Business With Blain: Explaining Everton's Appeal
JohnB on Everton's partially successful appeal, and what should come next.
On page 61 of his decision, in paragraph 230 of 232, The Rt Hon Sir Gary Hickinbottom finally wrapped up the first case of the Premier League’s process for assessing and sanctioning a breach of their Profitability and Sustainability Rules.
“For those reasons, we allow the appeal, we set aside the Decision of the Commission, and in place of the penalty it imposed, we impose a sanction of an immediate points deduction of six points.”
For Everton and their loyal and long-suffering fans, the process started in March 2023 when their beloved club was referred by the Premier League to an Independent Commission.
During the 340 days between the start of the process and its conclusion on Monday, February 26th, Everton played 36 Premier League matches across two seasons; they escaped relegation with their last gasp, and the Premier League’s Executive Board managed to give the impression they were making it up as they went along.
The legal profession was well represented throughout the process and consumed the time and effort of a judge, seven King’s Counsel, two barristers, one expert witness, and more than thirty other witnesses and providers of insight, not to mention tens of thousands of documents.
It took all these people, and all this time, to confirm that, between July 1, 2018 and June 30, 2022 — a period in which Everton had an aggregate turnover of £750million, began work on building a new stadium on a derelict dock on the banks of the Royal Blue Mersey, acquired and then dispensed with the services of five UEFA pro-license holding managers and had tallied up around 100 deals for footballers (ins and outs) in total — the club had breached the allowed upper threshold of allowed PSR losses (£105m) by £19.5m.
Any breach, it turns out, results in an automatic sporting advantage. Not that the sporting advantage can be quantified in this case, according to both the original Independent Commission and the Appeals Panel. However, an advantage was enjoyed nonetheless.
It was hard to disagree with the take of The Times’ award-winning columnist Martin Samuel.
“There were undoubtably better ways of dealing with the club… This will happen every year until competent and sensible leadership is restored to the league, which is why there is an increasing pushback against the Chief Executive.”
This whole tawdry process has left a bad taste in the mouths of not only Everton fans but those across the whole of the football family too, with some rival fans even setting aside tribalism as they reacted with shock to the 10 points Everton were deducted. There was some surprise that their sanction upon a successful appeal was only reduced by four points.
A sanction that will become a reference point for the forthcoming Independent Commissions overseeing the cases of the now serial offenders Everton and the new boys into the dock, Nottingham Forest, who somewhat impressively have managed to apparently breach the rules in their first season after promotion.
Spread across over one hundred pages of judgment from Everton’s first trial and the appeal, we have learned that, without a shred of empirical or quantifiable supporting evidence, breaching the arbitrary limit on losses must confer a sporting advantage on the transgressor and the only appropriate punishment is an immediate points deduction.
Asst. Professor Mike Gow of Edge Hill University and a keen follower and commentator on this said on Twitter/X: “The whole debacle is an affront to moral, philosophy, legal principles, statistics, and scientific reason.”
Everton, though, are not innocent in these matters. They have clearly been run very badly for several years. Farhad Moshiri has waited six months to see if 777 Partners will be allowed by the Premier League to buy his 94% shareholding as he seeks to follow the inadequate former executive leadership out of the club and leave someone else to clear up the mess that has become increasingly worse over eight years of his tenure. Indeed, the appeal’s decision came just a day before the eighth anniversary of Moshiri purchasing a 49.9% stake in the club.
As they have been for almost 150 years, Everton fans remain the one true constant, and indeed through their unwavering support for the team and the considered representation by the club’s Fan Advisory Board, are one of the few actors in this farce that came through it with their reputation not only intact but enhanced.
Gary Hickinbottom KC, on balance, comes out of this well too. He did not shy away from exposing the legal errors made by the Independent Commission and his disdain for the Premier League and its Chief Executive is clear to see in his decision.
However, his hands, and those of the Independent Commission, were tied by the Premier League’s inadequate policies (the Premier League’s Executive Board does not like this term), which he described cuttingly in Paragraph 184.
“We shall refer to these so-called “guidelines” as “the PL’s Structured Sanctions Submission”.
Nonetheless, although critical of the Independent Commission and complimentary of Everton’s lead KC Laurence Rabinowitz, the Appeal Board still dismissed seven of the nine grounds of appeal put forward by Everton, and it was just the two successfully argued grounds that helped reduce the sanction down from ten points to six.
Everton’s successful grounds of appeal
Ground 1 – The findings of (i) “less than frank” and (ii) a breach of rule B.15 (utmost good faith) as aggravating factors.
Ground 7 – The failure to impose a sanction without taking into account existing and relevant benchmarks.
Everton and their fanbase were particularly disappointed and hurt that the club had been besmirched by the original Independent Commission, and in a statement after the publication of the Appeal Board’s decision, they stated:
“The club is also particularly pleased with the Appeal Board’s decision to overturn the original Commission’s finding that the club failed to act in utmost good faith. That decision, along with the reducing points deduction, was an incredibly important point of principle for the club”.
At this point, the Appeal Board set about determining what the minimum number of points deducted should be, and noted in Para. 207 that: “The assessment of how many points would be appropriate is neither a mathematical exercise nor, indeed, an exercise in which the PL has any guidelines”.
Consequently, the Board considered a number of factors to draw a conclusion and come to a decision. They seemed to have relied upon the more transparent and established guidelines of the English Football League (EFL).
The EFL Guidelines, minus any mitigation, prescribe a minimum of three points, and if the overspend is significant such as on or around 20% of the total valuation of the threshold, a further three points would be deducted. In his written submission, Everton’s KC Rabinowitz calculated that by extrapolating the EFL Guidelines across to the Premier League, and excluding “trend”, the starting point deduction would be six points.
In his submission, the Premier League CEO Richard Masters suggested an additional penalty of four points in the club’s case over and above any starting point. The Appeal Board said of this: “There is no underlying evidence for this figure from Mr Masters, which of course substantially diminishes the weight we can attach to it.”
Furthermore, Rabinowitz, according to the Board, submitted with some force that insolvency is an inevitably more serious matter yet attracts only a nine-point deduction. The Board went on to say that: “We found this submission by Mr Rabinowitz to have some force. It suggests that the 10-point deduction was internally inconsistent within the framework of the PL Rules”.
Finally, on this point, the Board — in reference to the Premier League’s Structured Sanctions Submission — said: “Of course, we see the force in Mr Rabinowitz’s submission as to why little if any weight can be placed on this. It is not even a guideline.”
There is little point in itemising all the considerations (including both mitigation and aggravation factors) of the Board, but suffice to say, they look comprehensive and certainly had sufficient weight to support and justify their final decision.
With a further Independent Commission to face, one might consider the analogy that Everton are playing a two-legged tie. The first leg has concluded, and they have had some success, although perhaps not as much they might have hoped for. Whimsically though, they have created another first as a football club by winning four points in one day. Points that moved them up to 15th, five points above the relegation zone.
The second leg will soon be upon them, but not until Nottingham Forest have had their case heard in front of an Independent Commission — the hearing is expected to take place in the first week in March. It seems clear that as a starting point, both Everton and Forest can expect to receive a minimum deduction of three points. Subject to mitigation and aggravation, this deduction could rise or fall.
With more than £100m at risk through relegation, one hopes the Premier League and their Board have learned valuable lessons. It is clear that the current processes are not fit for purpose and with that in mind, and to protect the integrity of the competition, they must behave differently.
The Premier League Board has demonstrated that they are not fit to regulate this league. However, with an Independent Regulator now inevitable and with Forest and Everton likely to be the only clubs to suffer the use of these inadequate rules they have an opportunity to go out on a high by doing the right thing.
A clear indication that they have achieved that will be a simple metric – they should aim to conclude the two forthcoming hearings with neither club feeling the need to appeal the outcome.
If they fail, and one or both clubs appeal, then they will have destroyed the integrity of the competition — because the likelihood increases dramatically that relegation from the self-proclaimed best league in the world will be decided by who has the smartest lawyers, and not by how many points are won on the real field of play — the pitch.
By JohnB
Great summary of the position. Shame on the EPL who have dragged out this farce. It will be interesting to see how the next couple of months pan out. The EPL have been shown as inadequate but will they raise their vindictive head again?