Times article, Burnley/Leeds threaten to sue Everton

[Neiler]

This is a long post for which I apologise and no doubt I will get pelters for it’s contents

People are getting confused and assuming that audited accounts ( due to turnover there is a regulatory and legal obligation for them to be audited) are compliant as a matter of course with the PL Profit and Sustainability (FFP) rules. They aren’t although a lot of the numbers of course are the numbers submitted

It’s not till March 2022 that clubs were obliged to submit their latest audited accounts 20/21 numbers) alongside interim and of course un audited numbers for the 21/22 season .

My guess is that in March 21 the audited 19/20 numbers and the interim numbers for 20/21 set alarm bells ringing and the losses based on those interim numbers and the projections for 21/22 required The PL to take action in accordance with their rule E15 in effect Everton had to agree a budget for the current year.

Why I suspect other clubs are twitchy is two fold on is because of the deductible numbers that Everton have submitted in respect of COVID ( there isn’t anything specific in the 21/23 rule book as to what is allowable although there is a set of unpublished guide that accompanies the forms ) and secondly the rules are clear in that if losses do indeed exceed £105 over a rolling 3 year period then there isn’t any discretion the league are required to refer the matter to a PL commission.

Here’s the rule

If the PSR Calculation results in losses of in excess of £105m:

E.51.1. the Board may exercise its powers set out in Rule E.15; and
E.51.2. the Club shall be treated as being in breach of these Rules and accordingly the Board shall refer the breach to a Commission constituted pursuant to Section W of these Rules.

So it all comes down to what the PL board have or have not agreed and it seems difficult to see how the PL board could agree to anything until March when the interim 21/22 numbers would be available and also you need to wonder why other clubs who no doubt will have been working using the same guidelines haven’t pushed matters such as reduced sponsorship in the same way.

Sorry but its highly likely that the league will have to look at the numbers but even then you wonder what the sanctions would be.

I alongside everyone that’s commenting on the issue have no idea what the numbers on the appropriate PL form show nor when that form was submitted but the PL board is one thing and yes they are empowered to a degree but are answerable to the clubs

But the 20/21 interim numbers have been with the PL since March 21 mate, our financial year ended in July 21, the PL have these figures for a long time and by all accounts have been aware, working with the club and in dialogue around them, setting budgets and limits on what we can spend and sanctioning deals. To my mind there is a process in place and we have been constant communication around our compliance. Our new financial year 21/22 ends in short weeks - they would have those projected figures in March 22, so 20/21 figures were the grievance is, is almost a year old at this stage.

 

[davek]

Just read that Everton lost a possible £60 million transfer fee because of covid on Cenk Tosun and this is put down in the £371.8 million losses. Stuff like this s subjective considering Everton paid £27 million for him in January 2018. I don't think he was ever worth £60million. Personally I have no gripe against Everton even being a Leeds fan, and my family supporting Everton. It makes for some good banter. I think the authorities have cocked up with what clubs could right off with covid. Gate receipts are the first obvious one, but righting off transfer fees some parameters had to be put in place to stop things like Cenk Tosuns valuation being used as a write down tool. I don't think any Evertonian even with rose tinted glasses would say Tosun was a great buy.

I think this is where any legal case against the PL and Everton in particular begins and ends.

Basically, it' a case of "How long is a piece of string?" type of minefield. If the PL allowed leeway for losses on Covid but didn't put a cap on it they basically left themselves and not Everton open to that decision making.

I still think this is all about hard ball from Leeds and Burnley (Burnley especially given their hopeless financial position) and they're after a financial sweetener addition to the parachute payment if they fall into the Championship.

 

[HalfTimeSayers]

I listened to Ziegler on Talksport last night. It's petty brief, but he reckons this will move slowly and not at Burnley and Leeds hoped for pace. He also says he thinks it's a problem for the PL and potentially one for Everton, that he cant see Everton being relegated with a points deduction, but he does think things might happen further down the line...presumably a fine or even a points deduction for next season.

https://talksport.com/radio/listen-again/1653069600/1653071400/ (starts on 4m point)

Were any clubs likely to be over the limit without identifying these “Covid costs”?

If you were already safe, you wouldn’t be spending 6 figures on an audit firm to forensically identify and justify such costs. Might explain why no other clubs went to such extremes.

21 or so years ago I worked for such a very large firm on the statutory audit of a prem league team, not long after players first had to be capitalised on the balance sheet. I know how much they charge. Sat in a meeting room with club staff including the manager asking whether he/they thought players were still worth their NBV one by one. He angrily said yes to every one because he thought it was all subjective bollox, which it is.

 

[irishtony1878]

Wycombe are still trying to Sue Darby and that’s a year later

Yes but Wycombe aren't Everton.
Someone can try and make a name for themselves?
I hope Burnley finally go out of existence.
Leeds can do one as well but I'm prepared to wait a year for them.
Hire the best barristers, tie up any litigation with appeals and stall them into submission.
Every club in the country has to be playing these games with how much money they are actually spending.
Typical that they go after us.

 

[MrGrumpy]

I think this is where any legal case against the PL and Everton in particular begins and ends.

Basically, it' a case of "How long is a piece of string?" type of minefield. If the PL allowed leeway for losses on Covid but didn't put a cap on it they basically left themselves and not Everton open to that decision making.

I still think this is all about hard ball from Leeds and Burnley (Burnley especially given their hopeless financial position) and they're after a financial sweetener addition to the parachute payment if they fall into the Championship.

By the end of next season we be back level with the losses I’d imagine, there will be sales and will get cheap youngsters bought in and next season will be about consolidating and then pushing on the year after

 

[jonnyboy316]

This is all pretty desperate stuff. New season starts August 6th but obviously all the fixtures are announced and logistics put in place weeks before this. There is no time for a case like this to run its course and be concluded in time. There is zero chance of us receiving a Points deduction and being relegated off the back of this. It would also open up Pandora’s box about other teams. Particularly City and inflated sponsorship deals.

 

[Ring master]

This is all pretty desperate stuff. New season starts August 6th but obviously all the fixtures are announced and logistics put in place weeks before this. There is no time for a case like this to run its course and be concluded in time. There is zero chance of us receiving a Points deduction and being relegated off the back of this. It would also open up Pandora’s box about other teams. Particularly City and inflated sponsorship deals.

16th June 9AM UK time, for the new fixtures as well for any that dont know

 

[Neiler]

Thanks mate, and a very good post.

All I would add, is that unless something is announced today, they wouldn't even be giving us a few days. It would be completely retrospective, which as you say would be deemed completely unfair in any court.

Even if the PL Have yet to approve the accounts (which is seems overwhelmingly as if they have both, formally and informally) there would be an onus on the PL to make notification to us this season if they wanted to seek punishment this season.

Even when Manchester City were being challenged, and indeed found guilty (in football) there was no talk of retrospective punishments, but it would have been a ban from competition moving forward. This isn't me being wise after the event, I remember 18 months or so ago, people saying Everton might have a case if they were found guilty at CAS and we could be moved up a place into Europe I was really clear, that would not be possible. It's also worth saying, that this took years to even get to CAS. It's not going to be resolved in 6 weeks.

There is a possibility that points deductions would be imposed for the following season. A lot would have to happen/change in a number of ways for that to be a possibility, but I can see a route where-however distant- that was a possibility.

What is also a possibility, is that whoever is relegated may seek damages from the PL. They may say that as a regulator they did not do diligence properly and put them at a disadvantage. I suspect it would be a weak case, as they would be trying to prove that the rule makers failed on the rules they wrote. I suspect it's a play to try and get an out of court settlement, and in Burnley's case, if they fall into financial difficulties in the league below, to give them some legal context by which to approach the EFL.

Think about the implications though. Every season the side who finished 18th, could accuse the side who finished 17th of breaking FFP rules even though they had complied with them) and bring the league into disrepute. That would just bring chaos every season, and the PL could not really sign off on that, as it would greatly damage the product. Our accounts have been signed off, and have met the criteria of the PL. The same as every other clubs. Others may have an opinion they do not. What's stopping us saying the 15 other sides above us have all actually failed FFP because we disagree with aspects of the accounts, therefore we demand points deductions, and us to be crowned champions. It's obviously illogical, but its along the same paradigm that these claims are being made.

If you wanted to be very pedantic about it, we could take a case against the PL for a lack of application of the rules in some our games this year, we even have an acknowledgement, even an apology from the referee and the PL that they didn't apply the rules properly in our game against City. Say that decision ends up costing us 3 million finishing behind Southampton - we have a grievance.

We wont of course, but my point is the PL cant allow legal action to be taken over how they apply their rules as a constant avenue for clubs - they would never be out of the court.

 

[mumwasablue]

Who is sue everton?

No matter - unless they are legally allowed to sue us for points I've a canny feeling any settlement won't compare to the amount one of them will lose on relegation.

Hope it's Leeds, self-entitled scruffs still living off their Revie-era caveman football

Wilkinsons team was good, for 4 years until Blackburn came along and blew everyone out the water. I think that era of football Leeds got kicked to pieces by Chelsea in the 1970 Cup Final , all teams had their hatchet men Everton , Peter Reid, Mike Pejic, PVDH, Cahill, Ferguson, Walter Abbot, Dixie Dean, Southall, Brian Labone. To name but a few. Teams got away with a lot more in 60s and 70s. Peter Osgood actually admitted once that Revies team was a good one, and they really hated us

 

[everton fan number one]

Were any clubs likely to be over the limit without identifying these “Covid costs”?

If you were already safe, you wouldn’t be spending 6 figures on an audit firm to forensically identify and justify such costs. Might explain why no other clubs went to such extremes.

21 or so years ago I worked for such a very large firm on the statutory audit of a prem league team, not long after players first had to be capitalised on the balance sheet. I know how much they charge. Sat in a meeting room with club staff including the manager asking whether he/they thought players were still worth their NBV one by one. He angrily said yes to every one because he thought it was all subjective bollox, which it is.

It's a good point that if many of the teams also breached the rules it becomes a matter of pure discretion who is punished or not for the extent of their overstep

 

[Neiler]

Also crucially, these would be in next years figures, so they don't have any relevance. It kind of shows the BBC don't really know what they are talking about.

Absolutely this, poor by the BBC.

 

[ToffeeDan]

@WestStandLower

Great stuff.

I am a retired Management Accountant and I concur your POV as well. I suspect Everton were able to demonstrate a number of things to the Auditors - who would be asking probing, awkward questions to validate the accounts. I also suspect they wouldn't be hugely worried about Everton's version of events regarding foregone transfers and additional costs associated with retaining players. The wages are fact, the amortisation is fact. The theoretical Opportunity Costs another matter.

But Everton can certainly argue that discussions may have taken place to:

Sell Richarlison for £70M (instead of his current NBV of £10M)
Sell DCL for £60M (instead of his current NBV of £NIL)
Sell Kean for £25M or so (this hasn't materialised to date)

And so on.. and any other player you can think of. They might also seek to argue they would (partially) replace these players so would be some immediate commitment and wages for replacement "staff".

And they would be making these arguments on the basis that they were fully aware of the financial difficulties of recent Trading Losses and Extraordinary Losses associated with Covid.

So one presumes Leeds/Burnley haven't thought this through - not even called their Auditors for a chin wag.

 

[TyphooToffee]

I know it's about money but sore losers and sour grapes are the expressions that spring to mind.

 

[davek]

Were any clubs likely to be over the limit without identifying these “Covid costs”?

If you were already safe, you wouldn’t be spending 6 figures on an audit firm to forensically identify and justify such costs. Might explain why no other clubs went to such extremes.

21 or so years ago I worked for such a very large firm on the statutory audit of a prem league team, not long after players first had to be capitalised on the balance sheet. I know how much they charge. Sat in a meeting room with club staff including the manager asking whether he/they thought players were still worth their NBV one by one. He angrily said yes to every one because he thought it was all subjective bollox, which it is.

Motive is another and different matter.

The substance here to focus on is the PL in conversation with the club and allowing this arrangement.

And let's get this right: once upon a time the measuring rod was allowable debt and then they reduced it to losses...and that was because of lobbying from large indebted clubs. So this is a moveable feast and I think ultimately THAT is why Everton are saying they are "comfortable" with this.

Can you imagine the PL and the elite clubs wanting to see all of our domestic football governance dirty washing out on the line?

 

[davek]

By the end of next season we be back level with the losses I’d imagine, there will be sales and will get cheap youngsters bought in and next season will be about consolidating and then pushing on the year after

Maybe. But Everton are not the in the dock here, the PL are.