Premier League Charge Everton And Nottingham Forest With Breaking Profitability And Sustainability Rules

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 as a result of sustaining losses above the permitted thresholds for the assessment period ending Season 2022/23.

In accordance with Premier League Rules, both cases have now been referred to the chair of the Judicial Panel, who will appoint separate Commissions to determine the appropriate sanction.

Commissions are independent of the Premier League and member clubs. The proceedings are heard in private with the Commissions’ final decisions made public on the Premier League’s website. The League will make no further comment until that time.

Everton ‘will continue to defend its position’

Everton Football Club acknowledges the Premier League’s decision to refer a breach of Profit & Sustainability rules (PSR) for the assessment period ending with the 2022/23 season to an independent Premier League commission. 

This relates to a period which covers seasons 2019/20, 2020/21, 2021/22 and 2022/23. It therefore includes financial periods (2019/20, 2020/21 and 2021/22) for which the Club has already received a 10-point sanction. The Club is currently appealing that sanction. 

The Premier League does not have guidelines which prevent a club being sanctioned for alleged breaches in financial periods which have already been subject to punishment, unlike other governing bodies, including the EFL. As a result – and because of the Premier League’s new commitment to deal with such matters “in-season” – the Club is in a position where it has had no option but to submit a PSR calculation which remains subject to change, pending the outcome of the appeal.

The Club must now defend another Premier League complaint which includes the very same financial periods for which it has already been sanctioned, before that appeal has even been heard. The Club takes the view that this results from a clear deficiency in the Premier League’s rules. 

Everton can assure its fans that it will continue to defend its position during the ongoing appeal and, should it be required to do so, at any future commission – and that the impact on supporters will be reflected as part of that process.

Nottingham Forest ‘confident of a speedy and fair resolution’

Nottingham Forest acknowledges the statement from the Premier League confirming that the club has today been charged with a breach of the league’s Profitability and Sustainability Rules.

The club intends to continue to cooperate fully with the Premier League on this matter and are confident of a speedy and fair resolution. 

Notes

Profitability and Sustainability Rules (see Premier League Handbook Section E) 

– All Premier League Clubs are assessed for their compliance with the Profitability and Sustainability Rules each year

– Compliance is assessed by reference to the Club’s PSR Calculation, which is the aggregate of its Adjusted Earnings Before Tax for the relevant assessment period

– A Club’s Adjusted Earnings Before Tax figure for each season takes account of its profit or loss after depreciation and interest, but before tax, and then applies a series of ‘add backs’.  

– These ‘add backs’ are costs that the Premier League and its Clubs recognise to be in the general interest of the club and football. e.g. investment in infrastructure, community, women’s football, youth development and depreciation of tangible fixed assets. Exceptionally, in relation to years 2019/20, 2020/21 and 2021/22 COVID-19 costs were also permitted to be included as ‘add backs’

– Ordinarily, a Club’s PSR Calculation is the aggregate of its Adjusted Earnings Before Tax over a three-year period. Following amendments made to the PSRs during COVID-19, the relevant figures for Seasons 2019/20 and 2020/21 are now averaged. In the present case, therefore, the relevant period included Season 2022/2023, 2021/2022, and the average Adjusted Earnings Before Tax for Seasons 2020/2021 and 2019/20

– A Club will be in breach of the PSRs if its PSR Calculation over the relevant period results in a loss in excess of £105 million (with that threshold reduced by £22million for each season that the relevant Club has been in the Championship during the relevant period)

– Due to Nottingham Forest spending two seasons in the Championship within the three-year assessment period, the maximum loss for the club is £61million

– At the 2023 Annual General Meeting, Clubs agreed to bring forward the date for the submission of audited Annual Accounts for Clubs forecasting a loss to 31 December (in accordance to Rule E.50.2)

– Both cases will proceed in accordance with the new Standard Directions, set out at Appendix 1 to the Rules

– Clubs also agreed to introduce Standard Directions for PSR cases (Appendix 1 to the Rules) that seek to ensure such cases are resolved in the season in which the complaint is issued, with any sanction handed down prior to the subsequent Annual General Meeting. This provides certainty for the League, its Member Clubs and other stakeholders as to the membership of the League in the subsequent Season (Appendix 1 page 533)

Premier League investigations and independent Commissions

– The Premier League Board have the power to investigate any suspected or alleged breach of Premier League Rules  

– Where, following the conclusion of an investigation, an admission by a Club or otherwise, the Board believes that there is a suspicion or allegation of a Rule breach, it has a number of options available to it. One of these options is to issue a written compliant and refer the matter to a Commission

– The League has access to an independent Judicial Panel, comprising a number of legal, financial and other experts. Members of the Judicial Panel are appointed, in accordance with Premier League Rules W.19, W.20 and W.26, by its independent Chair, Murray Rosen KC, an experienced barrister. It is the Chair who selects members of the Judicial Panel to sit on Commissions, which are independent of the Premier League

– All proceedings are confidential and heard in private

– There are a range of sanctions available to the Commission which include fines, points deductions and other sporting sanctions

– Under Premier League Rule W.82.2, at the conclusion of proceedings, a Commission’s final decision will be published on the Premier League website 

– For further information on the disciplinary process, please see Section W of the Premier League Handbook