Everton's Financial Woes Lead To Biggest Points Deduction In Premier League History

Everton's objective of remaining a Premier League club has suffered a massive setback as the Merseyside club were handed an immediate 10-point deduction last Friday.

After years of financial mishandling and poor decision-making, Everton have now paid the ultimate price for the club's actions off the field.

Sean Dyche's side now drop from 14th to 19th place in the Premier League table and with just four points to their name. The club was previously eight points above the relegation area but now sit in the relegation zone and are two points from safety.

This is the largest penalty handed to a Premier League club in history, as it overtakes the nine-point deduction Portsmouth received in 2010 for entering administration. The other occasion where a Premier League team was deducted points was when Middlesbrough were unable to commit to a match against Blackburn Rovers in 1997, and subsequently had three points deducted.

An independent commission handed out Everton's points deduction due to the club breaching the Premier League's profit and sustainability rules (PSRs). Premier League clubs are allowed to lose up to £105 million across a three-year timeframe and it was found that Everton lost £124.5 million from 2021-2022.

The independent commission became involved in the matter in March 2023 when the Premier League requested that they look into Everton possibly breaching the league's PSRs. Everton did admit that the club was in breach of the PSRs during a recent hearing that lasted five days.

Everton's official club statement after the points deduction was announced, read: "Everton Football Club is both shocked and disappointed by the ruling of the Premier League's Commission. The Club believes that the Commission has imposed a wholly disproportionate and unjust sporting sanction."

Everton also believes the club "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".

The statement also revealed Everton's plan to appeal the points sanction and that the Premier League has already been alerted of this decision.

Everton put forward mitigating factors as its defence for the breaking of the Premier League PSRs. Among the main factors was Russia's invasion of Ukraine, as the club lost a naming rights agreement for its new stadium that is set to open in late 2024.

A deal was set with USM, the holding company of Russian billionaire, Alisher Usmanov, that was believed to be worth £200 million. The Russian had commercial ties to Everton and business links to Everton owner and majority shareholder, Farhad Moshiri, who previously was on the board at USM.

Due to the assets belonging to Usmanov being frozen by the European Union, Everton had to suspend its commercial relations with USM Holdings and its subsidiaries, Megafon and Yota, all having had sponsorships with Everton. Therefore, the negotiations for the stadium agreement with USM, which were advanced, were halted as Everton pulled out of a potential deal.

The commission dismissed this factor as there was no concrete evidence provided to them that showed an agreement between Everton and USM for the stadium rights was closed or concluded. The commission also mentioned that proposed agreements do not always go through and that it is generally a part of business.

Also, Everton highlighted COVID-19 as a major reason for its financial struggles as the club initially planned to raise £80 million from the sale of eight players in the 2020 summer transfer window. The commission found that it was Everton's high asking prices which turned away potential buying clubs and not any effects of COVID-19.

The commission ultimately found that it was Everton's own doing for going £19.5 million over the permitted loss figure for Premier League clubs as a result of the club's financial mismanagement and irresponsibility.

Everton's sanction has now opened the possibility of other clubs, who battled relegation alongside Everton and went down to the Championship in the past two seasons, taking legal action and looking to be compensated.

These clubs, which include Leicester City, Burnley, Leeds United and Southampton, may seek out the potential revenue they would have missed out on had Everton's points deduction happened in prior seasons and forced the Merseyside club out of the Premier League instead of them.

If any of these clubs wish to move ahead with seeking compensation, they have 28 days from last Friday's decision to make a claim against Everton.

This 10-point deduction is a major blow to Everton as the club has been in good form of late after a tough start to the season. Dyche's side have won six out of their last nine in all competitions and looked to possibly be avoiding another relegation battle this season, after 16th and 17th place finishes in the last two Premier League campaigns.

However, Everton will have to rebuild again and may be involved in another tight relegation battle this season. The journey to start putting points on the board again will commence this coming Sunday afternoon when Everton will face off against Manchester United at Goodison Park.