The independent commission’s report refers to four “aggravating factors” within the case as Everton were handed a 10-point deduction
The report from the indepenedent commission including four ‘aggravating factors’ including Everton’s intentions to sell the unnamed ‘Player Y’
Everton have been rocked by an immediate 10-point deduction – the largest in English top flight history – after being found guilty on their single charge of breaching the Premier League’s profit and sustainability rules but what prompted those handing out the verdict to be so severe?
Goodison Park officials have declared they are “both shocked and disappointed” by the ruling and will appeal. Everton always denied any wrongdoing and said they were “prepared to robustly defend” their position and the ECHO understands the club believe they have been open and transparent throughout the process. The commission’s report refers to what it calls four “aggravating factors” within the case.
The independent commission was made up of three individuals: David Phillips KC, who advises and litigates in a broad range of commercial matters including professional liability, regulatory, sports related matters and EU transport regulation, as well as mainstream commercial litigation; His Honour Alan Greenwood, an experienced Circuit Court Judge; and Nick Igoe, a qualified chartered accountant who works as a financial consultant and was West Ham United’s finance director between August 1997-December 2012.
The commission’s report states that the Premier League advances four separate factors that aggravate Everton’s account. These are described as follows: ‘Overspend despite repeated warnings’; ‘Extent of the breach of the PSR threshold’; ‘Misleading the Premier League about stadium interest; ‘Misleading the Premier League about the intention to sell Player Y’.
Overspend despite repeated warnings
It’s revealed that from August 2021 there was an agreement in which Everton would obtain Premier League approval on the purchase of new players. The club has long let it be clear that they had been working closely with the Premier League when it came to guidance over deals.
However, Premier League – who cautioned the club they were not managing their finances –asserted that Everton persisted in player purchases in the face of such plain warnings was recklessness that constitutes an aggravating factor. The charge related to the period ending 2021/22 though when the Blues’ made a trading profit in the transfer market with the outlays on Vitalii Mykolenko, Nathan Patterson and Demarai Gray (Andros Townsend, Asmir Begovic, Andy Lonergan, Salomon Rondon and Dele Alli all arrived without a fee) were covered by the sales of Lucas Digne, James Rodriguez and Bernard.
Extent of the breach of the PSR threshold
The report states that the Commission will take the extent of the breach of the PSR threshold as an important indicator of the level of culpability. However, just before the cut-off, Richarlison was sold to Tottenham Hotspur for £60million, a figure that was some £20million short of Everton’s valuation of him – a shortfall that would have bridged that gap of the club exceeding the £105million threshold for maximum losses over a three-year period.
The commission added: “Everton’s understandable desire to improve its on-pitch performance (to replace the non-existent midfield, as Mr Moshiri put it in evidence) led it to take chances with its PSR position.” However, the ECHO understands that Everton have been left stunned that being judged to have not met an arbitrary PSR guideline figure could result in them being handed a greater sporting sanction than a club who went into administration (Portsmouth were given a nine-point deduction for this in 2009/10).
Misleading the Premier League about stadium interest
The report states that the Premier League complains that Everton deliberately misled it about the source of the funds used for the stadium development. The commission found that both the loss of a naming rights agreement with billionaire Alisher Usmanov’s company USM Services Limited and a rise in stadium-related costs following Russia’s invasion of Ukraine could be considered “the type of event that businesses experience,” although the severing of the ties did result in the Blues having to miss out on a potential £200million deal.
Misleading the Premier League about the intention to sell Player Y
The report says in its FY 2022 PSR submission Everton identified Player Y as being one of the players whom it had targeted for sale, but whom it had been unable to sell. The Premier League asserts that that identification was false.
First, Player Y had been identified in Everton’s 13 March 2020 Summer Player Trading Strategy as being a player whom the club intended to sell. However, in a series of Everton’s documents produced in 2020 starting with the Financial Forecast Update April 2020 Player Y’s name had been removed from the list of players whom Everton intended to sell.
