The Premier League’s financial regulations are under renewed scrutiny after Everton were ordered to pay Burnley nearly £40 million in compensation following their relegation in the 2021–22 season.
The decision, issued by an independent disciplinary commission, found that Everton’s breach of Profit and Sustainability Rules (PSR) that season contributed to a competitive imbalance. Burnley sought damages relating to the breach, which resulted in Everton being deducted ten points (reduced to six on appeal) in the 2023/2024 season.
It is understood Burnley sought to argue that had those points deductions been imposed at the time, Burnley would have survived relegation at Everton’s expense.
The ruling marks one of the first major instances of direct financial compensation between clubs for a regulatory breach, and highlights a growing willingness within the regulatory framework to link financial misconduct with tangible sporting and financial consequences for other clubs.
Everton has appealed the decision, arguing that the finding sets an “unworkable precedent” and objecting to continued punishment for the PSR breaches four years after the event. While the appeal remains to be determined, the outcome is already prompting wider consideration across the league.
Sam Harkness, regulatory lawyer at Clarke Willmott, commented: “This is a landmark development in football finance regulation. While points deductions have been the traditional sanction for PSR breaches, there has often been criticism that these are imposed too late to make a difference at the relevant time.
“By recognising a causal link between Everton’s breach and Burnley’s relegation, the commission has effectively opened the door for other clubs to consider similar claims. We could now see increased appetite for legal action where there is a credible argument that financial rule-breaking has influenced league outcomes, and deprived clubs of lucrative commercial opportunities accessible only to those in the top flight of English football.
“Attention will inevitably turn to other high-profile cases, including Chelsea’s historic breaches and the ongoing proceedings involving Manchester City, as to the impact of PSR breaches on rival clubs. Should further breaches be confirmed, affected clubs may feel emboldened to pursue compensation, particularly where relegation or lost revenue can be clearly linked.
“There was plenty of comment at the time of the Southampton FC ‘Spygate’ scandal that it was a significant moment for football regulation, and that the consequences of regulatory breaches could be stark. There is every chance the Everton appeal succeeds – having already been punished once – but if it stands, the potential impact will be tremendous in comparison to Southampton’s case.”
Clarke Willmott’s regulatory team regularly act for sports teams involved in regulatory proceedings and disputes. For more information, please send an enquiry.
