Everton and Nottingham Forest have been referred to an independent commission over an alleged breach of the Premier League's profitability and sustainability (PSR) regulations.
Forest is the third top club to be charged with breaching the league's financial rules after reporting losses in excess of the allowable amount in the three-year reporting period.
Everton, who are already appealing against a 10-point deduction relating to the three-year reporting period ending in the 2021/22 season, have also been charged with another alleged breach. Manchester City were accused of more than 100 breaches of financial rules last year.
Under the guidelines, both Everton and Forest now face a fine or points deduction.
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A statement from the Premier League: “Everton FC and Nottingham Forest FC have each confirmed to the Premier League that they are in breach of the league's Profitability and Sustainability Rules (PSR).” This is due to persistent losses exceeding the permitted thresholds for the assessment period is up to the 2022/23 season.
“In accordance with Premier League rules, both cases have now been referred to the Chair of the Justice Panel, who will appoint separate commissions to determine the appropriate sanction.
“The commissions are independent of the Premier League and the member clubs. The process will be heard privately and the final decisions of the commissions will be published on the Premier League website. The league will have no further comment until this time.”
A statement from Everton said: “Everton Football Club acknowledges the Premier League's decision to refer a breach of the Profit and Sustainability Rules (PSR) to an independent Premier for the assessment period ending with the 2022/23 season. “To be forwarded to the League Commission.”
“This refers to a period covering the 2019/20, 2020/21, 2021/22 and 2022/23 seasons. It therefore covers financial periods (2019/20, 2020/21 and 2021/22) for which the club has already received a 10-point penalty. The club is currently appealing this sanction.
“Unlike other governing bodies, including the EFL, the Premier League has no policy in place to prevent a club from being sanctioned for alleged breaches in financial periods that have already been penalized.” As a result – and because of the Premier’s new commitment League to deal with such matters “during the season” – the club is in a situation where it had no choice but to submit a PSR calculation, which is subject to change pending the outcome of the appeal.
“The club now has to defend itself against another Premier League complaint relating to the exact same financial periods for which it was already sanctioned before this appeal was even heard.” The club believes this reflects a clear flaw in the Premier League rules and regulations.
“Everton can reassure its fans that it will continue to defend its position throughout the ongoing appeal process and, should it be required to do so, at future commissions – and that the impact on fans will be considered as part of that process.”
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A statement from Forest said: “Nottingham Forest notes the statement from the Premier League confirming that the club has been charged today with breaching the league’s profitability and sustainability rules.
“The club intends to continue to cooperate fully with the Premier League on this matter and is confident a quick and fair solution will be found.”
New policies have been introduced that aim to expedite PSR decisions to ensure that fundamental breaches of the regulations are dealt with in a timely manner to allow for penalties such as: B. point deductions, can be imposed in the same season in which the charge is made.
All clubs had to submit their 2022-23 accounts by December 31 – rather than March as before – with any breaches and resulting charges confirmed 14 days later.
The Premier League has set May 24th as the final date for any appeals received after the end of the season on May 19th. This date is before the league's annual general meeting.
As The Athletic reports, there is a risk that teams who appeal possible point deductions will end their league season without knowing their final position in the league or even knowing which division they will play in the following season.
Johnson left Forest in September and moved to Tottenham (Visionhaus/Getty Images)
Forest have signed 42 players since their promotion in May 2022, with owner Evangelos Marinakis approving a transfer spend of around £250 million ($318 million) to help the club establish themselves in the top flight.
Forest believed they had followed the rules on allowable losses as much of the matter revolved around the sale of Brennan Johnson to Tottenham Hotspur.
The club's argument – which it made in discussions with the Premier League – was that it could have sold Johnson sooner, but if it had done so at that point it would have had to accept a significantly lower price. It was sold only on September 1, long after the end of the financial year, for £47.5 million.
Everton's second breach in a row is a result of years of financial mismanagement under owner Farhad Moshiri.
Although figures for 2022-23 have not yet been released, they lost £260m in the two seasons affected by COVID-19 alone. In this latest PSR cycle, they also fired manager Frank Lampard and suspended lucrative trades with companies linked to oligarch Alisher Usmanov, who was sanctioned over the war in Ukraine.
After receiving a points deduction last November for an infringement in the 2021/22 season, Everton is now in the unique position of suffering – and even dealing with – two sanctions in the same season. The consequences could be serious, with the club's long-standing position in the top flight at stake.
What are profitability and sustainability rules?
All Premier League clubs are audited every year to ensure they comply with the competition's profitability and sustainability rules.
Compliance with these rules will be assessed based on the club's PSR calculation, which is the sum of its adjusted pre-tax profits for the relevant assessment period.
Under the PSR, clubs are allowed to lose a maximum of £105m over three seasons (or £35m per season), but certain costs can be deducted, such as investment in youth development, infrastructure, community and women's football.
There were also special COVID-related allowances and to help clubs, the league combined the two pandemic-affected seasons into one, converting the three-year accounting period to four years.
Forest's allowable losses are below the £105m limit because the club played in the Football League for part of the accounting period. Their maximum amount is instead £61m, which amounts to £13m for the 2020-21 and 2021-22 seasons when they played in the Championship, plus £35m for last season, their first return to the top flight , distributed.
What is the precedent for punishment?
The Everton case is only the second time such action has been taken, after more than 100 charges were brought against Manchester City last February.
The outcome of the City case has not yet been announced. The Athletic reported that a verdict, which could be appealed, would likely take some time.
Last year, Chelsea's new owners self-reported incomplete financial information related to transactions that took place during the tenure of the previous owner, Roman Abramovich, between 2012 and 2019.
Some transactions made while in Abramovich's possession are under scrutiny (Paul Gilham/Getty Images)
European governing body UEFA fined it €10 million in July for the historic breach, while the Premier League and England's Football Association continue to investigate.
There have been several precedents in the English football league in recent years, but punishment related to PSR violations in the top flight of English football was unprecedented before Everton.
In fact, only twice in the history of the Premier League has a club been given a points penalty.
Middlesbrough were given a three-point deduction for failing to play a competitive game in the 1996/97 season, while Portsmouth were given a nine-point penalty in January of the 2009/10 season after he took over.
(Stephen White – CameraSport via Getty Images)