Financial Un-fair Play in the Premier League

By: Anthony Tazbaz

Image Credit: Christopher Bill

To all clubs, handle money with care!

Last year, football fans' jaws dropped when Juventus initially received a 15-point deduction, which after appeal and review, ended in a 10-point deduction. Resulting in a seventh-place finish and a ticket to the UEFA Europa Conference League, the Italian giants also ended up getting banned from competing in the Conference League after breaking Financial Fair Play (FFP) rules.

This time around — over the past couple of weeks — Premier League clubs Everton FC and Manchester City are now subjects to similar penalties.

Everton FC's Woes

In addition to losing 3-0 at home against a rocky Manchester United squad, the Liverpool club recently received a 10-point deduction for violating the Premier League's profit and sustainability rules (PSR). This deduction drags Everton down to 19th place, tied with 20th-placed Burnley FC at four points.

With the PSR allowing clubs to accumulate losses of up to £105m over three years, Everton's losses during a three-year period up to 2021-22 amounted to £124.5m, per an independent commission. Its deficit in 2021-22 alone totalled £44.7m.

The Covid-19 pandemic played a major role, with its three-year period up to 2021-21 totalling losses of £372m, more than three times the limit under Premier League rules.

However, Everton's ambitious signing spree of major players, such as Jordan Pickford, Yerry Mina, Richarlison, Amadou Onana, Alex Iwobi, Gylfi Sigurdsson and several more — all arriving within a six-year span — also contributed to massive financial losses, especially considering several players and the club did not fully live up to expectations. Those six signings total a whopping £212.75m, an amount far exceeding any previous amount spent by Everton on the same number of players.

Then, one needs to factor in salaries, operational costs, high stadium maintenance fees, consulting on plans for a new stadium — due to open in late 2024 — and dwindling support amid the club's year-on-year performance decline.

A Difficult Predicament

To put it mildly, the decision left Everton manager Sean Dyche and club supporters incredibly shocked and furious. An arial banner accusing the league of corruption was seen flying over Goodison Park and fans have voiced their distaste of the decision and the league by holding anti-Premier League protests.

Everton is being dealt as massive blow amid owner Farhad Moshiri's sale of his 94% stake in the club to American investment fund 777 partners and ongoing investigations regarding Moshiri receiving £400m from companies owned by Alisher Usmanov, a Russian-Uzbek billionaire currently placed under sanctions by the United Kingdom government. In addition to Usmanov's close ties with Moshiri — Moshiri sold his Arsenal shares to the tycoon in 2016 — Usmanov is also close to the Kremlin and Vladimir Putin, which may raise further questions about Usmanov's operations in the U.K. and Moshiri's wealth, which was estimated at £1.6bn.

The club also faces the prospect of another ferocious battle to avoid relegation to the EFL Championship. Dropping from 14th to 19th shortly before the new year certainly takes a toll on players' morale ahead of the second half of the season. Worse — although it is not a completely reasonable comparison due to different league rules — Everton supporters will feel hard done by this deduction, particularly after Juventus's 10-point deduction was a result of far worse offences: falsifying its books and manipulating its balance sheets with artificial gains of approximately €60m.

One can certainly argue that the ruling is unfair, but Everton needs to face some degree of punishment. Ultimately, a points deduction may not be the most suitable nor proportional penalty. Perhaps an extensive transfer ban, similar to which Chelsea and Atlético Madrid previously faced, could constitute a more appropriate outcome, as it prevents them from overspending and does not punish players' hard work. However, the transfer ban should be extended beyond a couple of transfer windows.

Everton will also have the opportunity to appeal the decision in the near future.

Beware, Manchester

This scandal should also set the stage for potential sanctions against Manchester City who is facing grave allegations. Manchester City was charged with over 100 breaches of financial rules between 2009 and 2018, which dates back to the financial takeover by Emirati Sheikh Mansour — owner of the Abu Dhabi United Group — who bought the club from former Thai Prime Minister Thaksin Shinawatra.

UEFA began the investigation in the wake of Der Spiegel, a German newspaper, publishing leaked documents in November 2018 that alleged City inflated the value of a sponsorship deal.

Several other allegations include financial information about club revenue, including sponsorship income and operating costs. Allegations also relate to rules requiring full details of manager remuneration — during Roberto Mancini's tenure from 2009-10 to 2012-13 — and player remuneration between 2010-11 and 2015-16, a period during which Mancini and Manuel Pellegrini managed the club.

City also breached rules linked to UEFA regulations, such as FFP rules between 2013-14 to 2017-18 and the Premier League's PSRs between 2015-16 and 2017-18.

UEFA also concluded in 2020 that City committed "serious breaches" of FFP regulations between 2012 and 2016, which resulted in a provisional two-year ban from UEFA competitions. However, the ban was overturned by the Court of Arbitration for Sport (CAS) late last year.

It remains to be seen whether Manchester City faces serious punishment. Considering the number and the nature of these allegations, the club will have a hard time escaping scot-free. If found guilty, the club should face serious and perhaps unprecedented financial penalties and extensive bans — from transfers to participating in UEFA competitions — to ensure that UEFA and the Premier League maintain a significant degree of credibility.

Such a ruling on this many guilty charges would constitute the perfect opportunity to create a firm precedence for such violations. It would constitute a great moment for a sports governing body to send a strong message to a sports club, which could spread to clubs across all sports: corruption and financial malpractice will not be tolerated and that these practices eventually come to light, even when at your strongest. This was the case with City, who achieved new heights on the pitch by winning the treble — Premier League, FA Cup and (its first) Champions League — this past year.