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Leeds and Burnley ask Premier League to look into Everton over spending rules


chinapig
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As per title. Everton claimed their Covid losses were far greater than other clubs, which was always fishy.

Still, the Premier League has been investigating Man City for 3 years so Everton are in no imminent danger.😉

https://www.theguardian.com/football/2022/may/20/leeds-burnley-ask-premier-league-investigate-everton-over-pandemic-spending-rules

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This is good.

An article/line elsewhere suggested that the potential value of the lawsuit is a trifling amount...£200m!? Mentions pressure for an independent Inquiry too, as far as their general management of FFP issues goes.

This mooted lawsuit would be against the PL. This should focus their minds a bit, definitely clubs and if applicable, the Governing body itself in the event of collusion or special favours should not be untouchable.

A difference here as far as the Man City case goes is that nobody AFAIK has threatened to sue them or the PL in respect of their finances. This is a simpler case too in some ways- you can clearly define acceptable Covid losses in an FFP/P&S context- a chunk of these include impairment and hypothetical lost Player sale profit. Disregard!

Edited by Mr Popodopolous
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https://www.dailymail.co.uk/sport/football/article-10837943/Leeds-Burnley-threaten-legal-action-against-Premier-League-Everton.html

Matt Hughes. He's quite good with financial stuff even if it is the Daily Mail.

In theory although probably not in practice, an Independent Panel if convened quickly enough could apply sanctions to 2021/22 although that feels very unlikely. A threat to sue for £200m however can really focus the mind!!

Arsenal are also reported to be interested as they lost to Everton and it is likely that they will miss the CL but not by much.

Everton claim all signed off and by independent auditors but this is another failure of governance to date by the PL. Just because a club's auditors say a disputed item is X doesn't mean it should be taken at face value and as the only answer.

Would Derby or Sheffield Wednesday have been punished accordingly had this been the case?

(Birmingham and Reading are different as they patently overspent).

Edited by Mr Popodopolous
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Think it is only right that PL are asked about whether Everton have truly met the FFP rules.  It seems incredible that Newcastle are trying to offset £40m for covid and Everton £100m’s.  Let alone their losses this season.

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Posted (edited)
10 hours ago, Mr Popodopolous said:

This is a simpler case too in some ways- you can clearly define acceptable Covid losses in an FFP/P&S context- a chunk of these include impairment and hypothetical lost Player sale profit. Disregard!

Curious isn't it that clubs choose to deduct notional transfer income lost but don't choose to add back notional transfer spend?

Reason enough to, as you say, disregard the former.

Here's to Lampard being given £100m to spend this summer and the PL response being "meh".

Edited by chinapig
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21 minutes ago, Davefevs said:

Think it is only right that PL are asked about whether Everton have truly met the FFP rules.  It seems incredible that Newcastle are trying to offset £40m for covid and Everton £100m’s.  Let alone their losses this season.

It's an interesting one Arsenal who do a massive amount of domestic and international sales in a big stadium and have been placed nearby to Everton haven't claimed anywhere near that.  What's worse is I can't even see the ground delays costing them all that much. 

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I see Leeds and Burnley are now guarding against Everton deleting the evidence.

I doubt the PL will act decisively because it could open a can of worms drawing other clubs into the net but it would be nice to see them taking the integrity of the game seriously for once.

Who needs a regulator eh?😉

https://www.bbc.co.uk/sport/football/61529371

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1 hour ago, chinapig said:

I see Leeds and Burnley are now guarding against Everton deleting the evidence.

I doubt the PL will act decisively because it could open a can of worms drawing other clubs into the net but it would be nice to see them taking the integrity of the game seriously for once.

Who needs a regulator eh?😉

https://www.bbc.co.uk/sport/football/61529371

Not sure can have "integrity  of the game" and PL in the same sentence!

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This has been  on the cards for a while.

The PL restrictions seemed to last one window which is bizarre when set against the application of very similar regulations by the Football League post Harvey especially. 

I was baffled when in January given the likely significant FFP issues they- yes Digne sold but on the other hand they 'showed austerity' and the PL allowed them to to this seemingly by:

1) Permanently adding Patterson and Mykolenko. This double move depending on reports (yes amortisation etc) cost a combined £25-40m in fees.

2) Van De Beek on loan.

3) El Ghazi on loan.

4) Alli on loan although very heavily incentivised ie certain payments tied to appearances etc iirc.

5) Benitez- appointed summer 2021- sacked. Lampard hired..nice and cheap? I don't think!

Puzzled to know where the overarching austerity and restraint has been except for a brief summer window.

All power to Burnley and Leeds. The PL enforcing the harmonised rules badly, or not at all, has a significant knock on effect on us below.

Edited by Mr Popodopolous
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17 minutes ago, downendcity said:

Not sure can have "integrity  of the game" and PL in the same sentence!

Wonder if the reported £200m value of the lawsuit will have a transformative effect. Matt Hughes suggested that the potential one against them is indeed for that. :)

Think they're not too well run either. I recall a while back (I think) you mentioned similarities for how the EFL kicked the can with Derby. Richard Masters their CEO, while not in Harvey's league strikes me as less than effective let's say.

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https://www.telegraph.co.uk/football/2022/05/22/leeds-burnley-invited-meet-premier-league-bosses-everton-legal/

Sounds like the PL are standing by their position that Everton comply, have passed.

Remember that the 3 year bit is of course amended owing to Covid, 2019/20 and 2020/21 are aggregated and halved/averaged.

£255.3m is the starting point for the 3 rolled into Covid figure therefore. As such you also have to halve the impact of Covid, in this instance £170m would be counted as one as the two year aggregated number as per Everton is £85m.

£255.3m is the starting point based on the Covid averaging IMO, that incorporates pre tax losses for 2017/18, 2018/19, and then the average of 2019/20 and 2020/21.

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25 minutes ago, Mr Popodopolous said:

https://www.telegraph.co.uk/football/2022/05/22/leeds-burnley-invited-meet-premier-league-bosses-everton-legal/

Sounds like the PL are standing by their position that Everton comply, have passed.

Remember that the 3 year bit is of course amended owing to Covid, 2019/20 and 2020/21 are aggregated and halved/averaged.

£255.3m is the starting point for the 3 rolled into Covid figure therefore. As such you also have to halve the impact of Covid, in this instance £170m would be counted as one as the two year aggregated number as per Everton is £85m.

£255.3m is the starting point based on the Covid averaging IMO, that incorporates pre tax losses for 2017/18, 2018/19, and then the average of 2019/20 and 2020/21.

Inadequate response from Masters as expected. The simple question is to ask why would Everton's losses be so much greater than clubs with higher revenue? There must surely be a correlation between the two even if it's not 1:1.

If their losses truly are, say, over 3 times greater than Arsenal's it should be easy to explain why without giving away any great secrets.

As to "we have found no evidence" that rather depends on how hard you look. Not very is my guess.

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11 minutes ago, chinapig said:

Inadequate response from Masters as expected. The simple question is to ask why would Everton's losses be so much greater than clubs with higher revenue? There must surely be a correlation between the two even if it's not 1:1.

If their losses truly are, say, over 3 times greater than Arsenal's it should be easy to explain why without giving away any great secrets.

As to "we have found no evidence" that rather depends on how hard you look. Not very is my guess.

Inadequate response from an inadequate leader? Sounds about right! There is no direct PL statement, more 'it is understood' etc.

Agreed wholly. There is one I did earlier...might update but reading between the lines, given they don't outline it specifically beyond the basics, they are claiming that Covid cost them £80m in transfer related business- probably more. This is a combination of profit on disposal, amortisation savings and wage savings. "Independent expert advice/auditors" too- but as we saw in the Derby and Sheffield Wednesday case, these are not infallible in an FFP context.

Edited by Mr Popodopolous
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1 hour ago, Mr Popodopolous said:

Inadequate response from an inadequate leader? Sounds about right! There is no direct PL statement, more 'it is understood' etc.

Agreed wholly. There is one I did earlier...might update but reading between the lines, given they don't outline it specifically beyond the basics, they are claiming that Covid cost them £80m in transfer related business- probably more. This is a combination of profit on disposal, amortisation savings and wage savings. "Independent expert advice/auditors" too- but as we saw in the Derby and Sheffield Wednesday case, these are not infallible in an FFP context.

As I have pointed out if you are going to claim hypothetical losses of transfer income you should logically add back hypothetical transfer spend on the same basis. Something lost on the highly paid brains at the PL it seems.

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1 hour ago, chinapig said:

As I have pointed out if you are going to claim hypothetical losses of transfer income you should logically add back hypothetical transfer spend on the same basis. Something lost on the highly paid brains at the PL it seems.

Agree.

Same goes for us and all others btw- as I am sure most on here would concur, that's a good argument though to add back hypothetical spend, amortisation, wages etc...fairest or at least simplest idea is just to seek to adjust it out entirely and let the chips fall where they may.

I know we had a selling model but that is always a bit of a hostage to fortune, a bit contingent- I didn't agree when it was first mooted that we were seeking to add as much as £30m back in lost transfer profits and cost saving or maybe supplemental to the basic EFL number would take the total to £30m- and I don't agree with it now. Doesn't seem a justifiable (in the context of P&S/FFP anyway) addback to me.

Probably in genuine Covid losses for us £15-20m? Same for a host of clubs at our level if we're talking straight and clear revenue falls. Possibly over the 2, maybe the 3...talking Gate Receipts, ST losses/refunds, commercial, corporate etc. Quantifiable and universal to all. TV rebates too if applicable- mainly PL and yoyo.

Everton by their own admission lost maybe £80-90m over the 2 years if we disregard their hypotheticals. Still excessive probably but even that I am sure, would put them clearly in breach of FFP/P&S to 2021.

Edited by Mr Popodopolous
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29 minutes ago, Mr Popodopolous said:

Agree.

Same goes for us and all others btw- as I am sure most on here would concur, that's a good argument though to add back hypothetical spend, amortisation, wages etc...fairest or at least simplest idea is just to seek to adjust it out entirely and let the chips fall where they may.

I know we had a selling model but that is always a bit of a hostage to fortune, a bit contingent- I didn't agree when it was first mooted that we were seeking to add as much as £30m back in lost transfer profits and cost saving or maybe supplemental to the basic EFL number would take the total to £30m- and I don't agree with it now. Doesn't seem a justifiable (in the context of P&S/FFP anyway) addback to me.

Probably in genuine Covid losses for us £15-20m? Same for a host of clubs at our level if we're talking straight and clear revenue falls. Possibly over the 2, maybe the 3...talking Gate Receipts, ST losses/refunds, commercial, corporate etc. Quantifiable and universal to all. TV rebates too if applicable- mainly PL and yoyo.

Everton by their own admission lost maybe £80-90m over the 2 years if we disregard their hypotheticals. Still excessive probably but even that I am sure, would put them clearly in breach of FFP/P&S to 2021.

By all means allow lost revenues to be taken off, based on a set criteria, e.g. 2018/19 if that season was in the Champ.

But clubs have had 2 years to adjust.  Not saying adjustment was going to be easy, but it was obvious the transfer market would crash.  They spent £100m in fees alone in the last 2 seasons…where was the adjusting?  There wasn’t any.

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I completely agree that Burnley have a point and Everton are flouting the rules but clearly, being a club of high integrity, would never use a £90m head start to give them a grossly unfair commercial advantage in the Championship (if they don’t have to pay £65m of it off their loan obviously)……….

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One I (sort of) prepared earlier and haven't looked at for a while. Some are best guesses and partial estimates- now revised bits of it a little.

image.thumb.png.d810282eaf63fc3d45ca283d07c22f1f.png

From the Everton accounts we can see more easily verifiable Covid losses documented/contained.

image.png.58cac1513552a68e34503d6ac3e4eefa.png

Even say a lop off of £20m in Covid losses (remember the halving bit) would therefore see them in breach. By £2.4-2.5m by my quick calculations, which at OUR level=4 point deduction. Which would keep Burnley up on GD.

Below are some of the relevant parts of the accounts.

image.thumb.png.b77aacda270fc55aa429bbacaf884621.png

image.thumb.png.3059cd3ebcc1e741a67ea3cfa4b19ef5.png

These losses are obscene- and this potential breach is massive and egregious. It's not like they were a few million over in straitened times, or could haggle over a few million in Covid costs and losses- at PL level I doubt any clubs would have pushed for a lawsuit etc.

image.thumb.png.d41daa1a1364e75816a87df13fe2ecd2.png

Edited by Mr Popodopolous
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Done some revised estimates of how the numbers might look if a) we only take those losses and costs that they have clearly quantified and b) If as a Cat 1 Academy in the PL, their expenditure was £6m per year say.

image.thumb.png.21a374aa96916cae758ac27d2146a8e3.pngimage.png.1f497c2f0ce8ee18e14944a6ceaebbb3.png

Would come to a £30m overspend IF we took only the usual revenue losses and disregarded the player bit.

That's just to 2021. Would require a £25m improvement THIS season under the principle of reset for 2018/19 and 2019/20 to the Upper Loss limit- to avoid falling foul for a 2nd time to 2022...god knows how it'd play out if they went down, what levels the EFL would- or likely wouldn't- permit.

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Watching MOTD and the relegation battle. It reminded me that Burnley and Leeds have contacted the PL and requested that no data or documents related to this, transfers etc are deleted by Everton.

These two thusfar make Gibson and Couhig and the case v Derby look fairly slack tbh.

@Hxj @chinapig @ExiledAjax

Interested in your take, think you 3 know more about law than me :laugh: is this fairly routine or significant?

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8 hours ago, Mr Popodopolous said:

Watching MOTD and the relegation battle. It reminded me that Burnley and Leeds have contacted the PL and requested that no data or documents related to this, transfers etc are deleted by Everton.

These two thusfar make Gibson and Couhig and the case v Derby look fairly slack tbh.

@Hxj @chinapig @ExiledAjax

Interested in your take, think you 3 know more about law than me :laugh: is this fairly routine or significant?

I'll be honest that I've not followed it closely, and have just read the couple of BBC articles on it. However, my understanding is that as it stands it is a private dispute being conducted under the rules and regulations of the Premier League.  These rules are effectively the contract that all 20 PL clubs sign up to - similar to Derby and the EFL rules. In that respect it's not really a "legal" dispute right now, its a dispute between two members of a club, not dissimilar to two members of a local tennis club arguing over parking. It's not happening in the courts, its happening in the PL's arbitration tribunal (or whatever it might be called).

As such, those are the rules that apply, rather than the normal court rules. So things like rules of disclosure and retention of evidence would be different, qnd the consequences of breaking any rules of procedure will be different as well. Hence the need to request that evidence not be deleted.

Right now I'd say this is unusual, but not unprecedented. Where it could get tasty is if the PL makes a ruling that one or more clubs disagrees with. That could see a Club v PL dispute go to CAS or to the courts in England. That would, I believe, be very unusual. It's also probably very unlikely as the PL would really not want it at all, and would presumably settle before it got that far.

There's also tenuous, ultimate possibilities of fraud charges or the like, but I suspect that would be a claim for an Everton investor to bring rather than Leeds or Burnley. 

Some expensive lawyers will be working out just how much mud they can throw, I  the hope some sticks.

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10 hours ago, Mr Popodopolous said:

Watching MOTD and the relegation battle. It reminded me that Burnley and Leeds have contacted the PL and requested that no data or documents related to this, transfers etc are deleted by Everton.

These two thusfar make Gibson and Couhig and the case v Derby look fairly slack tbh.

@Hxj @chinapig @ExiledAjax

Interested in your take, think you 3 know more about law than me :laugh: is this fairly routine or significant?

@ExiledAjaxhas covered this better than I could. I would just add that there is some kind of precedent in that Man City took the PL to court to try to stop their investigation (now in its third year!). The court found against City but it shows that the courts will at least consider such claims.

I've seen a claim that Everton's Covid losses were higher because they did not claim furlough payments but since players weren't furloughed that doesn't seem to be sufficient to explain the huge difference compared to other clubs.

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13 hours ago, chinapig said:

@ExiledAjaxhas covered this better than I could. I would just add that there is some kind of precedent in that Man City took the PL to court to try to stop their investigation (now in its third year!). The court found against City but it shows that the courts will at least consider such claims.

I've seen a claim that Everton's Covid losses were higher because they did not claim furlough payments but since players weren't furloughed that doesn't seem to be sufficient to explain the huge difference compared to other clubs.

Interesting on the PL Man City and court bit...historic breaches I guess, do the PL not have scope to impose a budget on a club within their regs? Historic breaches vs the present though, always more difficult- I assume that these would be historic breaches...when Derby were in dispute they were literally were not permitted to sign anyone at all and then limited enormously. Was a case that "Okay you can drag it out but it'll decimate you with this here Professional Standing rule".

I wouldn't have thought the furlough bit would prove decisive tbh. Nothing like...£10m tops?

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13 hours ago, myol'man said:

Have the Premier League ever imposed a points deduction?

Yes, twice.

Portsmouth in 2009/10 due to administration.

Middlesbrough 1996/97 due to a match being postponed due to a flu outbreak- some sort of failing all round. 3 pts deducted, down Middlesbrough went by a similar margin.

The latter is quite notable as two names stand out...Rick Parry and Steve Gibson! Head of the PL and Middlesbrough owner respectively at this time...locked horns again recently over Derby and in between that over the Ziege tapping up allegations in 2000 when Parry was at Liverpool.  Quite a bit of previous there.

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