In the written reasons for the sanction on Everton, the Premier League advanced four separate factors
- Overspend despite repeated warnings
- Extent of the breach of the PSR (Profit & Sustainability Rules) threshold
- Misleading the Premier League about stadium interest
- Misleading the Premier League about the intention to sell Player Y
Everton, meanwhile, advances six factors they say stands as mitigating factors.
- Post-planning permission interest
- Positive trend
- Player X
- Ukraine
- Impact of Covid on the market for players
- Transparency and cooperation with the Premier League
Overspend despite repeated warnings:
Note, the bullet points are sections within the report.
In the written reasons, the report cites as follows:
- The 13 August 2021 agreement imposed certain obligations on Everton, one of which was to obtain the Premier League’s approval of purchases of new players.
The Premier League approved each such request but when doing cautioned Everton that it (the Premier League) was not managing Everton’s finances and that it was for Everton to ensure that it complied with the PSR.
The Premier League asserts that for Everton to have persisted in player purchases in the face of such plain warnings was recklessness that constitutes an aggravating factor.
- The Commission considers that it was unwise for Everton not to have curtailed player purchases.
It was aware of potential PSR difficulties but pressed ahead in the hope that it would make sales of players that would enable it to achieve PSR compliance. Events have proved that to be a poor judgment.
- At one level, disregard of the potential PSR difficulties can be said to increase Everton’s culpability. But the Commission considers that there is a danger of double counting.
We have already made clear that our approach is to start by considering the extent by which the PSR threshold has been exceeded: the greater the excess, the greater the culpability.
We do not consider that the reasons for the PSR breach should aggravate that culpability unless they can be said to constitute exceptional conduct. For example, a deliberate cynical breach of the PSR to achieve a sporting advantage might increase culpability beyond that already arrived at by the extent of the breach.
We do not think that this is such a case. Everton may have taken unwise risks, but it did so in the mistaken belief that it would achieve PSR compliance: it is not a case of deliberate breach.
Extent of the breach of the PSR threshold:
The second of their four factors is extent of the breach of the profit and sustainability threshold.
Note, the bullet points are sections within the report.
The report cites:
- The Commission will take the extent of the breach of the PSR threshold as an important indicator of the level of culpability. To include it as an aggravating factor would constitute double counting.
Misleading the Premier League about stadium interest:
Further to the points made by the Premier League in their report. The third aggravating factor was misleading about the stadium interest.
Note, the bullet points are sections within the report.
The report cites:
- The Premier League complains that Everton deliberately misled it about the source of the funds used for the stadium development.
In its FY 2022 PSR submission Everton had asserted that the loan to Everton Stadium Development Company Ltd bore financing costs by way of interest and arrangement fees.
The Commission has found that that was not the case. The Premier League asserts that Everton must have known that its assertion was incorrect, and that that inaccuracy constitutes an aggravating factor, although in its closing submissions it made it clear that it was not accusing Everton of dishonesty.
Further, the Premier League complains that Everton failed to disclose the fact that it was in discussion with Rights & Media Funding Ltd to secure a waiver of a breach of the terms of its loan agreement. The Premier League asserts that Everton must have known of this fact, and therefore must have consciously decided not to disclose it.
- The Commission notes the provisions of Rule B15 –
- B.15.In all matters and transactions relating to the League each Club, Official and Director shall behave towards each other Club, Official, Director and the League with the utmost good faith. For the avoidance of doubt and by way of example only, it shall be a breach of the duties under this Rule to:
- B.15.1.act dishonestly towards the League or another Club;
- or B.15.2.engage in conduct that is intended to circumvent these Rules or obstruct the Board’s investigation of compliance with them.
- The obligation to act in utmost good faith is high. As we have observed above, at the initial stages of consideration of a PSR submission the Premier League will be dependent on the accuracy of the information supplied by the submitting club.
In this case the information supplied by Everton was materially inaccurate. Under cross examination, the evidence of Everton’s representative was that, in the same way that a tax accountant’s job was to reduce a client’s tax exposure, an element of his job was to protect or interpret PSR rules to the benefit of my employer.
- The Commission notes that the Premier League already needs to devote considerable resources to monitoring PSR compliance by its member clubs. If all clubs were to adopt a similar approach to interpreting the PSR, the Premier League’s task would become yet more challenging.
The Commission is satisfied that Everton’s PSR calculation in relation to 33 stadium interest was less than frank. The Premier League has made it clear that it makes no allegation of dishonesty.
We consider, therefore, that Everton did not consciously intend to circumvent the Rules but there is no doubt that it failed to discharge the duty of utmost good faith imposed by B15. This is an aggravating factor that increases Everton’s culpability.
Misleading the Premier League about the intention to sell Player Y:
And aggravating factor four involves Player Y and the misleading intention of a sale.
Note, the bullet points are sections within the report.
- In its FY 2022 PSR submission Everton identified Player Y as being one of the players whom it had targeted for sale, but whom it had been unable to sell. The Premier League asserts that that identification was false.
It points to two facts that it argues support that conclusion. First, Player Y had been identified in Everton’s 13 March 2020 Summer Player Trading Strategy as being a player whom the club intended to sell.
However, in a series of Everton’s documents produced in 2020 starting with the Financial Forecast Update April 2020 Player Y’s name had been removed from the list of players whom Everton intended to sell.
In his evidence Mr Purdy agreed the fact of the removal but explained it by the fact that Player Y’s potential sale was being handled by Mr Kenwright and therefore the removal of his name from the regular lists did not mean that Everton would not have been willing to sell Player Y.
Second, although his contract was not about to expire, Player Y was given a new contract during the summer 2020 transfer window.
- The Premier League argued that those facts demonstrated that Everton’s submission in relation to Player Y was false.
This was disputed by Everton. It submitted that Mr Purdy’s evidence provided a complete answer to the fact that Player Y’s name had been removed from the list.
It asserted that if Mr Kenwright had received an appropriate offer Everton would have been willing to sell Player Y. It argued that the fact of a new contract would simply enhance the value of any transfer.
- Again, the Commission has hesitated over this issue. We have concluded that the Premier League has not proved its case on the issue.
We find that although Player Y’s name had been removed from the lists Everton would have been willing to sell him if it had received an appropriate offer.
Accordingly, Everton’s FY 2022 PSR submission was not intentionally misleading about Player Y’s status and does not constitute an aggravating feature.
