Everton ordered to pay Burnley nearly £40m in Premier League relegation legal case

Burnley sued Everton after they were relegated to the Championship at the end of the 2021-22 season. Everton were deducted 10 points for breaching PSR rules in the four-year period up to June 2022, although that verdict was not reached until the November of the following year. The penalty was later reduced to six points on appeal.

Premier League rules allow clubs to seek compensation from other clubs that are found guilty of breaching rules.

Burnley’s argument was that, had Everton been deducted six points in the 2021-22 season rather in 2023, they would have remained in the Premier League and Everton would have been relegated to the Championship. Everton have appealed the commission’s ruling and have received assurances from the Premier League that the compensation sum will not form part of this year’s PSR calculations.

The club was owned by Farhad Moshiri at the time of the breach and has since been taken over by The Friedkin Group (TFG), which insists the ruling does not effect its summer transfer plans or the club’s robust financial position. It is not known whether TFG will pursue Moshiri for the damages due to Burnley. Moshiri received only £25m when selling to TFG in December 2024.

In a statement, Everton said they were “surprised and angered” by a ruling they believe “is fundamentally flawed in both law and fact”.

The statement adds: “The club does not recognise the findings of the panel in determining Burnley’s relegation from the Premier League in May 2022 was caused by a sporting advantage gained by Everton due to a breach of profit[ability] & sustainability rules, for which a substantive sporting sanction has already been received.

“This ruling sets a dangerous and unworkable precedent for English football, given it is constructed on a principle that a club can be in breach of financial rules at any point in a financial year. Everton believes the panel’s ruling misrepresents the clear evidence presented by its legal representatives and that an appeal will be successful. No further comment will be made on this matter until the appeal process has been successfully concluded.”

Burnley’s success is understood to be based on the “loss of chance” principle and the ruling paves the way for other club-v-club legal disputes. Should Manchester City be found to have breached league rules in their long-running case, for example, then clubs who missed out on winning the Premier League title or on European qualification could sue. Several Premier League clubs are understood to have taken legal advice in the event of a guilty verdict against City.

Everton claim they believed they were PSR compliant when Burnley were relegated in May 2022 and, had they thought otherwise, action could have been taken to address the breach – a player sale, for example – before the financial year ended in June 2022. The club also argue that, as well as the sporting sanction of a six-point deduction in November 2023, it has already suffered a financial penalty of around £6m for being demoted from 13th to 17th in the 2022-23 season. Burnley have been awarded £26m in compensation, with £9.1m in interest plus accrued interest applied on top.

Burnley’s chair, Alan Pace, said: “When we were relegated in 2022, we disappointingly accepted the outcome on the pitch. What we could not accept and what no club should be asked to accept was competing in a competition later shown to have been compromised.

“We did not come to this lightly. When resolution through every available channel was declined, formal action was imposed as the only path left to us. The independent commission has now confirmed, in clear terms, that a rule was broken and a competitive advantage was improperly gained.

“Our action has always been about making football fair. Clubs that comply with the rules deserve to compete on a level playing field. Fans deserve it. The sport demands it. The commission’s decision affirms the existing framework to protect the game.”

Chelsea were fined £10.75m and handed a suspended ban from signing first-team players over breaches of financial rules during Roman Abramovich’s ownership. West Ham were fined a then record £5.5m in 2007 for signing Carlos Tevez and Javier Mascherano when they were contracted to third parties.

Guardian