Everton have been hit with an immediate 10-point deduction after being found to have breached Premier League financial fair play rules.
The punishment sees the Toffees fall from 14th place to 19th in the Premier League table, now five points from safety and only off the bottom of the table due to their superior goal difference over Burnley.
Everton had amassed 14 points from their opening 12 games this season, winning four, drawing two and losing six of those matches.
That tally has now been cut to four points with immediate effect after an independent commission ruled that Everton had sustained a £124.5m loss for the period ending in 2021-22 - almost £20m more than the £105m threshold under the competition's Profit and Sustainability Rules.
Everton have already lodged their intent to appeal the decision, which they claim is "wholly disproportionate" and "unjust".
"An independent Commission has imposed an immediate deduction of 10 points on Everton FC for a breach of the Premier League's Profitability and Sustainability Rules (PSRs)," read a statement from the Premier League announcing the decision.
"The Premier League issued a complaint against the club and referred the case to an independent Commission earlier this year. During the proceedings, the club admitted it was in breach of the PSRs for the period ending season 2021-22 but the extent of the breach remained in dispute.
"Following a five-day hearing last month, the Commission determined that Everton FC's PSR Calculation for the relevant period resulted in a loss of £124.5m, as contended by the Premier League, which exceeded the threshold of £105m permitted under the PSRs. The Commission concluded that a sporting sanction in the form of a 10-point deduction should be imposed. That sanction has immediate effect."
The Premier League had pushed for a points deduction, arguing that the financial breaches gave Everton a "sporting advantage" and so deserved a "sporting sanction".
Everton, meanwhile, argued that a financial penalty, or at worst a transfer ban, would be sufficient punishment.
"Everton Football Club is both shocked and disappointed by the ruling of the Premier League's Commission," read a statement from the Merseyside outfit.
"The club believes that the Commission has imposed a wholly disproportionate and unjust sporting sanction. The club has already communicated its intention to appeal the decision to the Premier League. The appeal process will now commence and the club's case will be heard by an Appeal Board appointed pursuant to the Premier League's rules in due course.
"Everton maintains that it has been open and transparent in the information it has provided to the Premier League and that it has always respected the integrity of the process. The club does not recognise the finding that it failed to act with the utmost good faith and it does not understand this to have been an allegation made by the Premier League during the course of proceedings. Both the harshness and severity of the sanction imposed by the Commission are neither a fair nor a reasonable reflection of the evidence submitted.
"The club will also monitor with great interest the decisions made in any other cases concerning the Premier League's Profit and Sustainability Rules. Everton cannot comment on this matter any further until the appeal process has concluded."
In their written reasons for coming to the decision, the independent commission agreed that only a points deduction would suffice, ruling that "a financial penalty for a club that enjoys the support of a wealthy owner is not a sufficient penalty".
The commission also dismissed the suggestion that the FFP breaches were in part down to the development of a new stadium for Everton, instead claiming that it was because "it overspent (largely on its purchase of new players and its inability to sell other players), and because it finished lower in the league than it had projected in FY 2022 (16th against the projected 6th – causing a loss of expected income of c.£21m).
"Everton's understandable desire to improve its on-pitch performance (to replace the non-existent midfield, as Mr Moshiri put it in evidence) led it to take chances with its PSR position: those chances resulted in it exceeding the £105m threshold by £19.5m.
"The position that Everton finds itself in is of its own making – it is Everton's responsibility to ensure that it complies with the PSR regime. The excess over the threshold is significant. The consequence is that Everton's culpability is great.
"We take into account the fact that Everton's PSR trend over the relevant four years is positive, but cannot ignore the fact that the failure to comply with the PSR regime was the result of Everton irresponsibly taking a chance that things would turn out positively. Further, Everton was less than frank in its dealings with the Premier League over the stadium interest issue."
The ruling could also set a precedent for future PSR breaches, most notably currently for Manchester City, who earlier this year were alleged to have incurred 115 financial breaches.
Despite the final deduction coming to the same amount, the commission rejected the Premier League's proposed formula of a six-point deduction plus an extra point for each £5m over the threshold they were, meaning that future such cases may not be tied to that formula by precedent.
Everton are currently in the midst of a takeover by 777 Partners, and past reports have claimed that the deal would not be affected by any points deduction.
Sean Dyche's side are next in action on Sunday, November 26 when they welcome Manchester United to Goodison Park.
Only Everton themselves in 1994-95 have avoided relegation from the Premier League after reaching the 12-game mark with four points or fewer. body check tags ::
