Everton told to pay Burnley £35m over financial rule breach

Everton have been told they must pay Burnley £35m over the impact of a breach of the Premier League's financial rules.

The case - heard by a Premier League commission - relates to the 2021-22 season, when Everton were found to have broken profit and sustainability regulations (PSR) over a three-year period.

Burnley argued the breach impacted their chances of staying in the Premier League, and sought compensation for the losses associated with being relegated.

The Clarets have been awarded £26m in damages and a further £9m in interest.

Everton have appealed, with sources saying they will "robustly and thoroughly" contest the ruling.

The club said in a statement they were "clear in the belief the ruling is fundamentally flawed in both law and fact".

"This ruling sets a dangerous and unworkable precedent for English football, given it is constructed on a principle that a club can be in breach of financial rules at any point in a financial year," Everton said.

"Everton believes the panel's ruling misrepresents the clear evidence presented by its legal representatives and that an appeal will be successful."

Both clubs presented evidence from experts to simulate the effect of the £19.5m overspend on Everton's points total.

The commission said that it found Burnley's evidence, which projected a gain of between 3.85 and 7.13 points for the Toffees, "more compelling".

It added that "on the balance of probabilities, Everton's breach of the PSR caused Burnley to be relegated".

Any compensation payment would not impact Everton's PSR accounts for the current period.

Everton were charged by the Premier League and deducted 10 points in November 2023, which was reduced to six points on appeal and applied to the league table in 2023-24.

The case centred on the argument that had the points been deducted in 2021-22, Burnley would have had a greater chance of avoiding relegation.

Everton finished 16th in 2021-22 on 39 points, with Leeds in 17th on 38 points and Burnley 18th on 35 points.

Leeds are reported to have agreed a settlement with Everton in September 2025.

Because of the complexities of the accounting period, which runs to the end of June, the Premier League is unable to apply points deductions in the season the offence happens.

But Premier League rules allow clubs to seek compensation from other members if rules are broken and cause them loss.

Leicester City, Nottingham Forest and Southampton were also reported to have considered legal action.

There have been a number of occasions in the past when clubs have successfully claimed compensation from other clubs.

West Ham United paid Sheffield United £20m in an out-of-court settlement in 2009.

The Hammers had signed Argentine duo Carlos Tevez and Javier Mascherano but broke third-party ownership rules in the process.

Sheffield United, who were relegated after a final-day loss to Wigan, took West Ham to a tribunal before the settlement was reached.

In 2022, Derby County and Middlesbrough reached a "resolution", which the BBC believes to be £2m, over the compensation claim brought against the Rams by their fellow Championship side.

Middlesbrough had launched legal proceedings, claiming Derby's financial breaches cost them a play-off place in 2018-19.

But the Everton case is a new chapter, with a club taking action over sporting loss directly to a league commission.

"This is a significant moment for football governance," Jan Levinson, partner in the Manchester office of law firm Foot Anstey, told BBC Sport.

"It shows that breaches of financial rules are not simply a matter between a club and the league.

"Where another club can show it has suffered a real commercial loss as a result, there may now be a route to substantial compensation.

"Burnley's argument appears to have been that Everton's PSR breach gave them a sporting and financial advantage in a season where relegation margins were extremely tight.

"If that link is accepted, the consequences are potentially very serious for clubs, because the cost of a breach may go far beyond a points deduction or regulatory fine."

The ruling could have implications for Chelsea, who were not given a points deduction but were fined £10m after admitting making £47m in secret payments to unregistered agents and third parties over transfers between 2011 and 2018.

Elsewhere, clubs could seek compensation if Manchester City are found guilty of the 115 charges related to alleged financial rule breaches between 2009 and 2018. City deny all of the charges.

Other Premier League clubs could argue their chances of success in the Premier League were affected by the rule breaches.

"It raises the stakes for clubs under investigation," Levinson said. "PSR compliance is no longer just a regulatory risk and it may become a direct litigation risk."

This is the single biggest claim made by one club against another in Premier League history.

Four years on from being deducted points for breaching PSR rules, Everton continue to be punished.

There is a feeling that the latest ruling makes it a triple jeopardy for one single infringement - the points deduction they received at the time, the financial implications of merit money reducing by dropping down the table, and now this claim from Burnley.

Everton's hierarchy have reacted with astonishment at the panel's decision to award this compensation claim to the Clarets, feeling the judgement is flawed and hugely excessive.

While this took place on the watch of former owner Farhad Moshiri, the Friedkin Group are now having to fork out a significant sum of money for the claim against the football club, and it is not known whether any contingencies were put in place to claim the sum back from Iranian Moshiri's business.

Nevertheless, it is understood this ruling has no impact on the current ownership's transfer plans for the summer or direction of the club. In fact, sources have said it will embolden them to drive Everton forward towards the top echelons of the Premier League.

There is a feeling at Everton, though, that the amount awarded is grossly unfair in comparison to the £10m fine handed to Chelsea in March after they admitted making £47m in secret payments to unregistered agents and the initial £5.5m punishment given to West Ham in 2007 over the transfers of Carlos Tevez and Javier Mascherano.

This news came out of the blue as Everton were not given a date by which a ruling should be handed down - the same principle which applies to Manchester City and their 115 charges for allegedly breaching financial rules.

Everton have immediately appealed against the decision and feel it could have huge implications for Premier League football as a whole if they are not successful.