The goalposts were moved in Everton's case... that's why the punishment is so unfair

But the principle involved here should still have been presented in a much stronger way, to make sure that all costs to Everton related to stadium construction were discounted from the PSR calculation.

Forget the interest issue for a moment, and think about the underlying principle here — that infrastructure costs should be deductable. Yet my understanding is that costs incurred before planning permission was secured were not 'capitalized'.

I'm no accountant and have no idea what this actually means but the result — and please correct me if I'm wrong — is that the vast sum of monies spent by Everton to get this incredible project through planning permission (around £40M) went into Everton's profit and loss calculation, rather than being considered as going toward a tangible infrastructure asset.

I haven't checked back to see which year this occurred in but, since the PSR calculation encompasses four seasons (not three) up to 2021-22, I'm sure it includes obtaining planning permssion.

Surely, following the spirit of the rules and applying 'good faith' the commission were so hung up on, then all the monies spent by Everton on the new stadium, including this vital pre-development oultlay, should be discounted from the PSR calcuation.

But for some arcane accounting convention, that investment is included as a cost that directly increases our PRS calculation by around £40M. And that makes us guilty of a breach?

It's the interest on loans, not the full value of loans, that can be taken into account to reduce calculation of our losses; we initially told the Premier League that the Rights & Media Funding and Metro Bank loans were to be allocated to the stadium project and the Premier League accepted that.

However, the Premier League later discovered that in fact we didn't allocate those loans to the stadium project, and instead used a loan from Moshiri for the stadium project; Moshiri's loan was interest-free and so there was no interest to be taken into account in our favour.

Furthermore, the Premier League saw us as not acting in good faith on all this (changing the story), which was one of their aggravating factors.

Sorry, just seen that Anthony and Brendan on the "Compensation..." thread seem to take the same stance.

I am sure my accounting skills are no better than yours. But reading through the 40-page verdict the other day, I got the impression that, after repeated representations from Everton, the Premier League eventually agreed that the money we spent on the stadium project before planning permission could be excluded from the PSR calculation, in what was described as the August 2021 agreement.

This is quite a pivotal point and I would like to hear from people who fully understand this.

We haven't cooked the books.

We didn't seek a sporting advantage.

There are mitigating circumstances which more than account for the £19.5M excess loss over a 3-year period.

All this means there should be no sporting sanction. The nature and severity of the sanction are unjust, and we must remind anyone who will listen of this at every opportunity.

More than one source claiming that the 'rules' we have broken were not actually in place at the start of the process. nor have they been ratified and added to the handbook. They were put in place to judge EFC alone.

Can we just not employ a decent legal team please. I do not wish to speak ill of the dead, but this smacks of his delusional 'What would Everton do?' If this had occurred prior, then a proper defence could have been submitted.

Well at the moment we are having our arses smacked and instead of fighting, we are saying. "Please Sir, may I have another?"

I also thought it had been stated that expenditure prior to planning permission being secured was then subsequently allowed by the Premier League.

Surely trying to buy and pay better players is in the realm of seeking a sporting advantage?

The reality is there is no other consistent way to both significantly improve your league position and then maintain it than to up your expenditure on players.

Theoretically an outstanding coach or manager could do it but are there any that come with a cast iron guarantee?

The truth is the Premier League are happy for the current general status quo to be perpetuated forever and expect the lesser clubs to be satisfied with the occasional good run of form giving them a whiff of what it would be like to establish themselves as one of the upper echelon.

Hopefully the obvious fact that they are loath to punish Man City and Chelsea proportionally will see PSR abandoned. I'd rather run the risk of financial ruin and have the possibility of a backer coming in to make us genuinely competitive, than have to meekly accept a role as permanent underdogs in a risk-free future.

The 3-year £105 million limit and referral to the Commission for clubs who breach it have certainly been in place for a few years.

As have the wide ranging powers of the Commission including the power to adjudicate upon any potential compensation claims.

So exactly what rules weren't in place?

"The Athletic has since been told the [Premier League] sanction framework was only meant to be used for Everton's case. It is understood no such league-wide sanction policy is in the pipeline at the moment and that such a change would need to be communicated to clubs formally and via the handbook."

Link

When it came to the vote Richard Scudamore had to apply pressure to get it through. Two thirds (66.67%) of votes cast had to support the change. In the end, six clubs voted against and one club abstained meaning 68.4% voted for the change. The clubs that voted against the changes were:

Against: Man City, Fulham, Aston Villa, West Brom, Swansea, Southampton.
Abstained: Reading

It was only adopted because the PL was fighting off potential government intervention. Sounds familiar. Ten years later we're the victim of this ongoing political expediency. Shame that Everton didn't vote against it, maybe we had no one who understood it!

In 2013, the Premier League sold the domestic rights:

The Premier League have sold the domestic broadcast rights from 2013-16 for £3.018B, with BSkyB and BT the two winners.

Last year the updated the arrangement:

Under the current arrangement, Sky – the owner of Sky News – and BT agreed in 2018 to pay £4.5B to screen live matches from 2019-20 to 2021-22 and a further tranche of games was sold to Amazon Prime for an undisclosed sum.

The new deal extends the arrangement, covering seasons 2022-23 to 2024-25, with a total value thought to be in the region of £5.1B.

Yet trading limits have remained the same despite a 70% increase in domestic TV revenue.

It will then lead to politicians and developers really taking an interest into the deduction scandal imposed by a biased panel and a Premier League board unfit for purpose.

It would also hurry up any reduction on the points we lose and cease immediately any risk of being forced to pay compensation to three or four teams, who were worse than us, when we have had the worst team I've ever seen in Everton colours.

Make them sweat instead of us supporters, who quite frankly have had enough of people who talk with forked tongues and would find it difficult to sit the right way on a toilet. Fuck them!

That is also my understanding of what the findings say. There is paperwork for all loans. They will invariably specify what the loan is for. Had it said, 'to finance the stadium' we could have included the interest in our calculation. But it didn't.

I suggest that this was because Moshiri wanted a 'clean' stadium financing set up, in order to bring in a sizeable outside investor who may well have been treated as 'senior debt', ie, secured against the asset.

The truth is, we should have known what we did was never going to fly. Grade A stupid and a terrible reflection on our so-called Board (and owner).

Reading Clause 28 of the judgment report again, with reference to that August 2021 agreement, it does state:

"The effect of that agreement was that, subject to certain conditions, Everton would be able to exclude from its PSR calculation stadium expenditure that could not
be capitalised."

Okay, yes, great. Except that it then quotes Clause 1.2 of the agreement itself:

"Given that the Stadium Costs [of approximately £39,346,00] were
incurred in the financial years prior to planning permission being granted, under applicable accounting regulations, these costs cannot be capitalised and must therefore be included in the Club's PSR Calculation. [My emphasis added in bold.]

So which is it???

They then quote Clause 2.1, which says:

"The Club's PSR Calculation … must not exceed the Threshold [£105M] plus such portion of the [Stadium?] Costs as falls to be reported in the relevant period. [Again, my emphasis added in bold.]

Now to my simple mind, that word 'plus' means that the £105M PSR Threshold is increased by whatever Everton's [Stadium?] Costs are in the relevant period. But in the whole of the rest of the judgement report document, there is no mention of the threshold that was actually applied being increased to reflect these costs. It is always £105M.

I think Everton tried to get this accepted again in their Amended Answer, which concluded:

The Premier League has rightly accepted that losses incurred by the Club in constructing the Stadium are the result of "applicable accounting standards" and reflect costs for which "there was no sporting imperative in the circumstances (not least when other Clubs had, in effect, been able to capitalise similar capital-related expenditure)". In those circumstances there should be no question of a sporting sanction.

Why would Everton mention them again at this point if it had all been resolved in that August 2021 agreement?

But in Clause 137, the Commission finally states more clearly:

Everton's PSR difficulties are not attributable to the costs of the stadium development. Those costs were excluded from the PSR calculation in respect of the period before planning permission was granted by reason of the 13 August 2021 agreement…

So I guess we have to conclude that all stadium development costs were excluded, and I was wrong?

First, it appears to be universally acknowledged (apart from amongst the more Neaderthal supporters of other clubs) that the punishment is grossly disproportionate to the "crime" (a technical breach of completely arbitrary rules)

Second, it appears that the rules, which have always had the appearance of preserving the oligopoly of the Sky Six, were changed halfway through the process, and that Moshiri's desire to keep the stadium and the day-to-day financing of the club separate was not a problem when he did it, but that reclassification of what was allowed was changed post facto to Everton's detriment afterwards which is contrary to every principle of natural justice

Third, the independence and probity of the "Independent Commission" appears very uncertain with apparent lobbying by the Sky Six (or at least some of them) for a huge penalty, probably in order later to be able to remove Manchester City from competition

Fourth, and in many ways, the most fun of the lot: the government has failed spectacularly to invest in the North of England having won the last election by capturing seats there (not in Liverpool, but to the Westminster "brain", Stoke, Liverpool, Sunderland, Keswick are considered the same place), and are going to be desperate to do anything to hang onto at least a few of them (don't bother stating the obvious about previous failure, they are very dim). The MP for West Derby is going to bang on about the huge (and genuine) benefits to the City and the north in general of this superb stadium in a very underdeveloped area and then Sunak can make a few points by hammering the EPL in support of Moshiri's investment.

Overall, I reckon these knobheads at the EPL have fucked up royally! I look forward to their absolute humiliation. And then to them looking to save themselves by spilling the beans on the RS-led attempt to destroy Everton, who knows, maybe the rest of the teams will decide that this repeated level of disloyalty (as in the European Dross League) is a bridge too far on disloyalty and throw them out of English football.

Couldn't happen to a nicer club!

PS I still find it hard to condemn Moshiri other than for his poor selection of people to trust. He poured a fortune into the club, he got us a new stadium, he's lost a fortune and he has, in fact, done a great deal of good for the city of my birth. For myself, I'm not prepared to hold him in contempt and derision, just pity.

This points deduction should and must be overturned completely. It is disproportionate and wholly unjust.

Like you, on reading paras 27, 28 and 30 more closely, I'm confused as to whether all this is consistent about stadium costs being allowed (or not).

I suppose the Premier League would argue that £19.5M above the desired threshold represents 18.57% which if it was converted to a speeding offence would mean driving at 83 mph in a 70-mph zone.

And then it was the equivalent of a driving ban for a first offence and the potential destruction of the car.

The Premier League stated that there was no written evidence that the club wanted to bring forward payments from USM in relation to the naming rights of the stadium, and therefore could not be used in our defence as mitigating circumstances.

If there is no record of this telephone call, then the club can simply say they never received any such call, and therefore knew nothing about these changes to interest payments counting towards losses.

This is an effing disgrace, it's like an argument over using a credit card to pay the bill on another credit card, not really sensible but not a crime; in the end, the money was spent on the stadium, the money will have to be paid back, the interest on monies used for stadium development is excluded, was money not spent then?

This is a smart-arsed vindictive opportunist accountant ruling; if there is any bad faith, then it sits with the Premier League.
Everton FC juggled their monies, the intent was to use it for day-to-day activities, it's like the credit card company saying you can use it to buy food but not pay the plumber.

It's stupid, but the flagrant disregard to allowing the claim back of interest paid is disgraceful. In effect, the Premier League didn't just move the goalposts, they removed one of them!

This is why, as I have said before, it's vindictive and wholly disproportionate for what is a breach of use of money.

Consider the other way for a minute: if we took out loans for use on the stadium but paid for the food and then claimed deductions as a stadium expense, then that's a fraudulent claim, but we spent money on the stadium – all monies spent should have been excluded. Doesn't matter which trouser pocket it came from...

In this way, all of the Premier League corruption is kept in-house and keeps the odds stacked against us.

The stadium was funded using interest-free loans. Yet Everton falsely misrepresented to the Premier League that we were paying interest on the stadium funding.

I really don't see how anyone can think the club weren't at fault here.

We borrowed directly from Moshiri to finance the new stadium. If we'd borrowed from a bank and made it clear the funds were being used to fund the stadium, that might have reduced the losses, but not by the full amount.

It's an accounting quirk. On this count at least, the club has done nothing wrong.

Of course if we'd borrowed from a bank any interest payments would have been fully deductible from our P&S total.

However we did not borrow from a bank. We got an interest free loan but still incredibly claimed a reduction for interest payments we didn't make in respect of the stadium.

The money came into the club. If we'd have explicitly taken out a commercial loan to pay for the stadium, and used the interest-free loan from Moshiri for general use, then our losses from a P&S perspective would have been reduced.

It's an accounting quirk, and an utter nonsense to suggest that the two sources of financing were unconnected.

Let's not let the Premier League off the hook – we've done nothing wrong.

You could argue we are in this position because of the fans, the other lot across the park did not put up with 2 yanks who were pulling the club apart.

We, on the other hand…

Of course the two sources of finance were unconnected. Everton admitted that and even provided paperwork to that effect.

"Let's not let the Premier League off the hook – we've done nothing wrong."

The most common view expressed on these threads that I've seen is that Everton are guilty, should not waste their time trying to argue their innocence at any appeal, and concentrate instead on contesting the severity of the punishment.

There's a reason for that and I've no doubt it's a strategy the club will follow.

Should we be docked 10 points for stating that certain funds were used for a certain purpose, when stating otherwise may have seen us come in under the threshold? Absolutely not. It wouldn't have changed anything in terms of our actual losses.

Do I agree with the club that the loans made by Moshiri to the stadium necessitated a draw on the commercial loans? Absolutely.

The sanction is disproportionate and totally unjust.

"Do I agree with the club that the loans made by Moshiri to the stadium necessitated a draw on the commercial loans? Absolutely."

I think the point is that we were intentionally misleading. We tried to give the impression the commercial loans were for the stadium (with the consequence that the interest would be exempt from calculations of profit & loss) when in fact they weren't. Paras 113-116 are clear and withering on this.

For me, I am just grateful that I have a wonderful daughter who I am very close to and 2 fantastically loyal dogs. Without them, I cannot imagine what I would do if Everton ceased to exist, I think I would probably cease to exist. I am sure I am not alone in these thoughts.

I don't think these people who are controlling the future of our club have any idea of what it is they are playing with.

He sat on the body that fined Everton £300,000 for the crowd invasion against Palace! Talk about sticking the knife and twisting it!

Unbiased? What a fucking joke!

"when I say we've done nothing wrong, it's all relative to the nature and severity of the sanction."

So you are admitting we have done wrong and are therefore guilty – just that the punishment is excessive?

"Do I agree with the club that the loans made by Moshiri to the stadium necessitated a draw on the commercial loans?"

Can you expand on that?

How did the fact that Moshiri provided us with ring-fenced stadium-related loans necessitate a draw on the commercial loans?

Danny, I really wish you were correct – I'd certainly feel a lot more confident about our appeal – but you're not and I don't.

I for one don't want him to sell, I want we and him to regenerate our club and our city. Fuck the Premier League and all those who feed on its carcass. Let Everton FC reconvene. Born 1878. Reborn 2024. UTFT!

https://m.youtube.com/watch?v=hKoB6GRKTKc&feature=youtu.be

Not doubting you mate, but if that is true, surely it puts the “independent” title in absolute jeopardy.

Surely some lawyer somewhere can see through this charade on our behalf. Let's shout this loud and clear to all and sundry.

We had one fool in charge then we had two and the Premier League were laughing their heads off.

"This is going to be easy!!"

The Premier League complains that Everton deliberately misled about the source of funds for the stadium development. Everton had two sources of funds – Moshiri's interest-free shareholder loans (albeit not charge-free) and commercial loans from Rights & Media Funding and Metro Bank. By applying the costs of the commercial loans to the Everton Stadium Development company, the Premier League complained this was deliberately misleading. The commercial loans were for working capital purposes within the club.

The commercial loans were intended for day-to-day operations but the club obviously used them in part for the stadium, that is the issue, the league said we misused the loan for the stadium — not claiming interest on Moshiri's loans.

From the Report, P.77

"We cannot, however, disregard the weight of Everton's own contemporaneous documents and the express restrictions imposed on the use of the commercial loans from Metro Bank PLC and Rights & Media Funding Ltd."

Really doubt Paul had sight of these documents so perhaps his conclusions may be flawed?

I studied (sad person I am) the report and double-checked myself. We, for some reason, probably cash flow, used Metro and R&MF commercial loans in part for the stadium development (loan was expressly for commercial day-to-day operations, not stadium development) and tried to claim the interest back (as we were allowed to) for stadium development.

But the Premier League said we could not as the money was not loaned for that purpose. In doing so, they believed we were trying to pull a fast one over them.

Personally I doubt they realised and it was put in the basket of exclusions as it was loan money we used for the stadium (when we shouldn't have). But my indignation with my previous post stands... as the commission said, we weren't dishonest — just incompetent!

Maybe the club should fight to have this appeal put on hold until it changes hands, but maybe this has been done to force the present owners to sell as soon as possible, and then the new owners will be dealt with in a different light after acquiring the club, a lot cheaper?

And I do believe the club when they say the commercial and private loans were interconnected.

And yes, I wouldn't feel as strongly about the matter had we not been handed the harshest sporting sanction in the history of the Premier League.

They literally posted the loan application information. We did not take out loans on the stadium.

We then decided to still use it as a mitigating factor (as opposed to a cost reduction), arguing that there might have been a possibility of still capitalising the interest under an accounting treatment.

To which the report concluded:

Its case is that the reason that it had not sought to exclude the post-planning permission interest was simply that it had not considered the possibility.

Everton’s evidence went further, making clear that even if it had considered the possibility to capitalise the post-planning permission interest it would not have done so in order to enhance the prospects of securing the senior lending that it was seeking. The Commission doubts that it would be appropriate to permit Everton to raise in mitigation a factual position that not only did not take place but would in any event have not taken place.

So we didn't do it, we wouldn't have done it, but we still want to claim it.

Amateur hour.

I do wonder how much of the points deduction was to do with the actual size of the breach and how much was for the disdain we showed the rules and the process?

But isn't there an element of truth in Everton's claim "that funds coming into the company, whether from Mr Moshiri or from the commercial lenders, were not earmarked or ringfenced in any way. All incoming funds were paid into Everton's current account. Those funds are therefore said to be fungible." (#20)

Is that not a true and honest reflection of how the company actually works? — irrespective of creditor niceties written into loan agreements?

Indeed, could it not be argued that, since the Profitability and Sustainability Rules by definition encompass all incomings and outgoings over the three- (or four?) season period in question, that this is indeed the right way to look at things?

The focus then moves to allowable costs and mitigation, which in the case of the massive investment in the new stadium and the bigger picture this creates, should have seen a least a smidgen of grace, gratitude and recognition from the commission, instead of the cynical disdain they used to cut down this and virtually every other mitigation Everton offered?

Everton, Chelsea, City, investigations into Defoes Portsmouth to Spurs transfer 15 years ago.

The bottom line is football has been bent for years. Back handers, hidden payments, ilegal paymwnts, tapping up, tax dodges, bribes, they'll all be in there.

What's amazing is we've been called out for it. The same club that got done for tapping up academy players & banned and fined, yet the rest get away with it.

Pretty comprehensive summing up of the stadium interest issue.

I think I'll simply refer people back to it if/when the matter raises its head on TW in the future.

They’ve gone after us in such forensic levels of detail that I simply can’t believe they apply such a microscopic level of investigation to other clubs. They decided to use us as proof of their hardline administration to minimise the powers of the government regulator. Unfortunately maybe Moshiri and co. didn’t pickup on the mood music and thought they were still dealing with a reputable organisation. Moshiri has been a disaster, the clubs been terribly run but the predetermined intent to use us as test case is obvious.

X amount came into the club from different means. Y amount went out of the club to different things.

But it doesn't really work like that. It's now how we've treated it, and we've even said it's not how we would have treated it if we could have treated it that way.

Even just on a 'pub test' argument I think it fails. The argument seems to be that if we didn't have to pay for the stadium AND the club's operating costs, then Moshiri would have still loaned us interest free money. Would he?

He could have loaned us the amounts that we borrowed for operational costs - but he didn't. I don't buy this idea that he had a set amount he could loan us and that was that - regardless of where it went. I think he wasn't prepared to loan more to the club, but he was comfortable loaning money to the stadium entity.

Crucially, he did exactly the things that he did. I'm not sure how the PL could judge us on an alternate reality where we might have done different things if the situation was different.

From the Commission's report it sounds pretty low detail. The accounts and then a list of things we're excluding without much backing.

I wonder how many clubs would breach if they actually investigated/audited their reporting?