Everton FC have been ordered by a Premier League Independent Disciplinary Commission to pay Burnley FC more than £35 million in compensation and interest, following a dispute arising from Everton’s breach of the Premier League’s Profitability and Sustainability Rules (PSR).
Everton have appealed the decision, so the legal position is not yet final. If upheld, however, the ruling could materially affect how clubs approach compensation claims arising from regulatory breaches. It is understood to be one of the largest claims brought by one Premier League club against another.
The impact of PSR breaches
In late 2023, Everton were deducted 10 points for PSR breaches, a sanction later reduced to 6 points on appeal in early 2024. The relevant breach related to the assessment period including the 2021/22 season, when Burnley were relegated after finishing four points behind Everton.
Burnley’s claim proceeded on the basis that, had an equivalent sporting sanction been applied in that season, Everton would have finished below Burnley. Burnley therefore sought damages for losses said to have resulted from relegation, including the loss of the opportunity to remain in the Premier League.
The PSR framework is intended to promote financial sustainability by limiting the extent to which clubs can incur losses over the relevant monitoring period. The Commission’s decision appears significant because it goes beyond a sporting sanction imposed by the league and recognises, at least at first instance, that a club may recover compensation where it can establish that another club’s regulatory breach caused compensable loss. That conclusion will now be tested on appeal.
Clubs monitoring other financial-regulation disputes, including proceedings involving Manchester City, will therefore be watching closely, although any future claim would still turn on its own facts, the applicable rules, causation, and proof of loss.
A major new precedent?
Everton have strongly criticised the decision, describing it as “fundamentally flawed in both law and fact” and warning that it sets a “dangerous and unworkable precedent for English football”.
Burnley, by contrast, can characterise the ruling as confirmation that Premier League rules may, in appropriate circumstances, support compensation where a breach is found to have caused a rival club’s loss. The appeal will be central to determining whether that reasoning survives further scrutiny.
The ruling also underlines the increasing legal and commercial significance of financial regulation in football. Breaches may now expose clubs not only to sporting sanctions such as points deductions, fines or registration restrictions, but potentially also to compensation claims from competitors who can demonstrate a legally recognisable loss caused by the breach.
Until the appeal is determined, it would be premature to say that the decision has opened the floodgates. Nevertheless, the case is likely to encourage clubs and advisers to look more closely at whether financial-rule breaches can support claims for loss of chance, lost revenue or other consequential losses.
The outcome of Everton’s appeal may therefore become an important reference point for future disputes arising from Premier League financial regulation.
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James is a Solicitor in our Commercial Disputes team. James studied his LLB at Swansea University.... Read More
Charlotte is a Trainee Solicitor in our Commercial Disputes team. Charlotte completed her LLB Law degree at Cardiff University where she also returned to complete her LPC LLM masters degree.... Read More
Céline Jones is a Partner in our commercial disputes team. Céline has over 20 years’ experience in cross-border litigation.... Read More
