Leeds United chiefs will likely be watching what happens with regards to the outcome of Burnley’s claim for compensation from Everton with great interest this summer.
The Clarets are seeking compensation from the Toffees in relation to the 2021/22 Premier League campaign, a season where [Leeds](https://www.leeds-live.co.uk/sport/leeds-united/) narrowly avoided the drop after finishing one place above the relegation zone in a season when Burnley, Watford and Norwich City all fell into the Championship.
Burnley’s pursuit of financial recompense from Everton is borne from the Clarets losing their Premier League status in a season when the Merseyside club were found to have breached the League’s profit and sustainability rules, a breach that they admitted, with the punishment for that coming in the form of a points deduction the following season.
Everton suffered significant pain from their PSR breaches, landed with two points deductions for two separate seasons, and served in the same 2023/24 campaign, something that saw them docked eight points after appeal.
The club managed to stave off the threat of relegation despite the financial issues at the football club and tumult surrounding the ownership, and with the Toffees now under new ownership after the successful takeover by The Friedkin Group back in December.
But what might any of this have to do with Leeds?
While there won’t be any retrospective points deduction punishments that Everton have to be concerned about when it comes to the compensation claim from Burnley, there may well be some financial implications in the event of a legal victory for the Clarets, and that could see Leeds seek to try and claw back some funds of their own.
When Everton were found to be in breach of the Premier League’s PSR for the 2021/22 and 2022/23 financial years, five clubs moved to apply for potential compensation; Burnley, Leeds United, Leicester City, Nottingham Forest and Southampton.
The PSR breach for 2021/22 came with a 10-point deduction which was then reduced to six, while the two points that were imposed in relation to the 2022/23 breach was two points. While both punishments ran concurrently last season, they were set apart from a legal standpoint when clubs were seeking compensation.
A two-point deduction in 2022/23 would have seen Everton still stay up on goal difference in a season when Leicester, Leeds and Southampton were all relegated. Those three clubs, as well as Forest, dropped their appeals upon the reduced penalty.
But a six-point deduction in 2021/22 would have seen Everton finish on 33 points and in the bottom three, thus relegated to the second tier of English football.
The side that finished third-bottom that season was Burnley on 35 points, and the Clarets are pushing ahead with a search for compensation.
That is where the Burnley claim comes from, with the Clarets suffering a £58million drop in revenue as a result of their relegation to the Championship. The existence of parachute payments designed to soften the landing of relegation and stop clubs immediately sliding into the financial abyss, likely won’t be much of an issue.
The Clarets could claim for not only the direct financial impact of a loss of a portion of broadcast rights, but also the diminution in value of commercial deals as a result of their relegation.
Burnley’s case will likely hinge on the legal concept of ‘loss of chance’, defined as being where a claim for damages and compensation may arise ‘when a negligent omission by a professional leads to the loss of a valuable business opportunity or the loss of a valuable claim’. In this case, who is the negligent party will have to be determined, with Premier League law at the time not requiring matters to be determined in the one season, something which has since been amended. Everton would argue that they operated within the Premier League’s legal framework that existed at the time.
The case for Leeds is a little different, with a successful bid for compensation from Burnley potentially opening up an avenue for Leeds to pursue a claim in relation to the Premier League’s merit payments, linked to the domestic and international TV rights, with clubs handed a sum of the overall prize pot on a sliding scale depending on where they finished in the season.
Leeds may feel that Everton’s breach aided them in achieving enough points to finish above the Whites, something that if proven could be worth around £2million to Leeds, with £1.69million of that from domestic rights and £369,000 from the international TV market.
Commenting on his weekly Substack, lawyer and football finance expert Stefan Borson wrote: “If Burnley are successful in their claim against Everton, even partially, Leeds would appear to have a very strong case for Everton’s additional merit payment of £2m for finishing above them - it simply requires a tribunal to consider it more likely than not (ie on a balance of probabilities) that Everton would have got two fewer points but for their admitted overspend.
“It is not impossible that Everton have already paid up which is why we have heard nothing of Leeds in the Burnley conversation. If the case is on-going or Leeds are waiting to see how the Burnley case unfolds, it is going to present some interesting litigation/disclosure issues given that the executive that probably knows most about the case, Angus Kinnear, is about to switch sides to become Everton CEO.”