Everton have been left reeling after being hit by a 10-point deduction that has plunged them to second bottom in the Premier League.

An independent commission has found the Toffees breached the league’s profit and sustainability rules during the 2021-22 season.

Everton posted staggering financial losses of almost £372million over a three-year period – more than £250m above what the Premier League’s guidelines permit club to lose.

Their profit and sustainability calculation for the period in question was contested by the Premier League and found to be a loss of £124.5m, exceeding the £105m threshold. Everton plan to appeal the verdict.

On Friday, the Premier League released a 41-page document outlining their reasons for issuing the 10-point deduction. Here’s a few things we learned from it.

Everton have suffered the hammer blow of a 10-point deduction for breaching financial rules

Everton have suffered the hammer blow of a 10-point deduction for breaching financial rules

Everton have suffered the hammer blow of a 10-point deduction for breaching financial rules

Everton are now in 19th place in the table but will be appealing the verdict

Everton are now in 19th place in the table but will be appealing the verdict

Everton are now in 19th place in the table but will be appealing the verdict 

Rival clubs capitalised on Everton’s financial issues

It became apparent in 2022 that Everton would struggle to meet their profit and sustainability targets after a 16th-place finish in the 2021-22 season affected their merit payments.

Rival clubs were clearly aware of Everton’s predicament and so drove a hard bargain when trying to buy their players.

Tottenham were able to drive down the transfer fee for Richarlison from £80m to £60m because of Everton's financial woes

Tottenham were able to drive down the transfer fee for Richarlison from £80m to £60m because of Everton's financial woes

Tottenham were able to drive down the transfer fee for Richarlison from £80m to £60m because of Everton’s financial woes

The document gives the example of Brazilian forward Richarlison, who was the Toffees’ leading goalscorer in 2021-22.

Everton budgeted to receive a fee of £80m for him but Tottenham paid just £60m, the bargaining ‘directly attributable to its PSR calculation difficulties’.

Everton ‘misled’ the Premier League over stadium funds

Section 106 outlines how the Premier League complained Everton ‘deliberately misled’ them over the source of funds used for their new 52,000-capacity stadium at Bramley-Moore Dock.

When the club submitted their profit and sustainability calculations for 2022, they ‘asserted that the loan to Everton Stadium Development Company Ltd bore financing costs by way of interest and arrangement fees.’

The commission found this wasn’t the case and said Everton knew this but consciously decided not to disclose it.

In the end, the commission found Everton’s ‘calculation in relation to stadium interest was less than frank’ and found it an ‘aggravating factor in their culpability’. 

Everton Stadium Development Ltd was a wholly-owned subsidiary of the club responsible for funding the construction of the new £760m stadium.

Majority shareholder Farhad Moshiri set it up but it was wholly dependent on funds from Everton through inter-company loans.

The document said the Premier League accused Everton of 'deliberately misleading' them over funding for the club's new stadium at Bramley-Moore Dock

The document said the Premier League accused Everton of 'deliberately misleading' them over funding for the club's new stadium at Bramley-Moore Dock

The document said the Premier League accused Everton of ‘deliberately misleading’ them over funding for the club’s new stadium at Bramley-Moore Dock

Who is Player Y?

An argument between Everton and the Premier League arose in 2022 over a member of the squad identified only as ‘Player Y’ in the documents.

They say that in March 2020, the intention had been to sell the player but from the following month they’d been removed from this transfer list.

Everton’s head of recruitment Daniel Purdy explained at the commission hearing that former chairman Bill Kenwright handled the matter and the player may still be sold if the right offer came in.

Premier League table after points penalty

Premier League table after points penalty

Premier League table after points penalty

The Premier League weren’t satisfied with the explanation but the commission found in Everton’s favour.

The document adds that ‘Player Y’ was given a new contract during the summer 2020 transfer window, which narrows it down to Michael Keane, Anthony Gordon or Maarten Stekelenburg.

And Player X…

The document also makes mention of a ‘Player X’ who was a ‘star player for the club’ but who was later dismissed from their contract after they were arrested.

The club considered legal action against ‘Player X’ for breach of contract to the tune of £10m but decided against it.

The loss of this player was ‘considered to be a cause of Everton’s poor performance’, which had a knock-on effect on their league position and income.

Russia’s invasion of Ukraine cost Everton £200m

The findings say Everton were in the process of negotiating a stadium naming rights agreement with investor Alisher Usmanov’s company USM.

USM already had a sponsorship deal with the club’s training ground, Finch Farm, but section 31 says a ‘stadium naming rights agreement’ with USM would have generated £10m per year for the club over 20 years.

However, they had to withdraw from the talks when Russia invaded Ukraine in February 2022 and the UK government imposed sanctions on Russian companies and individuals.

Everton used the loss of this lucrative deal as a mitigating factor in their case to the commission.

They said they’d tried to bring the agreement with USM into force ahead of the intended start in the 2025-26 season to begin instead in 2022.

The Toffees, currently owned by Farhad Moshiri (right), are selling the club to Josh Wander (left) who is leading the 777 takeover, which still needs to be approved. It is

The Toffees, currently owned by Farhad Moshiri (right), are selling the club to Josh Wander (left) who is leading the 777 takeover, which still needs to be approved. It is

The Toffees, currently owned by Farhad Moshiri (right), are selling the club to Josh Wander (left) who is leading the 777 takeover, which still needs to be approved

They were warned multiple times over spending

From August 2021, Everton were required to obtain approval from the Premier League before they signed any new players.

Each time they bought a player the Premier league reminded the club is was their responsibility to stay within the rules.

That summer they spent modestly but in January 2022 spent £17m on Vitaliy Mykolenko and £12m on Nathan Patterson. A deal to bring in Dele Alli could have risen to £40m.

The findings say: ‘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 agreed that it was ‘unwise’ and ‘poor judgement’ for Everton to keep buying players, believing player sale would balance the books.

But they didn’t find Everton deliberately broke the rules in doing this.

Sean Dyche's Everton have been plunged into the relegation zone today after  has had the verdict looming over him and the players for some time

Sean Dyche's Everton have been plunged into the relegation zone today after  has had the verdict looming over him and the players for some time

Manager Sean Dyche has had the verdict looming over him and the players for some time

Everton changed their tune over P&S breach

There was plenty of back and forth between Everton and the Premier League after they were found to be some way apart in their profit and sustainability calculations.

The findings say in Everton’s original findings they asserted they were within the £105m losses threshold, having cited numerous mitigating factors such as stadium costs and the impact of Covid.

But when the Premier League queried their figures, ‘Everton’s case changed significantly’.

In an amended answer, Everton admitted they’d breached the P&R limit but disputed how big that breach was. Despite their contentions, the loss was still £112.9m – above the £105m allowed.

Ominous tidings for Man City and Chelsea

With Everton being handed a 10-point deduction, quite a few people have already started speculation about the sanctions Manchester City and Chelsea could possibly face.

City face charges over 115 alleged breaches of the Premier League’s financial rules over nine years, while Chelsea could face security over alleged payments through offshore companies made by their former owner Roman Abramovich.

The lawyer Stefan Borson tweeted on Friday that given the Everton precedent, City and Chelsea could possibly face relegation if found to have broken the rules.

Everton had pushed for just a fine but the commission found in paragraph 135 that ‘only a sporting sanction in the form of a points deduction would be appropriate.’

They add: ‘A financial penalty for a club that enjoys the support of a wealthy owner is not a sufficient penalty.’

It adds that a ‘deterrence’ and ‘vindication of compliant clubs’ had to be established, which doesn’t bode well for anyone who breaks financial rules in the future.

A former financial advisor to Manchester City, Stefan Borson, has raised the prospect that Manchester City could be relegated for their 115 alleged financial breaches

A former financial advisor to Manchester City, Stefan Borson, has raised the prospect that Manchester City could be relegated for their 115 alleged financial breaches

A former financial advisor to Manchester City, Stefan Borson, has raised the prospect that Manchester City could be relegated for their 115 alleged financial breaches

Chelsea could be handed a points deduction after leaked files revealed a string of payments that may have breached strict football rules during Roman Abramovich's ownership

Chelsea could be handed a points deduction after leaked files revealed a string of payments that may have breached strict football rules during Roman Abramovich's ownership

Chelsea could be handed a points deduction after leaked files revealed a string of payments that may have breached strict football rules during Roman Abramovich’s ownership

Football finance expert Stefan Borson tweeted that Man City - and potentially Chelsea - could face heavy sanctions, including relegation from the Premier League following the Everton points deduction precedent

Football finance expert Stefan Borson tweeted that Man City - and potentially Chelsea - could face heavy sanctions, including relegation from the Premier League following the Everton points deduction precedent

Stefan Borson tweeted that Man City – and potentially Chelsea – could face heavy sanctions, including relegation from the Premier League following the Everton points deduction precedent

Borson added that Chelsea may have to reappraise their transfer strategy with regards to Premier League Profitability and Sustainability rules after the Everton verdict

Borson added that Chelsea may have to reappraise their transfer strategy with regards to Premier League Profitability and Sustainability rules after the Everton verdict

Borson added that Chelsea may have to reappraise their transfer strategy with regards to Premier League Profitability and Sustainability rules after the Everton verdict

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Source: | This article originally belongs to Daily Mail

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