An independent Commission has given an immediate two-point deduction to Everton FC for a breach of the Premier League’s Profitability and Sustainability Rules (PSRs) for the period ending Season 2022/23.
Over a three-day hearing last month, the independent Commission heard evidence and arguments from the club in respect of a range of potential mitigating factors for its admitted breach of £16.6million, including the impact of its two successive PSR charges. Having done so, the Commission determined the appropriate sanction to be a two-point deduction, taking effect immediately.
The independent Commission reaffirmed the principle that any breach of the PSRs is significant and justifies, indeed requires, a sporting sanction.
Click here to read the independent Commission’s full written reasons.
Commissions are independent of the Premier League and member clubs. The members of the Commission were appointed by the independent Chair of the Premier League Judicial Panel.
Notes
Profitability and Sustainability Rules (see Premier League Handbook Section E)
- All Premier League clubs are assessed for their compliance with the Profitability and Sustainability Rules (PSRs) each year.
- Compliance is assessed by reference to the club’s PSR Calculation, which is the aggregate of its Adjusted Earnings Before Tax for the relevant assessment period.
- A club’s Adjusted Earnings Before Tax figure for each season takes account of its profit or loss after depreciation and interest, but before tax, and then applies a series of ‘add backs’.
- These ‘add backs’ are costs that the Premier League and its clubs recognise to be in the general interest of the club and football, for example investment in infrastructure, community, women’s football, youth development and depreciation of tangible fixed assets Exceptionally, in relation to years 2019/20, 2020/21 and 2021/22 COVID-19 costs were also permitted to be included as ‘add backs’.
- Ordinarily, a club’s PSR Calculation is the aggregate of its Adjusted Earnings Before Tax over a three-year period. Following amendments made to the PSRs during COVID-19, the relevant figures for Seasons 2019/20 and 2020/21 are now averaged. In the present cases, therefore, the relevant period includes Seasons 2022/2023, 2021/2022, and the average Adjusted Earnings Before Tax for Seasons 2020/2021 and 2019/20.
- A club will be in breach of the PSRs if its PSR Calculation over the relevant period results in a loss in excess of £105million.
- At the 2023 Annual General Meeting, clubs agreed to bring forward the date for the submission of audited Annual Accounts for clubs forecasting a loss to 31 December (in accordance to Rule E.50.2).
- Clubs agreed to introduce Standard Directions for PSR cases (Appendix 1 to the Rules) that seek to ensure such cases are resolved in the same season the complaint is issued, with any sanction handed down prior to the subsequent Annual General Meeting. This provides certainty for the League, its member clubs and other stakeholders as to the membership of the League in the subsequent Season (Appendix 1 page 533).
- The part of EFC’s case that related to its admitted breach proceeded in accordance with the new Standard Directions, set out at Appendix 1 to the Rules.
- As the decision records, there remains a dispute between the Premier League and the club as to the status of certain costs that the club says are associated with its stadium construction. The League considers that these costs fall to be considered as a loss for the purposes of the PSRs. The club contends that these costs are not losses, given that they relate to the construction of the stadium and have been capitalised in their audited accounts. This issue, and the question of whether any additional sanction should be applied, will be resolved by the same Commission at a later date.
Premier League investigations, independent Commissions and Appeals
- The Premier League Board has the power to investigate any suspected or alleged breach of Premier League Rules .
- There are a number of options available to the Board where it suspects or alleges a breach of the Rules. For PSR cases, the matter will be handed to an independent Commission to determine whether there is a breach and, if so, what the sanction should be.
- The League has access to an independent Judicial Panel, comprising a number of legal, financial and other experts. Members of the Judicial Panel are appointed, in accordance with Premier League Rules W.19, W.20 and W.26, by its independent Chair, Murray Rosen KC, an experienced barrister. It is the Chair who selects members of the Judicial Panel to sit on Commissions, which are independent of the Premier League and its clubs.
- All proceedings before an independent Commission are confidential and heard in private. This includes the date and location which can’t be announced in advance.
- There are a range of sanctions available to the independent Commission which include fines, points deductions and other sporting sanctions.
- Under Premier League Rule W.82.2, at the conclusion of proceedings, an independent Commission’s final decision will be made public via the Premier League’s website .
- A party to the proceedings which wishes to challenge a decision of the Commission may to do so under Section W of the Premier League Rules.
- The Appeal Board is also appointed by Mr Murray Rosen KC and must have three members, one of whom should have held judicial office, and would sit as the chair of the Appeal Board.
- The proceedings of the Appeal Board are also confidential and heard in private.
- The Appeal Board has wide discretion in respect of the appeal, and may allow it, dismiss it, or make any order that it deems fit (including varying the order of Commission).
- For further information on the disciplinary process, please see Section W of the Premier League Handbook.