Everton has been docked ten points by the Premier League and must pay a hefty fine.

Everton has been punished 10 points, the most severe penalty ever imposed on a Premier League side, for breaking financial rules, potentially exposing them to tens of millions of pounds in compensation to a consortium of other teams.

Leeds, Leicester, Burnley, and Southampton, who were relegated in recent seasons while Everton remained in the Premier League, have previously threatened legal action, and a May ruling from David Phillips KC agreed the clubs could apply for compensation through the Premier League if Everton were found to have broken financial rules.

Each club has 28 days to file a claim against Everton, who are now second from bottom and two points from safety following the deduction. The Premier League commission that probed Everton’s infraction will decide on any compensation award.

Under Premier League rules, clubs can lose up to £105 million over three years. The commission determined that Everton had exceeded their permissible losses by £19.5 million and declared, “This was a serious breach that requires a significant penalty.”

The committee determined that the club’s transfer business in an attempt to avoid relegation “was recklessness that constitutes an aggravating factor.”

Everton stated they were “shocked and disappointed” by the sentence, which came after an independent commission probe, and that they will appeal. The appeal will be resolved before the season ends.

The harshness of the sentence startled Everton, who felt that a sports sanction for a disagreement about accounting interpretations is unreasonable. The ruling has focused attention on other Premier League investigations and how other teams will be dealt with if found guilty as well.

The Premier League has charged Manchester City with more than 100 suspected rule violations, but no decision has been issued due to legal bickering on both sides. The city has denied any wrongdoing. Chelsea are being investigated for suspected violations during Roman Abramovich’s ownership.

After an investigation of Premier League clubs’ financial records for the 2021-22 season, Everton was recommended to the commission. Burnley and Leeds complained to the Premier League last year, questioning whether Everton had broken the rules after incurring losses of £371.8 million over the previous three years.

“Following a five-day hearing last month, the commission determined that Everton FC’s PSR [profit and sustainability rules] calculation for the relevant period resulted in a loss of £124.5m, as contended by the Premier League, which exceeded the £105m permitted under the PSRs,” the Premier League said in a statement. The panel determined that a 10-point deduction should be applied as a sporting sanction. That punishment is effective immediately.”

Everton had agreed into an informal arrangement with the Premier League over its budget in August 2021, thereby putting the team under a pay ceiling. The league had to approve any potential deals, but each time Everton was warned about their finances.

Everton believes there are some mitigating considerations, which they discussed with the commission. After Russia’s invasion of Ukraine, Everton was forced to pull out of a lucrative naming rights contract for the stadium with Alisher Usmanov’s holding business, USM, which was valued around £200 million. Everton contends that some of the loans they obtained were for their new stadium and should not be counted in the process because infrastructure projects are not covered by PSR, but the commission disagrees.

777 Partners is in the process of taking over the club after the owner, Farhad Moshiri, decided to sell his 94% ownership. There are built-in conditions linked to the acquisition of the club, which means that if the charges are upheld, the price of the transaction will be reduced.

The verdict exceeds the nine-point reduction imposed on Portsmouth in 2010 for entering administration. Middlesbrough is the only other club to have received a similar sanction. In 1996-97, they were docked three points for canceling a game against Blackburn on short notice, claiming they couldn’t field a team due to injury and illness.

“The club believes that the commission has imposed a wholly disproportionate and unjust sporting sanction,” Everton said in a statement. Everton argues that it has always been open and upfront in providing information to the Premier League and that it has always maintained the process’s integrity.

“The club does not accept the finding that it failed to act in good faith, and it does not believe this was an allegation made by the Premier League during the course of the proceedings.” The harshness and severity of the commission’s sentence are neither fair nor justified in light of the evidence presented.

“The club will also monitor with great interest the decisions made in any other cases concerning the Premier League’s profit and sustainability rules.”

The Everton supporter coalition #AllTogetherNow expressed “outrage at the disproportionate punishment” that “punishes those innocent of any wrongdoing – the fans.” It accused the league of having double standards when, in 2021, the clubs that supported a European Super League were fined less than £4 million apiece.

“This is an excessive and grossly unfair punishment for a single charge – and makes a rod for the PL’s back in the future,” said Steve Rotheram, mayor of Liverpool city area. I will back the club in their appeal.”