After recording losses of £371.8 million over three years, the club sit just two points above the relegation zone with one game left to play
The true cost of relegation from the Premier League this season is central to the thoughts of four clubs as the season approaches matchday 38 – not least in case the outcome of 2022-2023 ends up in a legal dispute that one day poses exactly that question.
An uneasy final day to the season, with the usual drama of a relegation struggle that will see two from Leicester City, Leeds United and Everton go down with Southampton, lent another dimension. That is the outstanding single charge against Everton for the breach of the Premier League’s profit and sustainability rules (PSR) – formerly financial play – that was issued two months ago today, and casts a long shadow after the weekend’s final round of fixtures.
This weekend more than ever shows that a financial regulation that works retrospectively, is no longer suitable to govern the finances of a game that moves at such a pace. The Premier League’s PSR is also changing but not quick enough for this unprecedented last Sunday. By 6.30pm that day two more clubs will begin preparing for life in the Championship. If that is Leeds and Leicester, there will be an extra set of questions to those posed by all their predecessors in that position.
Whether Everton should, if found guilty, ultimately face a points deduction is a case without precedent – none has ever gone that far. Even West Ham’s dispute with Sheffield United from 2007 was settled with compensation. Either way, it would be too late for some. Football moves too swiftly for the rules designed to govern it.
The usual despair and relief of a final-day survival battle will not have quite the sense of all destinies being fulfilled. There is more to come. Even if Everton are relegated, the commission hearing their case will continue, although the club would no longer be a member of the Premier League for the time being.
How much does relegation cost a club? And how might a process of remedying that work? Everton will robustly deny the charge to the commission hearing the case appointed by the chair of the Premier League’s judicial panel, Murray Rosen KC. The club knows that it is fighting for its life on many different fronts. First, on Sunday, to stay in the league. Then to win its case with the commission and complete the £760 million project that is the building of its new Mersey dockland stadium and surroundings.
The first move outside the usual bounds of protocol was made earlier this month when a group of relegation-threatened clubs, understood to include Leeds, Leicester, and Southampton, asked to have the process of hearing Everton’s case accelerated. The clubs were told by the Premier League that the case was in the hands of the commission that would be appointed by Rosen, and no formal route was open to them to attempt lobbying.
Those three clubs for whom relegation is either now a certainty in Saints’ case – or a possibility – have for the time retreated. There is no prospect of Everton’s case being decided swiftly. Those who are relegated on Sunday will have to work according to that financial reality. The question is what their next steps would be if it was Everton who survived – only to lose the Premier League case against them.
Last season, the relegation-threatened Leeds as well as Burnley, who would subsequently go down, asked to see all documents relating to Everton’s finances that had been submitted to the league. The Premier League refused. The charge issued by the Premier League on March 24, once it had seen the latest audited accounts for Everton’s 2021-2022 season, meant that focus shifted from the league’s executive itself to its disciplinary process.
The process is out of the hands of Richard Masters, the Premier League chief executive, and his legal team. Following the charge, Everton disclosed financial results which took cumulative losses to £417 million for the previous four seasons albeit with a steep fall in those losses from £121 million the previous year to £44.7 million for the most recent period on record. The three-year accounting period for PSR rules under scrutiny had been extended to four with an average taken for the two Covid-affected seasons.
Everton insist that their losses are permissible under the league’s rules when a number of exempt spending and permitted revenue losses are taken into account. Those include Covid losses, investment in their women’s team and the stadium rebuild. The Everton owner Farhad Moshiri is seeking investment for that project which he estimates to total £760 million, encompassing a £505 million stadium build as well as fit-out and extra costs for the surrounding area.
The question for all clubs involved comes back to cost. The first year of parachute payments soften the blow of relegation but even at 55 per cent of the value of the equal share of all 20 clubs’ television revenue it represents a major cut that requires player sales at the very least. It only gets worse for a second season in the Championship. It is hard to put a price on what that does to a club – from the players it has to sell, to the gaps it has to plug.
It is not the only Premier League charge awaiting the attention of the league’s commission, although the consequences of this one feel more immediate. Pep Guardiola spoke at some length on Tuesday about the 115 charges faced by Manchester City, champions for the fifth time in six years. “We would love it [a resolution] tomorrow” Guardiola said before Wednesday’s game against Brighton and Hove Albion, “this afternoon [would be] better than tomorrow.”
That might come as some surprise to some given the general attitude of City Football Group thus far but nonetheless – the legal case against the champions will take some time to resolve. The consequences at the top of the table feel less immediate to those at the bottom where for once, the last Sunday of the season might not be the last word on the season itself.
