OFFICIAL: English Premier League club receives the heaviest penalty in history

Everton is ordered to compensate Burnley approximately £40 million following the defeat in the case related to violations of Premier League financial regulations, creating a legal precedent that may impact numerous other clubs down the line.

Everton has just taken another heavy financial blow as it is forced to pay nearly £40 million in compensation and interest to Burnley — the largest compensation sum in football history — after losing a dispute over breaches of the financial regulations of the Premier League.

In late 2023, Everton was deducted 10 points by the Premier League for violating the Profitability and Sustainability Rules (PSR) in the 2021/22 season. Following an appeal, the penalty was reduced to 6 points in early 2024.

Right after the penalty was confirmed, Burnley — the team that was relegated in the season during which Everton committed the violation — was allowed by the arbitration panel Premier League to sue Everton for damages.

The tribunal chairman, David Phillips KC, also confirmed that Leeds United, Leicester City, Nottingham Forest, and Southampton have the right to pursue similar claims. However, these clubs ultimately did not take legal action.

Under Premier League rules, clubs can demand compensation if they prove that an opponent's violation directly caused them harm. However, before this case, no such claim had ever succeeded.

Everton forced to compensate nearly £40 million

According to the latest announcement, Burnley won the lawsuit, and Everton is required to pay compensation plus interest amounting to nearly £40 million.

Burnley's argument was based on the premise that if Everton had been deducted 6 points during the 2021/22 season (when the violation occurred), the Merseyside club would likely have been relegated, while Burnley would have stayed in the Premier League.

Initially, Burnley was reported to have demanded at least £50 million. This figure reflects the difference between the "parachute payment" (support for relegated teams) they received and the minimum amount they could have earned from Premier League broadcast rights had they remained in England's top flight.

After assessing the lost opportunity value and the likelihood that Burnley could have avoided relegation if Everton had been penalized earlier, the tribunal decided on a compensation amount of nearly £40 million.

In the 2021/22 season, Everton finished 16th with 39 points, just 4 points ahead of Burnley, who ended up in 18th place.

Everton speaks out, determined to appeal

On the club's official website, Everton immediately issued a press release: "Everton Football Club is surprised and outraged by the decision of the Premier League's Independent Disciplinary Committee requiring Everton to pay compensation to Burnley related to Everton's breach of the Profitability and Sustainability Rules (PSR) in June 2022.

Everton has appealed this decision and believes that the ruling contains fundamental errors both legally and factually.

The club does not accept the tribunal's conclusion that Burnley's relegation from the Premier League in May 2022 was due to the sporting advantage Everton gained from violating the Profitability and Sustainability Rules, especially given that Everton had already received a significant sporting penalty for this violation."

Nevertheless, this ruling has set an important precedent in Premier League history. Burnley's success demonstrates that clubs can indeed obtain substantial compensation if they prove they suffered losses from teams that violated financial regulations.

This also draws attention to the closely watched case of Manchester City, which faces 115 charges of financial rule violations. According to multiple sources in England, if Manchester City is found guilty, several Premier League clubs have already prepared legal teams to pursue compensation claims in the future.

The ruling in favor of Burnley is therefore not just a victory for that club, but could also open a new wave of legal disputes related to financial violations in English football.