Everton FC have received an immediate 10-point Premier League deduction after being found to have breached the League’s financial rules.
The punishment is the biggest sporting sanction in the competition’s history and leaves Everton 19th in the table.
The Premier League had in March referred Everton to an independent commission, but did not reveal the specifics of the club’s alleged breach.
In the month of referral, Everton posted financial loses for the fifth successive year after reporting a £44.7m deficit in 2021-22.
English top-flight clubs are permitted to lose £105m over three years, the independent commission found Everton’s losses to 2021-22 amounted to £124.5m.
They admitted to being in breach of the profit and sustainability rules (PSR) for the period ending 2021-22, and the commission found in favour of the Premier League following a five-day hearing in October.
Explaining why Everton’s points deduction was so high, the commission said in its written reasons that the cause of the club’s issues was because of overspending – largely on new players – along with an inability to sell players, and a lower than projected league finish.
The club’s 16th-place finish in 2021-22 caused a loss of expected income of around £21m, the reasons state.
The commission added: “Everton’s understandable desire to improve its on-pitch performance (to replace the non-existent midfield, as Mr Moshiri put it in evidence) led it to take chances with its PSR position.
“Those chances resulted in it exceeding the £105m threshold by £19.5m.
“The position that Everton finds itself in is of its own making. The excess over the threshold is significant. The consequence is that Everton’s culpability is great.
“We take into account the fact that Everton’s PSR trend over the relevant four years is positive, but cannot ignore the fact that the failure to comply with the PSR regime was the result of Everton irresponsibly taking a chance that things would turn out positively.”
Everton was ultimately found to be have failed to comply with the Premier League’s “generous threshold” by it’s own “mismanagement.”
In a statement on its website, Everton FC stated that the club was both shocked and disappointed by the ruling of the Premier League’s Commission.
The club said that it believes the Commission has imposed a wholly disproportionate and unjust sporting sanction.
It went further to say that it has already communicated its intention to appeal the decision to the Premier League.
“The appeal process will now commence and the Club’s case will be heard by an Appeal Board appointed pursuant to the Premier League’s rules in due course,” the statement read.
Everton maintains that it 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 Club does not recognise the finding that it failed to act with the utmost good faith and it does not understand this to have been an allegation made by the Premier League during the course of proceedings.
Both the harshness and severity of the sanction imposed by the Commission are neither a fair nor a reasonable reflection of the evidence submitted.
The points deduction comes at a time of significant uncertainty at Everton.
In September, owner Farhad Moshiri agreed to sell his 94% stake in the club to American investment fund 777 Partners. The takeover is going through the regulatory processes and, before this ruling, sources said it was on course to be completed by next month.
The club are in the process of building a new stadium on the banks of the River Mersey at Bramley-Moore Dock, which is due to open in late 2024.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur