Everton became the first Premier League club to be deducted points for breaching profitability and sustainability rules (PSR) on Friday, when the league docked the Merseyside club 10 points over their finances in the 2020-21 season.
An independent commission imposed an immediate deduction which will see Everton drop from 14th in the standings into the relegation zone with four points, above bottom side Burnley on goal difference.
The club described the decision as unjust and said it would appeal.
The Premier League said it had issued a complaint against the Merseyside club and referred the case to the independent commission earlier this year.
“During the proceedings, the club admitted it was in breach of the PSRs for the period ending season 2021/22 but the extent of the breach remained in dispute,” the league said in a statement.
“The Commission determined that Everton FC’s PSR Calculation for the relevant period resulted in a loss of 124.5 million pounds, as contended by the Premier League, which exceeded the threshold of 105 million pounds permitted under the PSRs.”
Everton’s most recent figures showed a fifth straight year of losses, with their total loss over that period amounting to over 430 million pounds ($534.36 million).
The club said they had posted a loss of 44.7 million pounds for the 2021-22 season earlier this year.
After three straight years of losses in excess of 100 million pounds, Everton said they had made significant reductions to their losses, down 76 million pounds from the previous year’s loss of 121 million pounds.
While Everton’s 10-point deduction for breaching the league’s financial rules is unprecedented, clubs in England’s top flight have been docked points before.
Middlesbrough had three points deducted in 1997 when they failed to fulfil a fixture against Blackburn Rovers while Portsmouth were given a nine-point penalty in 2010 when the financially troubled club entered administration.
Everton narrowly avoided relegation last season, finishing 17th with 36 points, with Leicester City (34 points), Leeds United (31 pts) and Southampton (25 pts) demoted to the second-tier Championship.
EVERTON APPEAL
Everton said the sanction was “wholly disproportionate and unjust” and announced its intention to appeal the decision to the Premier League.
“Everton maintains that it has been open and transparent in the information it has provided to the Premier League and that it has always respected the integrity of the process,” it said.
“The club does not recognise the finding that it failed to act with the utmost good faith and it does not understand this to have been an allegation made by the Premier League during the course of proceedings.
“Both the harshness and severity of the sanction imposed by the Commission are neither a fair nor a reasonable reflection of the evidence submitted.”
Everton were sold to 777 Partners in September in a deal reports said was worth more than 550 million pounds, with the company acquiring British-Iranian billionaire Farhad Moshiri’s 94.1% stake in the club. The deal is expected to be closed by the end of the year.
The US private equity firm declined to comment on the points deduction while the change of control process remains ongoing.