While Everton’s nightmares about breaching the Premier League’s profit and sustainability rules (PSR) may have passed, the Toffees now face a £50m legal showdown.
Burnley and Everton might not be due to face each other on the pitch until December 27, but the two clubs and their legal representatives will face off in central London this week at the International Dispute Resolution Centre, with the Turf Moor side seeking more than £50m in compensation from their Premier League rivals.
Dispute has been a theme across the Premier League, from the points deductions of Everton and Nottingham Forest for breaching PSR, to the 115 charges against Manchester City, the world’s biggest and best domestic league has been bumping heads with its shareholders, the 20 clubs who compete in it each season.
This time is different, though. This is a club-to-club matter. But why? The decision from Burnley to pursue hefty damages directly from Everton, a club who achieved safety in a season when they were ruled to have breached PSR, and one where Burnley fell through the trapdoor and back into the Championship. The PSR breach was one that Everton admitted, but the punishment for that came in the form of a points deduction the following season. Here is where Burnley are hanging their case.
Clarets Arguing Toffees Unfairly Stayed Up
Everton were hit with two separate points deductions for breaching PSR, reduced to eight points upon appeal, with both served during the 2023/24 Premier League season. But the 2021/22 breach, where Everton were docked 10 points before being reduced to six upon appeal, saw the Toffees survive by four points, with the final relegation spot occupied by Burnley.
The argument from the Clarets is that Everton stayed up unfairly, and that the six-point deduction handed out, had it been applied during the same season as the breach, would have seen the Merseyside club relegated instead of Burnley.
Relegation to the Championship comes at great financial cost. It is estimated that the Clarets lost some £58m in revenue through relegation, although the existence of parachute payments designed to soften the landing for clubs aided matters. It is with that figure in mind that Burnley are pursuing their legal case against Everton.
The Clarets could claim for not only the direct financial impact of a loss of a portion of broadcast rights, but also the diminution in value of commercial deals as a result of their relegation in 2021/22. The case will likely hinge on the legal concept of ‘loss of chance’, defined as being where a claim for damages and compensation may arise ‘when a negligent omission by a professional leads to the loss of a valuable business opportunity or the loss of a valuable claim’. In this case, who the negligent party is will have to be determined, with Premier League law at the time not requiring matters to be determined in the one season, something which has since been amended. Everton would argue that they operated within the Premier League’s legal framework that existed at the time.
There is no timeframe for the case, and with the hearing to be heard in private, the details may never be publicly known. What is known, however, is that there won’t be any retrospective points deductions handed down, and any penalty will be purely financial. While a claim for the full loss of revenue is highly unlikely to be upheld, there could be a point reached where a settlement is agreed upon, although Everton are defending their position and challenging the legal proceedings, arguing that they were operating within the Premier League’s agreed framework at the time. The Toffees engaged the services of renowned silk Mark Howard QC earlier this year.
While there is no precedent for this kind of action, therefore no previous benchmark for punishment handed down, in the remarks of the commission that imposed a 10-point deduction on Everton for 2023/24, the commission’s chairman, David Phillips KC, when referencing the potential for aggrieved clubs to seek compensation, stated: “I am satisfied that the applicant clubs have potential claims for compensation.”
For Everton owners the Friedkin Group, who took full control of the club in December 2024 after acquiring former owner Farhad Moshiri’s controlling stake, it was an issue that they were aware of prior to completing the deal, as highlighted during a period of due diligence.
Any successful claim for compensation likely won’t be counted against the club when it comes to PSR calculations, although this particular battle is likely to be the last of the PSR era for the Premier League.
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