Everton supporters protest against the Premier League during the Premier League match between Everton
FC and Aston Villa at Goodison Park on January 14, 2024 (Image: James Gill – Danehouse/Getty Images)
The threat of points deductions for clubs that breach Premier League financial regulations is to remain, regardless of the form that any new controls take.
Member clubs of the Premier League met on Wednesday (April 10) for their monthly shareholder meeting where one of the main issues on the agenda was how to go about finding appropriate financial controls that can replace the current profit and sustainability rules (PSR).
PSR has become a dominant topic in the Premier League this season, with Everton landed with two charges for different accounting periods and two separate points deductions for breaching PSR.
Back in March last year, the Toffees were hit with a charge for a breach in the 2021/22 accounts of around £20m against the allowable level of £105m over three years. For that breach they were handed a 10-point deduction in November, a punishment that was reduced to six upon appeal in February.
Last week, Everton’s breach for the 2022/23 financial year saw them hit with another deduction, this time a two-point deduction.
Initially, the Premier League had sought a 12-point deduction for Everton for 2021/22, and they had been seeking a five-point deduction for the 2022/23 offences. Had those wishes been granted then Everton would have been hit with a 17-point deduction. The points deductions for financially failing football clubs that fall into administration is nine points.
The rush to make sure clubs are punished in the same season means that both Everton and Nottingham Forest will finish this season with asterisks by their names for points deductions, while Leicester City could be promoted back to the Premier League and begin next season with a deduction after being found to be in breach of PSR rules for 2022/23, a season where they were relegated from English football’s top tier.
New regulation has been discussed, with a potential move to a UEFA-style squad cost ratio system, where player and manager wages, amortisation charges, severance and intermediary costs are calculated against revenue to give a percentage. UEFA wants that percentage to be 70% by next year for clubs in its competitions, while in the Premier League there has been the suggestion of a similar percentage for clubs in European competition, but as much as 85% for other clubs who fall outside of that.
For Everton, while based on current figures would have a squad cost ratio a little over the 85% mark, it would be a cost control that may serve them better than the current PSR model, one where the £105m figure over three years hasn’t moved in a decade despite the fact that costs in football, from wage bills to administrative expenses, have risen exponentially.
But they will have to be mindful that any changes in cost controls won’t be softened to just a fine. According to Sky Sports, the Premier League are insistent that sporting sanctions through points deductions are the only real deterrent to clubs breaching rules, something that UEFA is at odds with.
The monthly shareholders meeting for March was supposed to bring about some progress on agreeing on a deal with the EFL over redistribution of wealth from the Premier League, but half of the member clubs did not want to take a vote until they knew the level of financial controls that would be imposed by the Premier League. That means that new rules around spending are likely to be fast-tracked and dominate the agenda ahead of a potential introduction for the start of next season.
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For Everton, though, they have been used of something of an example by the Premier League, itself threatened by the looming prospect of a government-backed independent regulator for the game that would see the power for some key decision-making that previously fell into the remit of the Premier League, ceded.
The Premier League’s determination to self-regulate at a time when an independent regulator is imminent has emboldened them to come down hard on clubs in breach of the current PSR regulations, and maintain that points deductions would be the only appropriate course of action regardless of any change in rules, they are going against what UEFA believes is the best course of action.
Any new regulation will almost certainly be weighted in favour of the biggest clubs due to the fact that they command such huge revenues, although they also have the biggest wage bills and the highest amortised costs. But for clubs seeking to close the gap and challenge, it is likely to aid that endeavour.