6 million.
Despite admitting that breach, Everton argued that it should not be penalised further because it had already received a penalty of six points within the current season following the determination of proceedings concerning the three assessment periods ending in 2022 (in which it received a ten-point penalty which was reduced to six points on appeal). In that regard, Everton relied upon the guidelines adopted by the English Football League (the “EFL”), which (if applied to Everton) would lead to no further penalty.
Additionally, Everton relied upon various further heads of mitigation, including the fact that it admitted its breach at an early stage, that it had co-operated exceptionally with the Premier League, that it had lost £20 million of sponsorship income as a result of the conflict between Russia and Ukraine, and that its broader financial circumstances included the construction of its new stadium at Bramley-Moore Dock.
Everton also argued that any penalty should be postponed into the next season, which was said to be appropriate because Everton received a six-point penalty within this season for its 2022 PSR breach.
The Commission considered the various recent authorities, and in particular the decision of the Appeal Board in the Everton FY22 Proceedings and the recent decision of a differently-constituted Premier League Commission in Nottingham Forest FC’s admitted breach of the PSR. The Commission reached the following conclusions.
- Any breach of the PSR is significant and justifies a deduction of three points.
- Thereafter, the penalty should be increased to reflect the extent of the breach. Everton had breached the PSR by £16.6 million, which justified a deduction of a further two points. The ‘starting point’ for Everton’s penalty was, therefore, a deduction of five points.
- In relation to the mitigation relied upon by Everton:
- The Commission accepted that Everton had been penalised in the 2022 proceedings for losses in years which overlapped with the years at issue in the 2023 proceedings. However, it was not appropriate to transpose or to apply the EFL’s guidelines, in particular because such guidelines had not been adopted by the Premier League. Ultimately, the Commission concluded that Everton’s penalty should be reduced by two points to take into account the overlapping assessment periods.
- The Commission also accepted that Everton had lost £20 million of sponsorship revenue, which was sufficiently exceptional to amount to mitigation, and that Everton admitted its breach at an early stage of the proceedings, which was deserving of recognition. For those two heads of mitigation, the penalty was reduced by a further point.
- Taking into account mitigation, the Commission concluded that Everton should receive an immediate penalty of two points. The Commission determined that, in the interests of fairness to all other clubs, it was not appropriate to postpone that penalty until next season.
The Premier League alleges that Everton has exceeded the threshold by a further £16.96 million. That allegation will not be determined within the current Premier League season.
