By Trevor Stynes
(Reuters) – Everton’s 10-point deduction for breaching financial rules is a sign the Premier League wants to limit the scope of an independent regulator while clubs that were relegated at their expense could seek legal recourse, a sports lawyer has said.
Everton became the first Premier League club to be deducted points for breaching profitability and sustainability rules (PSR) on Friday, when the league docked the Merseyside club 10 points over their finances in the 2020-21 season.
Simon Leaf, head of sport at law firm Mishcon de Reya, said the league’s approach which led to unprecedented sanctions was the result of British lawmaker Tracey Crouch’s recommendation for the creation of an independent regulator and the inclusion of the Football Governance Bill in the King’s Speech.
British Prime Minister Rishi Sunak confirmed plans for an independent regulator to safeguard the future of clubs, where an Independent Regulator for Football (IREF) will have the power to step in and address club’s cash flow and other systemic issues.
“In short, we are seeing a stronger Premier League seeking to demonstrate that any powers provided to the IREF should be limited because the Premier League has now got its own house in order,” Leaf told Reuters.
“Only time will tell whether this proves to be a prudent strategy.
“Especially if the negativity that inevitably comes with imposing sanctions on clubs damages the value of the brand — particularly in important international markets and with a new domestic TV deal in the process of being negotiated.”
When plans for a regulator were announced this year, the Premier League itself had said it recognised the case for change in football governance but that it was already implementing “stronger and more independent self-regulation”.
‘CULTURE CHANGE’
Fair Game UK is a band of clubs campaigning to improve football governance and its CEO Niall Couper said Everton’s predicament was proof football needed a “culture change”.
“The tragic case of Everton proves not just why football needs a regulator, but why it needs a regulator with real teeth and real power,” he said. “Everton should never have been allowed to get into this mess in the first place.”
Everton were sold to 777 Partners in September in a deal reports said was worth more than 550 million pounds and Leaf said the points deduction was unlikely to make the U.S. private equity firm back out of the sale.
“Subject to Premier League and FCA approval that deal looks to have already been concluded,” he said.
“Given Everton’s FFP (Financial Fair Play) issues would have been well-known to 777 going into the transaction, we suspect that the purchase agreement would have directly catered for this type of scenario.”
Everton are the first club to be sanctioned but Manchester City were also referred to an independent commission over more than 100 alleged breaches of finance rules.
Meanwhile, Chelsea are also being investigated for potential financial rule breaches under former owner Roman Abramovich.
SEPARATE CLAIM
While Everton appeal the decision, they may also be staring down the barrel of a separate claim brought by other clubs who suffered relegation as a result of the breaches.
Everton narrowly avoided relegation in the last two seasons, finishing 16th and 17th respectively. The club’s survival ultimately led to Burnley and then Leicester City being demoted to the second-tier Championship in those campaigns.
“The Premier League also revealed that there had been an attempt by a collection of clubs led by Leeds United but also including Nottingham Forest, Southampton, Leicester and Burnley to intervene in the case,” Leaf said.
“While this was given short shrift by a separate Commission, it, alongside today’s main ruling, paves the way for those clubs to potentially seek to bring a separate claim against Everton for losses that those clubs had incurred as a result of Everton’s breach.”
Tom Murray, a senior sports lawyer, said Everton will need to act fast in their appeal.
“Perhaps most surprisingly given the potential impact of the sanction, under the new rules Everton only have seven days to submit their case for the appeal,” Murray said.
“Given the amount of work that is involved, it is not much time at all. We would then expect a further hearing to take place shortly afterwards and, in any event, a final decision received in advance of the end of the season.”
(Reporting by Trevor Stynes and Rohith Nair; Editing by Ken Ferris)