Everton Faces Potential £300m PSR Threat from Leeds United-Backed Action

Profit and Sustainability Rules (PSR), formerly known as Financial Fair Play, are regulations that restrict Premier League clubs, such as Everton, to a maximum loss of £105 million over a rolling three-year period.

Last season, an independent commission found that Everton had exceeded this financial threshold for the 2021-22 and 2022-23 seasons.

As a consequence, Everton was penalized with a 12-point deduction over the season.

However, after an appeal regarding the initial breach, this penalty was reduced to eight points.

Despite this, the Premier League continues to contest Everton’s practice of capitalizing interest payments on their new stadium at Bramley Moore Dock, arguing that these costs should not be excluded from their PSR calculation.

Typically, infrastructure costs are exempt from PSR considerations.

A new hearing regarding Everton’s PSR status is scheduled for this year, during which an independent panel will rule on the issue of capitalized interest payments.

However, this is not the only PSR-related challenge that Everton may have to face in the near future.

Compensation Claim Against Everton by Leeds United-Backed Group

When it was revealed that Everton had breached PSR during the 2021-22 and 2022-23 seasons, barely avoiding relegation by two and four points respectively, several relegated clubs were outraged.

Leeds United, Nottingham Forest, Southampton, Leicester City, and Burnley believed that Everton had gained an unfair advantage by violating the rules during those campaigns.

Subsequently, official documentation confirmed that these clubs were seeking compensation from Everton.

According to Matt Hughes of the Daily Mail, the total damages could reach £300 million.

While there has been no official update since this claim was made, some, including legal expert and former Manchester City advisor Stefan Borson, speculate that the case against Everton may still be active.

The compensation claim has resurfaced in discussions after Leicester City recently won their own PSR battle against the Premier League in controversial circumstances.

Notably, Nick De Marco, a highly regarded KC who represented Leicester in that case, is also slated to represent the Leeds United-backed group in their compensation claim against Everton.

A possible indication that the case has been resolved would be if Everton’s 2023-24 accounts, due to be released early next year, do not mention the case as a going concern.

However, if the case remains unresolved, it would be unusual if details had not been leaked to the media by now.

Everton Takeover Update

While PSR issues loom over Everton, the club’s ownership future presents a far more critical and existential concern.

Farhad Moshiri, whose financial resources seem to be dwindling, has been attempting to sell the club for over a year.

He has reached an exclusivity agreement with John Textor, an American businessman who owns multiple football clubs.

However, several obstacles remain.Textor intends to list his Eagle Football Group on the New York Stock Exchange and would need to sell his 45% stake in Crystal Palace before the Premier League allows him to acquire Everton.

Additionally, there are concerns about whether Textor has the liquidity to manage Everton’s significant debt, estimated to be between £600 million and £700 million.

Despite these challenges, Textor has acted as though Everton is already part of his multi-club empire.

Over the summer, Everton signed two players from Lyon, a club owned by Textor, and almost secured a third player on deadline day.

Additionally, Everton youth player Francis Gomez was loaned to Lyon, indicating ongoing collaboration between the clubs.