Everton FC docked 10 points for breaching financial rules

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

English football club Everton has been docked 10 points for breaching the Premier League’s financial rules, the toughest sporting sanction ever meted out to a top-tier club.

The Premier League referred the Liverpool-based club to an independent commission to consider allegations of rule-breaking earlier this year. After a hearing last month, the commission released its findings on Friday.

The 10-point penalty takes immediate effect and leaves the club second from bottom of the league on four points after 12 games.

“We have no doubt that the circumstances of this case are such that only a sporting sanction in the form of a points deduction would be appropriate,” the commission said. “The size of the points deduction is to be determined by Everton’s culpability.”

Everton said it was “shocked and disappointed” by the decision, and that it planned to appeal against the “disproportionate and unjust” penalty. The club had asserted that a transfer ban would be a more appropriate punishment.

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

The penalty comes two months after Miami-based investment fund 777 Partners agreed to buy Everton for an undisclosed amount from its current owner, British-Iranian businessman Farhad Moshiri.

The two sides had previously said they expected to close the deal by the end of this year. On Friday, 777 Partners said it would not be commenting on the decision. The risk of a points deduction was included in the original agreement, said a person familiar with the details of the deal.

Premier League rules allow clubs to lose up to £105mn over a rolling three-year period. The commission concluded that Everton had exceeded that figure by £19.5mn in the period ending with the 2021/22 season.

The club had raised a series of mitigating factors, including the impact of Covid-19 on the transfer market, which it said had made it harder to sell players.

It also blamed the war in Ukraine for pushing up stadium construction costs and forcing it to ditch agreements with Russian sponsors. Everton had several sponsorship tie-ups with companies controlled by Alisher Usmanov, Moshiri’s former business partner, including a potential naming rights agreement for the club’s new stadium. Those deals were cancelled after the Russian-born oligarch was placed under sanctions last year.

However, the commission concluded that Everton’s losses were largely due to overspending on players, which it described as “unwise” given the clear risk of exceeding permitted losses and repeated warnings from the Premier League.

“The commission has no doubt that one of the primary purposes of the sanction is to punish the transgressing club. We must not be swayed by sympathy — for example, the fact that the penalty might make the prospect of relegation greater,” the commission said.

The ruling comes as the Premier League moves to take a more muscular approach to its financial rules ahead of the introduction of a new independent football regulator.

Tom Murray, senior sports lawyer at Mishcon de Reya, said the ruling was a signal that the Premier League was treating breaches of its financial rules with the “utmost significance”.

“The Premier League are showing their teeth and look very likely to continue to take these matters very seriously,” he said.

The league has also referred reigning champions Manchester City to an independent commission to review more than 100 allegations of rule-breaking by the Abu Dhabi-backed club. The club denies any wrongdoing.

Additional reporting by James Fontanella-Khan in New York