Burnley have brought an action against Everton for £50m in relation to their relegation from the Premier League a few years ago when Everton broke Profitability and Sustainability Rules: https://toffeeweb.com/season/24-25/news/46685.html
It's not something I like to see, but Burnley would no doubt argue it's worth a try. If they do get compensated, I doubt whether it will be £50m. Once again the growing band of sports lawyers will be the real winners. If there is not an out of court settlement, the case could last for two months.
Burnley were one of five clubs — also including Leeds
United, Leicester City, Southampton and Nottingham Forest — who had indicated
earlier in the process that they would consider legal action should
Everton’s breach be confirmed.
Burnley will argue they would have avoided relegation had Everton’s points deduction applied in the 2021-22 season, and that they missed out on significant Premier League income as a result. The Premier League TV deal is extremely lucrative, and while there are parachute payments available to relegated clubs, it does not come close to offsetting the income lost. Burnley’s accounts show a decrease in television revenue from £104.9m to £47.8m from the 2021-22 to 2022-23 campaigns.
Not being in the top flight can also influence commercial
opportunities, with Burnley’s income dropping by £3.1m. Burnley were forced to
reduce their wage bill significantly — although a number of high earners were
out of contract anyway — and it likely had an impact on player trading. Burnley
spent around £30m, while bringing in more than £70m.
For Burnley to win this case, they would likely need to
prove ‘loss of a chance’ claim. This legal doctrine, which is expected to be
part of their argument, offers a party the chance to claim damages for a loss
of opportunity. Burnley would not be required to prove they would definitely
have survived if Everton had not overspent, but rather that they had lost
the opportunity to stay up.
Everton have engaged Mark Howard KC, of Brick Court
Chambers, to lead their defence. The main battleground is likely to be around
causation. Burnley will first have to establish that they would have avoided
relegation but for Everton’s breach. There is a question mark around how they
will show a lower spend from the Merseyside club would have directly resulted
in improved performance from Burnley.
This type of case typically ends with out-of-court
settlements and there had long been an expectation that Everton and Burnley
would find a middle ground to satisfy all parties. As yet, though, an agreement
for the compensation figure has not been struck.
Obvious parallels can be drawn between this case and the one
between West Ham United and Sheffield United, eventually settled in 2009. The
latter took action after they were relegated from the Premier League at the end
of the 2006-07 season, with West Ham’s survival overshadowed when they were
found to have broken rules over third-party agreements when signing Carlos
Tevez from Brazilian club Corinthians.
There was no points deduction given to West Ham, who only
received a Premier League fine, but Sheffield United’s two-year legal battle
eventually ended when reaching an out-of-court settlement in the region of
£20m.
Should Burnley be able to convince a commission that
Everton’s PSR breach resulted in their relegation and subsequent diminished
earnings, the door would swing open for others to pursue Manchester City for damages
should any or all of the 115 charges they face stick. It remains a big if, of course. City deny any
wrongdoing and have vehemently fought the Premier League at every step,
maintaining that this is a chance to finally clear their name.
With football a business with large sums of money at stake and ambitious wealthy owners in charge, more and more battles are likely to be fought in the courts rather than on the pitch.
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