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Everton’s harsh punishment for finance breaches is a warning shot for Manchester City and Chelsea

Everton’s harsh punishment for finance breaches is a warning shot for Manchester City and Chelsea
Jordan Ayew of Crystal Palace and Vitaliy Mykolenko of Everton during the Premier League match between Crystal Palace and Everton FC at Selhurst Park on 11 November 2023 in London, England. (Photo: Chloe Knott - Danehouse / Getty Images)

Everton have been punished severely for breaching the English Premier League’s financial rules. What does this mean for Manchester City and Chelsea, who are also on the Premier League’s radar?

In recent seasons, Everton have not had the sweetest of times. They have flirted with relegation for the past two campaigns, both times finishing a handful of points above the drop zone.

They’ve had an indifferent start to the 2023/24 season, collecting 14 points from 12 games. However, before they had 10 points deducted they were well clear of the bottom three, sitting in 14th spot.

Now the Toffees, as the English club is nicknamed, are in a sticky situation, deep in the relegation zone, although there are many games still to play.

Guilty as charged?

An independent commission found the Merseyside-based outfit guilty of breaching the Premier League’s Profitability and Sustainability Rules (PSRs) and docked the club 10 points. The announcement was made on Friday, 17 November.

Under the PSRs, clubs are allowed to make losses of up to £105-million over a three-year financial period. Everton posted losses that were much more during the period ending in the 2021/2022 season.   

“During the proceedings, the club admitted it was in breach of the PSRs for the period ending Season 2021/2022. But the extent of the breach remained in dispute,” the league said.

“The commission determined that Everton’s PSR calculation for the relevant period resulted in a loss of £125-million, as contended by the Premier League, which exceeded the threshold of £105-million permitted under the PSRs,” the league stated.

As a result, the club is in 19th place in the Premier League standings. They are appealing against the verdict in the hopes that their penalty will be reduced.

Although Everton admitted guilt, they said they were only £10-million over the threshold and not the £19-million determined by the Premier League.

The Toffees cited the global financial strain induced by Covid-19 as a mitigating factor. They said the 10-point deduction was “a wholly disproportionate and unjust sporting sanction.

“Everton maintains that it has been open and transparent in the information it has provided to the Premier League and that it has always respected the integrity of the process.

“Both the harshness and severity of the sanction imposed by the commission are neither a fair nor a reasonable reflection of the evidence submitted.”

Just how long the appeal process will take is unclear. However, all involved will hope for a swift resolution to avoid ambiguity in relation to league placements at the end of the season.

Manchester City captain Ilkay Gundogan lifts the Premier League trophy in front of teammates after the Premier League match between Manchester City and Chelsea FC at Etihad Stadium on 21 May 2023 in Manchester, England. (Photo: Visionhaus / Getty Images)

The bigger picture

The Premier League is trying to clamp down on reckless spending by its clubs.

Manchester City, the current English champions, face more than 100 charges relating to financial malfeasance over a nine-year period (between 2009 and 2018). According to the league, the Citizens were dishonest about figures in their books.

The Emirati-owned club is accused of not providing the league with accurate financial information relating to revenue and expenditure during that period.

Moreover, City are said to have lied about how much they were paying an unnamed manager during this period, with the manager’s remuneration allegedly much higher than what was stated in his official contract.

The club has vehemently denied the allegations, which will be dissected and reviewed by an independent panel.

As something of a middle finger to the allegations of altering their finances, City recently announced revenue in excess of £700-million for the 2022/2023 financial year, when the club won the treble of the league, FA Cup and Uefa Champions League.

The revenue they made is a record for English soccer. It is north of £50-million more than the previous record, which was held by Manchester United. Apart from that, Manchester City also announced a club profit of £80-million — double that of the previous financial year.

“Our financial health and on-field success mean everyone connected to Manchester City can look forward to the future with excitement. Our collective achievements give me huge confidence that together we can accomplish even more in the years to come,” said City chairperson Khaldoon Al Mubarak, as quoted by The Guardian.

Chelsea owner Roman Abramovich congratulates Marcos Alonso and his players after the Uefa Champions League final between Manchester City and Chelsea FC at Estadio do Dragao on 29 May 2021 in Porto, Portugal. (Photo: Visionhaus / Getty Images)

Precedent set

Considering the extent of Everton’s punishment (the highest points deduction in the history of the English top flight), it will be interesting to see how severely City are punished in the event that they are found guilty of any of the numerous charges levelled against them. 

Also on the radar of the Premier League is London club Chelsea. The Guardian recently reported that former Chelsea owner Roman Abramovich used offshore companies to make payments that benefited the Blues and may have breached the Premier League’s “financial fair play” rules.

The Premier League is already investigating the club after the new owners flagged “potentially incomplete financial reporting” linked to the Abramovich era when they did their due diligence after the official takeover.

The new ownership group, led by US businessman Todd Boehly, took over Chelsea in May 2022 after the British government forced Abramovich to sell the club because of his close ties to Russian President Vladimir Putin.  

The new owners have spent excessively — more than £1-billion in transfer fees alone. This is something the Premier League will cast a keen eye on as it gathers evidence to potentially nail the London-based club. DM

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