Our legal dispute with Everton

[Spijed]

Just wondered what's happening or recently happened with that.

Are we likely to benefit quite well from any outcome?

[Quickenthetempo]

Just wondered what's happening or recently happened with that.

Are we likely to benefit quite well from any outcome?

No

[Woodleyclaret]

So my post accusing Everton of creative accountancy is inappropriate? Sorry but that a step too far please remove my account permanently

[ClaretTony]

So my post accusing Everton of creative accountancy is inappropriate? Sorry but that a step too far please remove my account permanently

It was libellous and there was no option but to remove it.

[Deathtrip]

Sorry but that a step too far please remove my account permanently

Just don't log in anymore,I bet you can't

[PremierLeagueClass]

So my post accusing Everton of creative accountancy is inappropriate? Sorry but that a step too far please remove my account permanently

Not much point is there when you’ll just come back as someone else within a couple of days.

[Woodleyclaret]

I will not post again .

[Inchy]

D

It was libellous and there was no option but to remove it.

Potentially libellous. Could be right

[fidelcastro]

I will not post again .

Every little helps.

[Volvoclaret]

I will not post again .

You just have

[Hedontplayforyou]

Just wondered what's happening or recently happened with that.

Are we likely to benefit quite well from any outcome?

I had the same thought

[Burnley1989]

I will not post again .

[Quickenthetempo]

I will not post again .

Grow up.

Everyone has posted something that the moderaters have had to delete from time to time. Just accept/put your hand up/apologise and move on

[Jakubclaret]

The integrity of the forum should surely be more important than posters egos. If you think any different think of back Henry street.

[NewClaret]

Just wondered what's happening or recently happened with that.

Are we likely to benefit quite well from any outcome?

The hearing is supposed to be in July. I expect we will be hearing more on this in the next month or two.

What typically happens in these cases is that both parties hold on as long as possible, making out they think their case is water tight and the other party are bound to fail, then they start exchanging without prejudice letters nearer the time with offers/counter offers to settle. They may also choose to do ‘alternative dispute resolution’, which is basically a non-binding hearing by a jointly agreed party who tries to negotiate with either side and get them to reach an agreement.

I really can’t see either side wanting to go to the main hearing and potentially end up with one massive winner and one loser, so I think it’ll settle but only very late in the day.

As a reminder for folks interested, we basically have to prove there was a ‘chance’ Everton’s PSR breach caused our relegation. Which will be tough, but we will have very solid arguments. The 6 point deduction they were awarded would’ve see them relegated that year, but the previous hearing did say that while a sporting advantage had been inferred, it could not be quantified when they gave their initial 10 point deduction, reduced to 6 at appeal.

We will have to prove that their £19.5m overspending caused our relegation, which will be tricky as accounting is cumulative so there won’t be one specific cause of the breach. So I think our case will revolve around arguments like:

1. They should have stopped spending in the summer prior. That year they signed Mykolenko, Patterson, Gray cheaply and Townsend (free). I think we’ll do detailed analysis of their contributions to the season. Simplistically, summer signings that year scored 40% of their goals from the season. The latter two scored against us in the home game, causing a three point swing. Mykolenko scored a winner vs Leicester, so there’s 6 points positive impact. Everton will argue that those players weren’t solely responsible for the breach or that other players could’ve been signed that may have had the same/better impact given the unpredictable nature of the sport.

2. Moshiri’s comment that they took risks with PSR to “replace our non existent midfield” will be a big angle for us. We will argue that had they not taken these risks, and played absent a midfield, we’d have stayed up. This will mean looking further back as it was the season prior to the breach (20/21) when they signed Allan and Doucoure for €47m. We’ll need to model the outcome of the following season had they not been signed and prove that they had a material impact on us being relegated. That won’t be hard as pretty sure they both played a lot of games and were two of Everton’s better players.

3. Finally, I expect we’ll make some representation around the points deduction, and the fact that had either the ten or six point punishment been applied in the season the breach occurred, as we requested an early hearing, it’d have resulted in us staying up. This will be a weaker argument. Everton will argue there was no provision in the rules for an earlier hearing and note that the hearing did not attempt to quantify the sporting advantage gained when issuing its punishment. Both of which are true, but I still expect us to make it as a fall back argument.

In summary, I think it will all come down to a) lots of financial analysis where we pinpoint the exact causes of the breach, develop various alternate scenarios that would have needed to be true for them to remain complaint (e.g. not signed combinations of players), then b) use performance/technical data analysis prove that in those scenarios there is a good chance that we’d have stayed up instead of them.

Complex stuff. I expect we might have leant in to their former CFO’s knowledge when employing him on point a) and will be using Lee Mooney to model point b).

[Spijed]

Thanks for the info.

[JR1882]

Just wondered what's happening or recently happened with that.

Are we likely to benefit quite well from any outcome?

It will settle out of court, we may have a case and could hold out for a big win, but Everton have new owners, new stadium, everything positive so I’d imagine they will throw 20m or so at us and try call it even.

Apart from the Tevez/Mascherano affair there isn’t much precedent for this which makes our case risky however sure we are of it.

The other angle is, with professional sport, you can’t predict what “would have happened”. Everton could have signed no one and still stayed up, you can’t prove what didn’t happen - as such, out of court is probs the way it will go, after a few initial hearings probably.

[NewClaret]

It will settle out of court, we may have a case and could hold out for a big win, but Everton have new owners, new stadium, everything positive so I’d imagine they will throw 20m or so at us and try call it even.

Apart from the Tevez/Mascherano affair there isn’t much precedent for this which makes our case risky however sure we are of it.

The other angle is, with professional sport, you can’t predict what “would have happened”. Everton could have signed no one and still stayed up, you can’t prove what didn’t happen - as such, out of court is probs the way it will go, after a few initial hearings probably.

I agree it will settle. I just don’t see either party want to take the risk of complete loss and I think the premier league will want an outcome that doesn’t set any legal precedents.

I think we’ll consider £20m a bad outcome. That was what the Tevez saga settled for and I think the money lost in relegation is about three times higher now.

That said, the Tevez case was much clearer cut; only one player involved and his contribution to survival was easily quantifiable. I think it’ll depend on how confident we are that we can prove which players Everton couldn’t have signed and remained compliant, and how strong the the arguments are of their contributions to survival.

On our side is what you would consider a sympathetic commission. They have already ruled against Everton, sanctioned them heavily and determined we have a case for compensation. If I were them, I’d be a bit worried about that.

Final point is that I just cannot believe TFG bought Everton without indemnifying themselves against this case, which may mean they have no skin in the game here and it might be more likely to go to hearing.

It’ll be interesting to see how this pans out, anyway.

[Corway]

The case is and it’s implications are discussed here

https://shepwedd.com/knowledge/breaking ... fly-effect

It seems to me our case is about the time it took for the authorities to investigate.

Burnley, were three points away from safety in 2021/22 when allegations came to light of breaches of PSR
were made. In the 2023/2024 season, it was found during 2021/22 Everton had been breaching PSR in he 2021/2022 season Everton avoided relegation by only four points, two points less than the six-point deduction the club later received 2 seasons later for its rule-breaking during that year.
Burnley expressed grievances that the matter was not dealt with earlier so that Everton's point deductions could have been incurred during the relevant season, therefore saving Burnley from relegation and financial loss.

[claretspice]

1. They should have stopped spending in the summer prior. That year they signed Mykolenko, Patterson, Gray cheaply and Townsend (free). I think we’ll do detailed analysis of their contributions to the season. Simplistically, summer signings that year scored 40% of their goals from the season. The latter two scored against us in the home game, causing a three point swing. Mykolenko scored a winner vs Leicester, so there’s 6 points positive impact. Everton will argue that those players weren’t solely responsible for the breach or that other players could’ve been signed that may have had the same/better impact given the unpredictable nature of the sport.

2. Moshiri’s comment that they took risks with PSR to “replace our non existent midfield” will be a big angle for us. We will argue that had they not taken these risks, and played absent a midfield, we’d have stayed up. This will mean looking further back as it was the season prior to the breach (20/21) when they signed Allan and Doucoure for €47m. We’ll need to model the outcome of the following season had they not been signed and prove that they had a material impact on us being relegated. That won’t be hard as pretty sure they both played a lot of games and were two of Everton’s better players.

At an enormously simplistic level, the fact Townsend and Gray scored the final two goals (after Townsend had set up the equaliser) as Everton came from 1-0 down to beat us 3-1 early on that season may well be pretty relevant to that analysis. As you say, this is all about loss of chance because you can never tell what what would have happened in a parallel universe but the fact two new signings had such an impact on a game between the two clubs is very relevant given that in the end, there was 4 points between the two clubs.

[123EasyasBFC]

When I mentioned my colleague spoke to Matt Williams after QPR regarding Tresor, this also got brought up and Williams said he expected us to get compensation from Everton.

Whilst I’m here, he also said the club hired a lip reading expert for the Hannibal and osmajic case and the FA were discussing with the lip reading person

[NewClaret]

The case is and it’s implications are discussed here

https://shepwedd.com/knowledge/breaking ... fly-effect

It seems to me our case is about the time it took for the authorities to investigate.

Burnley, were three points away from safety in 2021/22 when allegations came to light of breaches of PSR
were made. In the 2023/2024 season, it was found during 2021/22 Everton had been breaching PSR in he 2021/2022 season Everton avoided relegation by only four points, two points less than the six-point deduction the club later received 2 seasons later for its rule-breaking during that year.
Burnley expressed grievances that the matter was not dealt with earlier so that Everton's point deductions could have been incurred during the relevant season, therefore saving Burnley from relegation and financial loss.

Per my post above Corway, I think this is misleading and incorrect.

At the time the Premier League rules didn’t allow for an expedited hearing. If they did, our case would be against the Premier League. We, and Everton, signed up to those rules, so we couldn’t retrospectively challenge them. Or it would be very unlikely to succeed if we did.

Our case is against Everton. And the only way I can see us being successful is if we prove their breach - the admitted £19.5m overspend - caused our relegation. Which basically involves determining which players they couldn’t have signed and remained compliant, then that their signings caused our relegation… or there’s a chance it caused our relegation.

They may also make the point that the punishment that was doled out by the same commission that will hear our claim would've seen them relegated had it applied in the year of our relegation, but it’s an easily defended argument so would be more about making a point of fairness than a valid legal argument, I think.

[NewClaret]

When I mentioned my colleague spoke to Matt Williams after QPR regarding Tresor, this also got brought up and Williams said he expected us to get compensation from Everton.

Whilst I’m here, he also said the club hired a lip reading expert for the Hannibal and osmajic case and the FA were discussing with the lip reading person

Interesting, thanks for posting.

[NewClaret]

At an enormously simplistic level, the fact Townsend and Gray scored the final two goals (after Townsend had set up the equaliser) as Everton came from 1-0 down to beat us 3-1 early on that season may well be pretty relevant to that analysis. As you say, this is all about loss of chance because you can never tell what what would have happened in a parallel universe but the fact two new signings had such an impact on a game between the two clubs is very relevant given that in the end, there was 4 points between the two clubs.

Yep.

That’s why I think we’ll create a number of different alternative scenarios that we’ll argue Everton would have needed to take to remain compliant. One will be that they should have stopped signing players that window in knowledge of a likely breach, and, had they done that, their combined 10 goals from summer signings wouldn’t have been scored and we’d have stayed up.

The slight issue is that Townsend and Gray were cheap, Van de Beek was a loan, so it was maybe feasible to sign them and remain compliant. And they scored 9 of the 10 goals. So you’d be relying on the €20m Mykolenko signing where he scored one vital goal to secure 3 points, but there’s probably an argument they’d have conceded more goals without a decent left back.

There may be other arguments, like looking back on Moshiri’s comments re: taking risks to bolster the midfield and positioning that the problems started there, or the scenario where they sold player X or Y to boost profits and remain compliant. I can’t remember the specifics of the case but Richarlison scored 10 goals that year and I think they might’ve received a bid for him that didn’t meet their valuation. In which case, we’ll likely argue they should’ve accepted it and had they done those 10 goals wouldn’t have been scored.

The legal arguments will be tough and fiercely argued by either side. By their nature, they’ll be a lot of what-ifery, so will depend on how well our arguments are constructed and backed up with data.

[claretspice]

https://stefanborson.substack.com/p/exp ... rton-to-be

This is the best summary I've seen of the somewhat nuanced and complicated legal constructs we will need to overcome in order to make a claim stick - particularly around the idea of a claim based on a "lost chance" to survive.

Regarding Gray and Townsend - they were not signed on expensive transfer fees, but they did command substantial wages - it is not irrelevant that (I suspect) Burnley could not compete on wages for either.

[NewClaret]

https://stefanborson.substack.com/p/exp ... rton-to-be

This is the best summary I've seen of the somewhat nuanced and complicated legal constructs we will need to overcome in order to make a claim stick - particularly around the idea of a claim based on a "lost chance" to survive.

Regarding Gray and Townsend - they were not signed on expensive transfer fees, but they did command substantial wages - it is not irrelevant that (I suspect) Burnley could not compete on wages for either.

Yeah, agree that’s the best write up I’ve seen. Still some points I disagree with, not least the assertion that our claim might be £10m! Unless it’s a typo and they missed a zero off it.

It’s a fair point on Gray and Townsend’s wages, but it sort of underlines the complexity, because a whole host of transfer spending and wages will’ve contributed to the breach, so there’s so many potential scenarios we’ll have to simplify and distill in to coherent arguments that on balance, their overspending caused our relegation.

The crazy thing here is their actual losses were £370m but they got covid losses way out of kilter with any other similar club their size. There’s a fair argument that some of those were not justifiable but of course we wont be able to make those arguments.

[claretspice]

Yeah, agree that’s the best write up I’ve seen. Still some points I disagree with, not least the assertion that our claim might be £10m! Unless it’s a typo and they missed a zero off it.

It’s a fair point on Gray and Townsend’s wages, but it sort of underlines the complexity, because a whole host of transfer spending and wages will’ve contributed to the breach, so there’s so many potential scenarios we’ll have to simplify and distill in to coherent arguments that on balance, their overspending caused our relegation.

The crazy thing here is their actual losses were £370m but they got covid losses way out of kilter with any other similar club their size. There’s a fair argument that some of those were not justifiable but of course we wont be able to make those arguments.

I imagine we will be making quite a lot of "in the alternative" pleadings- ie "this is our preferred argument so listen to this first, but if you're not persuaded by that then try this".

Very difficult without knowledge of the fine accounting detail to know what the quantum of damages here might be - particularly if on a loss of chance basis where the %age probability is effectively applied as a tarrif to the claim. It may well be that 10m is referenced as a cautious figure to avoid overstating it. I wouldn't want to put a figure on it.

[NewClaret]

I imagine we will be making quite a lot of "in the alternative" pleadings- ie "this is our preferred argument so listen to this first, but if you're not persuaded by that then try this".

Very difficult without knowledge of the fine accounting detail to know what the quantum of damages here might be - particularly if on a loss of chance basis where the %age probability is effectively applied as a tarrif to the claim. It may well be that 10m is referenced as a cautious figure to avoid overstating it. I wouldn't want to put a figure on it.

Yep, I think there will be a long list of them. 5 or 6 I’d guess.

On the quantum piece, one thing I’m not sure about is whether to be made whole the damages will be for all the lost revenue/additional costs associated with relegation, or the effective profit on that revenue since in a scenario we stayed up we would have had additional costs too.

I expect the former but maybe £10m is more easily explained if it were the latter.

[aggi]

Yep, I think there will be a long list of them. 5 or 6 I’d guess.

On the quantum piece, one thing I’m not sure about is whether to be made whole the damages will be for all the lost revenue/additional costs associated with relegation, or the effective profit on that revenue since in a scenario we stayed up we would have had additional costs too.

I expect the former but maybe £10m is more easily explained if it were the latter.

I'd expect the latter, you can't disassociate the revenues we would have received from the costs we would have incurred if we'd stayed up. The remedy we'll be seeking would be to put us in the position we would have been in had we not been relegated and the increased costs of the Premier League come with that.

[NewClaret]

I'd expect the latter, you can't disassociate the revenues we would have received from the costs we would have incurred if we'd stayed up. The remedy we'll be seeking would be to put us in the position we would have been in had we not been relegated and the increased costs of the Premier League come with that.

Yeah that does make sense, really. Although how exactly we determine what costs we might’ve incurred the following season is more difficult than what revenues we’d have received as it’s easily quantifiable. Costs would be determined by the choices we’d have been able to make had we had the revenue. Given the number of out of contract players, I imagine we will argue one such option available to us would have been some stark cost reductions. Others would’ve been significant investment that may also have realised big profits in future years.

It’ll be tough to work that out, but if that’s how they consider it, I’d reduce my expectations.

[aggi]

Yeah that does make sense, really. Although how exactly we determine what costs we might’ve incurred the following season is more difficult than what revenues we’d have received as it’s easily quantifiable. Costs would be determined by the choices we’d have been able to make had we had the revenue. Given the number of out of contract players, I imagine we will argue one such option available to us would have been some stark cost reductions. Others would’ve been significant investment that may also have realised big profits in future years.

It’ll be tough to work that out, but if that’s how they consider it, I’d reduce my expectations.

If you're doing it properly then you'd be looking at the player contracts at the time, reviewing contemporaneous business plans and correspondence, benchmarking against similar teams, etc

The deprived future profits on signings is a bit more nebulous as is the receipts from sales (e.g. Pope) being depressed as we had been relegated (although given our current profitable player trading it's probably worth a stab with that as some form of benchmark).

I've been involved in a number of these where the kitchen sink has been thrown at it with the business potentially losing out on vast amounts of profit due to some unfair occurrence and you often have to suggest to business owners that their predictions aren't really realistic.

[what now !]

just a thought but we are still being affected by the result of relegation, had we stayed up we wouldn't have been subject to the reduce losses that the EFL impose, the fact we went back up and were relegated again will also be facted in as well. so i think the figure will quite a way north of the 10m quoted in the article.

that said it will also be interesting going forward to see if any settlement in our favour would count as income towards the losses allowed and vice versa will Everton paying us a sum of money mean they have to factor it into any losses for the upcoming season as if its over £35 million what happens then !!! but i suspect that it may then be staged payments over a number of seasons.

but who knows but will be interesting to see the outcome.

also dont forget in all of this the premier league wrote to us and Leeds when we threatened legal action during the affected season and they basically said there was nothing to look at but then they sanctioned Everton 18month later - so really it has been caused by the inaction of the authorities in one sense.

[NewClaret]

If you're doing it properly then you'd be looking at the player contracts at the time, reviewing contemporaneous business plans and correspondence, benchmarking against similar teams, etc

The deprived future profits on signings is a bit more nebulous as is the receipts from sales (e.g. Pope) being depressed as we had been relegated (although given our current profitable player trading it's probably worth a stab with that as some form of benchmark).

I've been involved in a number of these where the kitchen sink has been thrown at it with the business potentially losing out on vast amounts of profit due to some unfair occurrence and you often have to suggest to business owners that their predictions aren't really realistic.

All really good points. I did think about your initial point as you’d expect we had trading strategy documents discussed at board meetings, agent correspondence, etc to support what our plans looked like. Although maybe we don’t plan too far ahead in the midsts of a relegation battle.

Proving loss of revenue is simple. Proving additional costs/losses as a result of relegation (i.e. additional agent costs, reduced player valuations) is less simple but probably easy to form solid arguments. But playing out all the various scenarios that would have happened had we stayed up to determine a fair amount to be made whole, much tougher.

I have a bit of experience in this myself and so it does fascinate me. I think we’ll kitchen sink it like they all do in such circumstances, then it’s a case of who makes the most coherent arguments.

We’ll have to prove causation first though and maybe they do that before discussing loss? It would make sense because there’s a lot of work involved in that.

[IanMcL]

The Richarlson episode of throwing fireworks into the crowd, seems more of an issue. He was only suspended after they had played and he had scored enough to save them. It should have been instant. Drogba only tossed a pound back!

[Goliath]

The Richarlson episode of throwing fireworks into the crowd, seems more of an issue. He was only suspended after they had played and he had scored enough to save them. It should have been instant. Drogba only tossed a pound back!

Yep he was by far their best player. Absolute nonsense that he was allowed to play.

[NewClaret]

just a thought but we are still being affected by the result of relegation, had we stayed up we wouldn't have been subject to the reduce losses that the EFL impose, the fact we went back up and were relegated again will also be facted in as well. so i think the figure will quite a way north of the 10m quoted in the article.

that said it will also be interesting going forward to see if any settlement in our favour would count as income towards the losses allowed and vice versa will Everton paying us a sum of money mean they have to factor it into any losses for the upcoming season as if its over £35 million what happens then !!! but i suspect that it may then be staged payments over a number of seasons.

but who knows but will be interesting to see the outcome.

also dont forget in all of this the premier league wrote to us and Leeds when we threatened legal action during the affected season and they basically said there was nothing to look at but then they sanctioned Everton 18month later - so really it has been caused by the inaction of the authorities in one sense.

I think we’ll definitely make arguments that the destabilisation effect of a single relegation is still having financial consequences. How you argue those I’m not sure.

On the PSR point I’m no accountant but pretty certain if compensation is awarded for loss of revenue it would be accounted as revenue on receipt, so it maybe does make a difference whether we settle or are awarded compensation.

I’m not sure your final paragraph is correct. I think we asked them to expedite a hearing and they said the rules didn’t allow that to happen. I agree with you that the authorities have a lot to answer for in all this, and it wouldn’t shock me if we’d looked at avenues against the Premier League if this fails, but I expect that will be tough as all teams sign up to the rules. I expect that would also need to go through traditional courts. I think they’ll want this settled and wrapped up.

[NewClaret]

The Richarlson episode of throwing fireworks into the crowd, seems more of an issue. He was only suspended after they had played and he had scored enough to save them. It should have been instant. Drogba only tossed a pound back!

That was the real disgrace of that season.

That and the fact they also lost £370m but somehow got all but £125m agreed as being “allowable losses” due to Covid - WAY higher than any other similar-sized club.

Had fewer losses been allowable, the £19.5m overspending would’ve been much higher and easier to prove caused our relegation.

[IanMcL]

That was the real disgrace of that season.

That and the fact they also lost £370m but somehow got all but £125m agreed as being “allowable losses” due to Covid - WAY higher than any other similar-sized club.

Had fewer losses been allowable, the £19.5m overspending would’ve been much higher and easier to prove caused our relegation.

Yes. Everton, remember, were one of the founding clubs of the Prem. The Prem would do nothing to harm them.

[Corway]

Any idea when the case will be heard!

[whiffa]

After Man City's 115 cases I suspect...

[Stockbrokerbelt]

After listening to a piece on talk sport with the 2 guys who are held up as prem finance experts, I think 1 was Barzini or something like that & the other was Kieran McGuire they both thought we had a real strong chance of getting damages. They both agreed that on the points of Everton actually pleaded guilty to the charges & the previous to Sheff U regarding the Tevez case was damming. They were also stunned that Everton’s defence was that they had nothing to do with Burnley’s relegation but it was because we were not good enough. They pointed out our legal challenge is against Everton breaking the rules not that they relegated us! They also said that it’s not in the perms best interests for us to win the case.

[bobinho]

Yes. Everton, remember, were one of the founding clubs of the Prem. The Prem would do nothing to harm them.

Not when you consider the PL will have already have seen the plans for BMD and would have been looking forward to showing their product in there.