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Burnley sue Everton for £50m

The joke used to be 25 years ago that any modern Subbuteo set required an accountant.   Today a VAR team needs to be added, but above all a team of lawyers.

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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