Burnley’s £50m-plus compensation case against Everton is due to start this week, with potentially huge ramifications for the Premier League.
The Clarets claim they are owed compensation after Everton were found in breach of the Premier League’s profitability and sustainability rules (PSR).
Everton were handed a 10-point deduction in November 2023, later reduced to six on appeal.
Had the points deduction been applied the previous season, Burnley would have avoided relegation with Everton dropping into the bottom three instead.
The case will commence in the middle of this week at the International Dispute Resolution Centre in St Paul’s, London.
The Clarets suffered a drop in revenue as a result of their demotion to the Championship (Photo: Getty)
It is understood that Burnley, who were relegated in 2022, will argue they are entitled to compensation because Everton gained sporting advantage by breaching those rules.
The i Paper understands Burnley’s claim, which centres on revenue lost by dropping into the Championship, is in excess of £50m.
Lawyers on both sides have spent around a year preparing their case, which will be heard in private.
There is no time scale for when a verdict will be delivered and the public may never learn of the outcome.
Burnley’s general counsel, Amy Wells, was Everton’s head of legal from July 2017 to December 2022. She joined Burnley in April 2024.
Legal experts are watching the complex case – which revolves around a principle known as “loss of chance” – with interest.
Burnley’s legal team will need to prove a link between the club’s relegation and any sporting advantage Everton benefited from due to the breaches, which took place during the ownership of Farhad Moshiri.
The Clarets were relegated in the 2021-22 season, finishing four points behind 16th-placed Everton.
The Toffees were subsequently hit with a 10-point deduction in November 2023 for breaching PSR rules over a rolling three-year period that included the season in which Burnley went down.
Even though the penalty was later reduced to six points on appeal, it would still have been enough to relegate Everton if it was applied when the breaches took place, which is why Burnley have been able to bring the claim.
It is potentially a significant case for the Premier League with Manchester City’s 115-charge verdict looming on the horizon.
Legal experts have told The i Paper that if Burnley can prove that they lost income directly because of Everton’s breaches, it opens the door for future claims if some of the charges against City are proven.
If Burnley are successful, it would also mean other clubs could mount similar claims against rivals that breach spending rules in the future.
Burnley and Everton declined to comment when contacted by The i Paper.
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Governing bodies have tightened spending restrictions in recent years.
Uefa requires all clubs playing in its competitions to limit expenditure on wages and transfer fees to a maximum 70 per cent of revenue – known as squad cost ratio rules.
Clubs are also permitted to report losses of around £52m over any three-year period. Those in good financial health are permitted slightly higher losses.
The Premier League rules differ by allowing clubs to lose a maximum of £105m over three years. But the top flight is expected to adopt similar squad cost ratio rules in the coming seasons.
Uefa has dealt with recent financial rule breaches by handing substantial fines to Chelsea and Aston Villa, and placing them under tighter spending limits.
In recent years, the Premier League issued points deductions to Everton and Nottingham Forest, although every top-flight club passed the league’s PSR audits last season.