Burnley’s £35m win rightly scared every club that has breached the Premier League and EFL Rules. However, the law that underpinned the decision was familiar to all breach of contract litigators. That one team could be liable to another for its losses is, contrary to the impression given, not news. Everton themselves, Sheffield United, Middlesbrough, Wycombe and others have ended up settling similar disputes in the past. Those settlements happened because the outcome was too uncertain a bet to take to a hearing. Burnley took the bet and so far it has paid off.
More surprisingly, that causation had to be proved at all was not inevitable. Burnley’s original position was that a Premier League Rule W compensation claim was a discretionary exercise, not requiring conventional proof of causation - Burnley sought compensation as a furthersanctionand not as established losses. Everton applied to have that issue determined as a preliminary matter. At the Construction Issue hearing on 20 September 2024 (Attachment 5 to the decision), the Commission ruled against Burnley, concluding that a Rule W claim is a contractual claim requiring conventional causation principles. An opposite ruling to that really would have been a game changer for Premier League disputes. But the irony is that winning it may have cost Everton far more than losing it. Had thesanction framing survived, the Commission would have been asked to exercise its broad discretion in awarding something to Burnley (and potentially others) without the need for highly complex and contentious probabilistic modelling.
At some point, Burnley decided that their case was strong enough to put it on a balance of probabilities basis, i.e., that it was more likely than not that but for its PSR breach Everton would have won 4 or more fewer points and been relegated instead of Burnley in 2021/22. Burnley’s experts Wilson/Daniels’ 12-year Scenario 1 showed a 69.54% to 29.39% relegation probability split in Burnley’s favour. That figure presumably gave Burnley confidence to go binary. The Commission’s eventual retreat to Scenario 4 narrowed that split to 50.51% against 47.59% on the inflation-adjusted figures: fine margins, as the Commission itself acknowledged.
Once the case was established on a balance of probabilities, Burnley was deemed to have survived, Everton to have been relegated and Burnley were entitled to recover damages in full - subject to appeal.
There are a number of arguments Everton will try at appeal. Some will try to be knockout points (see my other pieces on the30 June argument) and others will be an attempt to move the probabilities just far enough below 50% to stymie Burnley.
In rejecting running an alternativeloss of chance claim, Burnley turned down the opportunity to vastly improve their odds of coming away with something. In English law, a party can claim damages for the loss of an opportunity to achieve a beneficial outcome. So, had Burnley run a loss of chance claim, even if it had failed to prove that it would have avoided relegation absent Everton’s rule breach, it could have established that it lost the chance to stay up and that that chance had tangible value. Tribunals can assess the probability of a missed outcome and award damages proportionate to that likelihood. For example, if it had been determined that Burnley had, hypothetically, only a 25% chance of surviving, they could have recovered a commensurate 25% of the losses.
Burnley would have had to show that there was a “real and substantial” chance (not merely speculative) that Everton would have gained 4 (or more) fewer points had they not overspent. Given the Commission found for Burnley, the “real and substantial” hurdle would not have been a challenge.
The Commission would then have applied a percentage to the figure claimed to reflect its assessment of the likelihood that the event would have happened. An appeal would also be less likely to be binary. A loss of chance approach would have given the Appeal Board a percentage to adjust rather than a threshold to cross.
Even if Burnley do win their appeal and keep the £35m, the ultimate decision was clearly finely decided even with a relatively simple counterfactual. As such, I suspect it will greatly encourage claimant clubs to go for a safer loss of chance claim in the future. This is especially so in more nuanced factual situations.
Take2022/23for example. Nottingham Forest, Everton, and Leicester City all breached PSR limits in the same season. All were in a relegation battle with Leeds United and Southampton, who were both relegated. The obvious claim is that, but for the three clubs’ collective breaches, one or both would have survived. But the binary causation question has to be answered club by club. A claimant directing its claim at any one of the three breaching clubs faces the immediate objection that the other two were also overspending, and that the counterfactual has to account for what the table would have looked like if all three had complied simultaneously. The simulation in Burnley’s case replayed Everton’s 38 matches 100,000 times, holding all other clubs’ positions constant. That may work with one club but add two more and the margin of error compounds across every fixture each of them played. No tribunal will want to have to navigate that complex set of numbers and experts.
Furthermore, some future claims won’t involve relegation at all. A club finishing 14th and arguing that a competitor’s breach cost it a higher finish is making a prize money loss claim. The merit award gradient across Premier League positions is substantial (now at £3m per place). But the probability that the club would have finished in any particular higher position has to be assessed across a distribution of outcomes. There is no binary question, so loss of chance is more appropriate by default.
Burnley’s potential regret is quantifiable. A loss of chance claim maintained alongside it’s principal case would have secured a recovery at any probability above a real and substantial chance. Burnley traded that certainty for a shot at £35m. On these margins, that was a bold bet and one that may not be replicated by other clubs as some commentators have suggested. Meanwhile, Burnley and Everton should probably be discussing a settlement.
Stefan Borson is a lawyer, football finance commentator and Partner and Head of Sport at law firm, McCarthy Denning.
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