Burnley FC has initiated a legal action against Everton FC, seeking compensation in the amount of £50 million. The claim is directly tied to the Clarets’ relegation from the Premier League at the conclusion of the 2021-22 season. 

Burnley’s central assertion is that Everton’s admitted breach of the Premier League’s Profitability and Sustainability Rules (PSR) during that financial period conferred an unfair sporting advantage, and that had the resulting points deduction been applied in a timely manner, Everton would have been relegated in their stead.

This unprecedented case is currently being heard at the International Dispute Resolution Centre in London by the same Independent Commission that previously imposed and then reduced Everton’s points penalties. While Burnley is seeking in excess of £50 million, most analysts and legal experts have expressed scepticism about the feasibility of securing the full amount in the event of their case being successful, suggesting that a settlement in a much lower range—potentially between £0 and £10 million—is a more probable outcome.

The significance of this legal battle extends far beyond the two clubs involved. A successful claim by Burnley would set a precedent, altering the landscape of Premier League governance and transforming financial misconduct from a matter of internal regulatory discipline into a cause for civil litigation between member clubs. This development would allow other teams, including those who missed out on European qualification or were relegated, to pursue financial damages from clubs like Manchester City and Chelsea, which face numerous charges for alleged financial breaches.

The dispute

At the heart of this dispute are the Premier League’s Profitability and Sustainability Rules (PSR) which are the English equivalent of UEFA’s Financial Fair Play (FFP) rules. The core principle of PSR is that clubs are permitted to incur a maximum calculated loss of £105 million over a rolling three-year period.

Burnley’s legal action arises from the final Premier League table of the 2021-22 season. In that campaign, Everton finished 16th with 39 points, while Burnley finished 18th with 35 points and were relegated to the Championship. The lawsuit is based on the premise that had Everton’s subsequent six-point deduction for financial rule-breaking been applied in that season, Everton would have finished with just 33 points, placing them in the relegation zone below Burnley and allowing the Clarets to remain in the top flight.

This dispute creates a legal examination of the relationship between financial regulations and on-field sporting consequences. The Premier League’s own rules deem a PSR breach to confer a “sporting advantage,” providing a direct connection between Everton’s financial overspend and Burnley’s competitive disadvantage. However, the case faces a significant challenge in proving a direct causal link between the financial breach and the final league standings. Everton’s legal defense will likely leverage the unpredictable nature of football, arguing that applying a points deduction retroactively is a speculative exercise. They may claim that a points penalty in real-time would have altered their entire season’s trajectory, including tactical choices, player motivation, and results, rendering a simple points subtraction from the final tally an insufficient and misleading calculation.

Chronology and legal basis

The present case is the culmination of a multi-year process that began with Everton’s financial misconduct and has since evolved into a complex legal and regulatory dispute. The following table provides a clear timeline of the key events.

A key element of Burnley’s case is the argument that the Premier League’s delayed enforcement of its own rules directly contributed to their relegation. Burnley claims that the revenue losses they suffered would have been avoided if the case had been adjudicated sooner, leading to Everton’s relegation in the 2021-22 season.

 The reasoning behind this is that the rules at the time did not mandate that such cases be concluded within the same season as the breach. However, the cause of the delay is disputed. While some sources suggest the Premier League was solely responsible for the slow process, there is a claim that Everton may have “requested” the delay themselves. 

In response to these issues, the Premier League has since amended its rules to “shorten time frames” and ensure swifter hearings. Everton, for its part, is expected to argue that it operated entirely within the existing legal framework at the time and is therefore not liable for a delay caused by the league’s own governance model.

The case (again)  highlights weaknesses in the league’s structure. As a body owned and operated by its member clubs, the Premier League’s system of self-regulation has potentially resulted in a situation where a potential regulatory failure—the slow legal process—has directly led to a legal dispute between two of its members. 

The subsequent rule change has to be viewed as an implicit acknowledgment of the prior system’s flaws, which arguably supports Burnley’s assertion that they were a victim of a systemic failure.  On the other hand, the fact that Everton has already faced severe sporting sanctions has led some supporters and observers to raise a “double jeopardy” argument, questioning the fairness of being subject to further financial penalties for the same transgression.

The Principle of “Loss of Chance”

The legal foundation of Burnley’s claim is the principle of “loss of chance,” a concept that allows for a claim for damages when a negligent action or omission leads to (among other matters) the loss of a valuable business opportunity.  In this case, Burnley argues that Everton’s financial rule-breaking denied them a fair opportunity to remain in the Premier League.

 The tribunal will likely not be asked to definitively declare that Burnley would have stayed up, but rather to assess the probability of that outcome. On that basis  the tribunal can then assign a “probability-based value” to the lost opportunity, potentially awarding Burnley a percentage of the financial benefits of staying in the top flight, based on the determined likelihood of their survival.

The Financial and Sporting Arguments

The loss of revenue arising from relegation, includes broadcasting rights and commercial revenues. The figure that Burnley are thought to be seeking is circa £50 million

Burnley suffered a documented £58 million reduction in revenue as a result of their fall to the Championship. This loss has two primary components: the direct financial impact of a loss of Premier League broadcast rights and a “diminution in value of commercial deals”. 

The lawsuit is sanctioned by Premier League Rule W.51.5, which grants the Independent Commission the power to order a club guilty of a PSR breach to pay compensation of an “unlimited” amount to an aggrieved party.

Everton’s Defence

Everton’s defense will likely focus on a several counterarguments. The central point of contention will be that Burnley’s own performance over the course of the 38-game season was the direct and primary cause of their relegation, not Everton’s financial overspend.

Furthermore, Everton will contend that their financial breach did not confer a direct “sporting advantage” in the 2021-22 season. The overspend was, in large part, related to the financing of their new stadium, a long-term investment that would only provide a future, not a past or current benefit. In addition,  some of the high-profile players signed during that period, such as Dele Alli, Donny van de Beek, and Nathan Patterson, had a minimal impact on the team’s on-field performance. This is in stark contrast to other historical cases, such as the transfers of Carlos Tevez and Javier Mascherano, which demonstrably influenced the league standings.

This lawsuit can be seen as a form of strategic litigation on Burnley’s part. By pursuing a full £50 million, they are initiating a high-stakes legal process with the potential to force a settlement at a lower figure. Their hope will be that the unpredictability of the verdict, the significant legal costs and reputational damage of a protracted legal battle could motivate Everton to seek a compromise, allowing both parties to conclude the matter and move on.

Everton will be defended by Mark Howard KC – (although Laurence Rabinowitz KC has been mentioned).

Adjudication and consequences

The adjudication of the case is noteworthy. The hearing is being conducted by the same Independent Commission that found Everton in breach of PSR and initially imposed a ten-point deduction, which was later reduced on appeal.

As before, the hearing will be held in private due to “sensitive commercial interests”. This lack of public transparency stands in contrast to the widespread public interest in the case and continues to raise questions about the accountability of the Premier League’s internal legal processes.

The outcome of this case is likely to be significant for English football. A victory for Burnley would set a precedent, effectively transforming regulatory penalties from a matter of internal sporting governance into a civil liability between rival clubs. This development would have huge consequences.

The most significant consequence would be the potential for many similar lawsuits. This case is seen as a direct precursor to possible legal action against Manchester City, which faces 115 charges for alleged financial breaches, and Chelsea, which is also under scrutiny for historic financial irregularities. Furthermore, if Burnley’s claim is successful, other clubs relegated in recent seasons, such as Leeds, Leicester, and Southampton, could revive their dormant compensation claims. The implications could even extend to teams that missed out on lucrative European qualification spots as a result of financially non-compliant rivals. 

Ultimately, this lawsuit highlights the significant governance weaknesses of the  Premier League. The system of self-regulation, where member clubs have held the reins of power, has proven inadequate to address the complex financial and legal challenges of the modern game. The ongoing disputes, from the points deductions to this inter-club lawsuit, underscore the reasoning and logic for the implementation of the Independent Football Regulator.

To conclude, this case is a landmark moment in English football. Burnley claim their case possesses a logical and legal framework, asserting a direct line of causation between Everton’s financial breach and its own financial and sporting demise.

However, this argument is not without significant vulnerabilities. Everton’s defense is compelling and challenges the very notion of a direct, quantifiable link between a financial breach and the outcome of a sporting season shaped by multiple factors. The defense will rely on the fact that the club operated within the rules as they were written at the time and that Burnley’s on-field performance was the true determinant of their relegation. The speculative nature of the “what-if” scenario severely questions a definitive verdict.

The probability of Burnley winning the full compensation claimed is considered remote, but a settlement remains a distinct possibility. A negotiated agreement might serve the interests of both clubs by allowing them to avoid the financial costs, reputational damage, and legal uncertainty of a protracted and public dispute.

Regardless of the final verdict or settlement figure, the case has already irrevocably changed the legal and financial landscape of the Premier League. It has established a precedent for inter-club litigation over regulatory non-compliance, forcing the league and its members to confront the limitations of their current governance model. The legacy of this case will be a defining moment that not only dictates the future of financial fair play but also tests the fundamental principles of competitive integrity in the world’s most-watched football league.