IN PLAY WITH B&K

Welcome to Volume 4 of “In Play with B&K”, the regular update from the Bray & Krais sports law team. This month we consider the recent ruling by the English Premier League Independent Commission against Everton FC (7 min read).

Five takeaways from the Burnley v Everton compensation decision

Background

In June 2026, the Premier League Independent Commission ruled that Everton Football Club must pay Burnley Football Club £35 million, having found that Everton’s breach of the Profit and Sustainability Rules (PSR) conferred a sporting advantage that caused Burnley’s relegation.

After the Premier League Appeal Board in 2024 upheld the same Commission’s finding that Everton had breached PSR for the 2021/2022 season (by an overspend of £19.5 million), Burnley notified Everton that it intended to seek compensation through Rule W.51.5 of the Premier League Rules, which empowers the Commission to order a club found in breach of the Premier League Rules to pay compensation of an “unlimited” amount to an aggrieved party.

Burnley’s claim was that the sporting advantage created by Everton’s breach of PSR resulted in its relegation.  It sought to be put in the position that it would have been in but for Everton’s breach, claiming compensation for the financial losses flowing from its relegation, such as lost Premier League broadcast revenues.

The Commission found that, on the balance of probabilities, Everton’s breach of the PSR caused Burnley to be relegated and ordered Everton to pay £26 million plus £9.1 million in interest.

This decision is subject to appeal by Everton.  While commission decisions are not binding in the same way as higher court judgments, they are routinely cited as highly persuasive.  With a verdict on Manchester City’s 115 charges impending, we identify five takeaways that lawyers for interested parties will have noted.

Clarity on the legal basis for compensation

There are examples of clubs claiming compensation from other clubs (see West Ham’s or Derby County’s settlements). This decision, though, is unprecedented not just in the quantum of the claim, but also as the first time a club has claimed compensation through the Rule W.51.5 mechanism (now W.55.5) and it usefully clarifies the procedure:

• In its 2024 Statement of Claim, Burnley initially tried to claim that it should be awarded compensation under W.51.5 automatically by way of further sanction.  The Commission made an interim ruling that Burnley was not so entitled: its claim was a contractual claim to which ordinary principles of causation and compensation applied.
• In principle, the compensation mechanism is available to clubs suffering identifiable loss as a result of another’s breaches of financial rules (note the incoming SCR and SSR rules) and not just the more obvious violations similar to Southampton’s spying in the EFL.
• A compensation claim is not an avenue for interested parties to be joined to the underlying complaint.  Burnley’s original application to intervene was refused on grounds of procedural unworkability and the need to prevent access to confidential and commercially sensitive information. Compensation proceedings are instead stayed pending final determination of the underlying proceedings, after which the Commission may in its discretion indicate that it may wish to award compensation.

Delineation of sporting sanctions and civil compensation

One of Everton’s grievances is that “a substantive sporting sanction has already been received”, i.e. the decision opens the door to a potential triple jeopardy: a points deduction, the decrease in merit money from an adjusted league position and liability for compensation.  Everton might also point to the £10 million fine issued to Chelsea in March 2026 as a comparator.

This fails to recognise that the compensation mechanism and the disciplinary process serve distinct purposes.  Compensation is about putting an affected club in the position it would have been in but for the defaulting club’s breach and not punishing the defaulting club.   Moreover, the existence of Rule W.51.5/W.55.5 envisages that breaches of Premier League Rules may not be exclusively addressed through points deductions.

By the same token, Burnley were unsuccessful in their argument that the simple way to quantify sporting advantage was to adopt the 6 points deduction as a proxy.  By that logic, a 6 point deduction at the end of the 2021/2022 season would have relegated Everton instead of Burnley.  The Commission noted the attractive simplicity, but rejected it, drawing also on Lord Dyson’s comments in Sheffield Wednesday FC v the Football League.  Burnley had conflated sporting advantage on the one hand and sporting sanctions, such as points deductions, on the other, which are not a quantification of sporting advantage but are imposed as a punishment and a deterrent to uphold the integrity of the competition.

To Everton’s point, a sporting sanction applied only in the following season will generally be incapable of compensating a club for loss suffered in the season of the breach, hence the need for a follow-up compensation claim.

In the bigger picture then, this decision and the prospect of theoretically “unlimited” compensation gives spending rules more teeth. Any clubs close to the limits of the new financial rules that might have otherwise been prepared to absorb a fine or a deferred points deduction will now think twice.

The “practical and realistic” approach to counterfactual analysis

Before coming onto causation and quantum, the Commission had to first hypothesise what would have happened if Everton had not breached PSR.

Everton argued that the correct counterfactual should alter its conduct to the minimum extent necessary to avoid a breach.  They then claimed that the hypothetical world of PSR compliance involved Everton saving money on players with no difference to its sporting performance – Everton would have simply sold another (redacted) player.  Alternatively, Everton would have refrained from buying other players to remain PSR-compliant with little impact on sporting performance (or if bought, would have sold underperformers), pointing to analysis showing Everton to be the league’s least efficient spender relative to points gained.

Preferring Burnley’s reading of Durham Tees Valley Airport, the Commission clarified that the exercise required it to take a “practical and realistic approach” to making findings of fact as to what would have been done.  A course of action being hypothetically possible does not make it the one that would probably have been adopted.

That Everton’s then owner “unequivocally dismissed” an offer for an undisclosed player flew in the face of the claim that Everton would have sold the player in summer 2022.  The Commission also had little sympathy for the second counterfactual, echoing the conclusion in the disciplinary proceedings that “the point is not that the Club, having invested heavily… did not do as well as it expected… but rather that, having made that investment, the Club is likely to have performed better than it would had it not done so.”

This rejection of the inefficient spend argument is yet another example of the threshold for finding a degree of sporting advantage being relatively low.  Southampton recently protested in its EFL disciplinary case that intel obtained from spying produced no sporting advantage because it was wrong, of no use or disregarded by coaches in match preparation, but the test looks at sporting advantage against the base case and not sporting success.

Purposive construction of the Premier League Rules prevails

Everton’s principal substantive argument was timing: applying the PSR literally, a club is not technically in breach of PSR until the end of its financial year because until that point it can take steps to cure an incipient breach.  Consequently, Burnley’s relegation had already taken place (on 22 May 2022) before Everton’s breach (no earlier than 1 July 2022).  Accordingly, Burnley’s claimed losses were incurred before the cause of action and were therefore not recoverable.

Burnley argued that a literal reading produces a result inconsistent with the purpose of PSR – properly construed, the PSR recognise that breaches can exist before the end of a club’s financial year.

Both parties cited the decisions in the Premier League v Leicester City tribunals, where Leicester maintained that, upon its relegation, it was no longer a “Club” that could be disciplined for breach of the PSR.  The Commission here drew on the final determination by the Rule X tribunal, which overturned the Leicester Appeal Board’s literal reading, and found:

• The Appeal Board in Leicester City erred in applying a literal construction that disregarded the evident purpose of the PSR regime, which created an integrated, coherent system.
• The correct construction recognises that PSR breaches do not materialise as a single event, but may develop and exists over the course of the season before the annual accounts are completed.  The PSR calculation effectively reveals the PSR breach, but is not the same.
• The PSR tie annual accounts to playing seasons.  Any adverse effect of a PSR breach occurs during the season tied to the annual accounts which reveal the breach, and so the breach relates to that season.

On the facts, Everton were “on a path to” a PSR overspend.  The breach revealed by the calculation “had been present” for months before Burnley’s relegation.  Indeed, Everton’s 2021/2022 season was closely monitored by the Premier League, Everton were repeatedly warned as to compliance and filed forecasts of a breach in March 2022.  It was thus open to Burnley to maintain its case that the breach caused the relegation and the loss flowing therefrom.

In the event that (i) Everton are successful with this complete defence on appeal and (ii) Manchester City are found guilty of their 115 charges, the literal timing defence is unlikely to be available to Manchester City given the nature of their charges, which recur over numerous seasons.

Causation analysis

Everton’s alternative argument was that even if a breach of the PSR conferred a sporting advantage, Burnley could not prove that such advantage caused their relegation.

While acknowledging that “trying to quantify the impact of Everton’s overspend in points terms is an inexact science” (and Lord Dyson’s comment in Sheffield Wednesday that sporting advantages derived from breaches are “likely to be impossible to quantify”), the Commission was willing to engage with thorny questions of causation.

In support of its alternative case on causation, Burnley instructed experts to carry out a statistical and probabilistic modelling exercise, using 100,000 simulations, to determine whether Everton’s breach resulted in a sporting advantage and, if so, the extent of it.

Notwithstanding Everton’s partly accepted misgivings and contrary analysis, the Commission found the expert evidence of Burnley more compelling and concluded that, on the balance of probabilities, the breach of PSR translated into the minimum of four points that caused Everton to avoid relegation to Burnley’s detriment.

While such analysis is invariably fact-specific, there are some lessons:

1. Overspend should be allocated to the last season in the relevant cycle (rather than spread evenly across the seasons in question since the benefit is cumulative).  This could help, e.g. Manchester City, to narrow sporting advantage to select seasons.
2. The general principle of diminishing returns was accepted (i.e. the more a club spends, the more inefficient each pound of expenditure becomes), but the Commission agreed that it in practice it was only really felt by high-spending clubs, which already have near-optimal squads.  By contrast, for a lower spending club, a £20 million player was more likely to make a difference.  This might again be an argument Manchester City (if it came to it) could employ to undermine arguments as to the extent of any unlawful sporting advantage.
3. As above, inefficient spend is no defence.
4. The importance of engaging credible experts, particularly where it is generally harder to overturn factual findings than points of law.  The Commission was impressed by the Burnley experts’ background in football matters and considered that their modelling more accurately reflected the probable outcomes than the less nuanced analysis advanced by the Everton expert, who was an economist with over 30 years’ experience “but with no direct experience of footballing issues”.  After a lengthy ten-day hearing, it is hard to see these findings being reopened on appeal.

Final thoughts

Arsenal, Liverpool, Manchester United and Tottenham Hotspur have reportedly served notices on Manchester City to preserve their rights within the six-year statute of limitations.

If one indulges in speculation and assumes an adverse ruling against Manchester City inviting compensation claims, it is worth noting that the causal chain would be materially more complex.  The Everton-Burnley dispute relates to a single season and is binary: if Everton were relegated, Burnley must stay up, in circumstances where the difference was merely four points.  By contrast, a club who finished outside of the top four (missing out on Champions League revenues) would need to demonstrate that if Manchester City had not breached the relevant rules, not only would City not have won the league, but they would have also fallen outside of the top four completely.  While the 100,000 simulations in Burnley’s case replayed Everton’s matches but held other clubs’ positions constant, the statistical and probabilistic exercise in a claim against Manchester City would have to factor in far more variables, making it harder to cross the greater than 50% balance of probabilities threshold.

For this reason, it is plausible that interested parties may run loss of chance claims as a safer alternative.  Such claims compensate a party for the loss of an opportunity to achieve a beneficial outcome and are a modification of ordinary contractual principles of causation and quantum.  Instead of having to pass the balance of probabilities causation test, a claimant would only need to prove that the chance of finishing in the top four was “real and substantial” and that the chance had tangible value.  The commission would then award damages in proportion to the percentage probability.

For instance, if, absent a breach by Manchester City, Tottenham had a 30% chance to qualify for the Champions League and the club would have earned £40 million from participation in the Champions League the following season, it would recover £12 million of the losses.