Sport nationFormer Everton chief executive Keith Wyness has painted a grim picture of the potential fallout from the Premier League’s ongoing profit and sustainability rules (PSR) saga, warning that the situation could lead to “20,000 fans outside the courts” waiting for a relegation verdict after the season ends in what would be “a tragedy for football.”
Speaking on the latest edition of Football Insider’s Inside Track podcast, Wyness, who served as Everton’s CEO from 2004 to 2009 and now runs a consultancy advising elite clubs, expressed disbelief at the way the PSR process has unfolded, leaving the fates of his former club and fellow strugglers Nottingham Forest in limbo heading into the final stretch of the campaign.
Everton and Forest are both facing disciplinary proceedings over alleged breaches of the Premier League’s financial regulations, with the Toffees already having been docked six points this season, reduced from an initial 10-point penalty on appeal. The two clubs are awaiting further hearings and potential sanctions related to their 2022-23 accounts, but with the process set to drag on beyond the end of the season, there is a very real possibility that the final relegation places may not be decided on the pitch.
“The worst case scenario is that we get to the last game of the season, and we don’t know who is up or down,” Wyness said. “That would be a tragedy for football. The fans themselves would be shaking their heads, and we could even see 20,000 fans standing waiting outside the courts for a decision on whether they’ve been relegated.”
The specter of such a farcical and unsatisfying conclusion to the relegation battle has left Wyness incredulous at the leadership of Premier League chief executive Richard Masters and chair Alison Brittain, who he believes must be held accountable for allowing the situation to reach this point.
“Richard Masters and Alison Brittain have got themselves into this mess, and they are the ones who have to be held accountable for it,” Wyness said. “They’ve got to try and learn from it, but I don’t have faith in them.”
The PSR regulations, which were introduced in 2013 as a more tailored version of UEFA’s Financial Fair Play (FFP) rules for the Premier League, limit clubs to maximum losses of £105 million over a rolling three-year period. However, only £15 million of that figure is permitted to be actual cash losses, with the remaining £90 million having to be covered by a club’s owners in the form of shares or equity, rather than loans[2].
For newly-promoted sides like Forest, who spent two of the last three seasons in the Championship, the maximum permitted losses are lower, at £61 million over the same timeframe[2]. This breaks down as £35 million for the most recent Premier League season, and £13 million for each of the two second-tier campaigns.
The complexity and potential loopholes in the regulations have led to widespread confusion and controversy, with critics arguing that they have failed in their stated aim of promoting financial stability and sustainability in the Premier League. Instead, the rules have become a legal and accounting battleground, with clubs pushing the boundaries of what is permissible and challenging sanctions when breaches are alleged.
Everton’s case has become a cause célèbre in this regard, with the club vociferously fighting the Premier League’s charges and arguing that there is an element of double jeopardy in play, as they have already been sanctioned for PSR breaches covering the 2019-20, 2020-21 and 2021-22 seasons. The club’s hierarchy has also pointed out that, unlike other governing bodies such as the EFL, the Premier League has no guidelines preventing a club from being penalized for the same financial period more than once[6].
Forest, meanwhile, are facing a potential points deduction of their own after being charged by the Premier League in January. The East Midlands club, who have spent around £250 million on new players since winning promotion last year, are alleged to have exceeded their permitted losses for the three-year period ending with the 2022-23 season[6].
However, Forest are expected to argue that their financial situation was skewed by the decision to delay the sale of star forward Brennan Johnson until after the accounting deadline of June 30, 2023. Johnson was eventually sold to Tottenham Hotspur for £47.5 million in September, but Forest believe they would have received a significantly lower fee – in the region of £30 million – had they cashed in before the end of June[6].
The club is set to claim that holding out for a higher price for their prized asset was in their long-term financial interests and made them more sustainable, even if it meant breaching the PSR limits in the short term. It is an argument that cuts to the heart of the debate around the effectiveness and fairness of the Premier League’s financial regulations.
Critics argue that the rules, as currently constituted, actually discourage clubs from making profitable player trading decisions and force them to sell at below market value to meet arbitrary accounting deadlines. This, they claim, goes against the very principles of sustainability and sound financial management that the regulations are meant to promote.
Kieran Maguire, a respected football finance expert and lecturer at the University of Liverpool, has been one of the most vocal critics of the PSR system. In a recent article for Forbes, he argued that the rules are actively “punishing Nottingham Forest for trying to make a profit and be sustainable”[8].
“In other words, the profitability and sustainability rules are punishing Nottingham Forest for trying to make a profit and be sustainable,” Maguire wrote. “The Premier League’s accounting timelines gave the club almost no chance to cover that spending by selling players for a profit.”
Maguire’s comments reflect a growing sense of frustration and disillusionment with the PSR regulations among clubs, fans and experts alike. Many feel that the rules have become a legal and financial quagmire, with clubs spending more time and resources on creative accounting and legal challenges than on actually improving their financial health and performance on the pitch.
The situation has become so farcical that the Premier League is now reportedly considering scrapping the PSR system altogether and replacing it with a new set of financial regulations more closely aligned with UEFA’s revamped FFP rules[5]. These would focus on a squad cost ratio system, limiting clubs’ spending on wages, transfers and agent fees to a fixed percentage of their revenue, rather than the current system of monitoring rolling losses.
Under the proposals being discussed, Premier League clubs would be allowed to spend up to 85% of their revenue on squad costs, compared to the 70% limit in UEFA’s new rules[5]. This would give clubs more flexibility to invest in their playing staff and facilities, while still ensuring that they are operating within their means and not relying on unsustainable levels of owner funding.
However, any changes to the Premier League’s financial regulations would require the approval of at least 14 of the 20 member clubs, and it remains to be seen whether there is sufficient appetite for such a radical overhaul. Some clubs may feel that they have already invested significant time and resources into complying with the current PSR system and would be reluctant to start from scratch with a new set of rules.
There are also concerns that a squad cost ratio system could further entrench the competitive advantages enjoyed by the Premier League’s biggest and wealthiest clubs, who generate far more revenue than their smaller rivals and would therefore be able to spend much more on player wages and transfer fees. This could make it even harder for clubs like Everton and Forest to compete on a level playing field and avoid relegation.
For now, though, the focus remains on the immediate fate of those two clubs and the ongoing PSR disciplinary process. Both Everton and Forest are set to have their cases heard by independent commissions before the end of the season, but with the potential for appeals and further legal challenges, there is no guarantee that a final verdict will be reached before the campaign concludes.
This has led to the very real possibility of a scenario where a club could finish the season in the relegation zone, only to be saved by a successful appeal weeks or even months later, or conversely, a club could celebrate survival on the final day, only to be demoted to the Championship by a subsequent points deduction. It is a situation that Wyness and many others believe would be a disaster for the integrity and credibility of the Premier League.
“It’s a mess, and it’s a mess of the Premier League’s own making,” Wyness said. “They have created a system that is confusing, inconsistent and open to abuse, and now they are reaping the whirlwind. It’s not fair on the clubs, it’s not fair on the fans, and it’s not fair on the competition as a whole.”
The former Everton chief executive’s comments reflect a growing sense of anger and frustration among those who feel that the PSR regulations have failed in their fundamental purpose of promoting financial responsibility and competitive balance in the Premier League. Instead, they argue, the rules have become a legal and accounting minefield, with clubs spending more time and money on creative bookkeeping and legal challenges than on actually improving their financial health and on-field performance.
It is a sentiment that has been echoed by many other experts and stakeholders in recent months, as the PSR system has come under increasing scrutiny and criticism. Some have called for the rules to be scrapped altogether, while others have advocated for a more flexible and pragmatic approach that takes into account the unique financial challenges and pressures faced by different clubs.
What is clear, however, is that the current situation is unsustainable and is causing significant damage to the reputation and integrity of the Premier League. The specter of relegation battles being decided in courtrooms rather than on pitches, of fans protesting outside legal hearings rather than cheering on their teams, is one that should be deeply concerning to everyone who cares about the future of English football.
As Wyness notes, the responsibility for finding a solution and restoring trust in the system lies squarely with the Premier League’s leadership. Masters and Brittain must act quickly and decisively to address the flaws and inconsistencies in the current regulations, and to create a new framework that is fair, transparent and fit for purpose in the modern game.
Whether that means adopting a squad cost ratio system, as has been proposed, or finding another way to balance the competing demands of financial sustainability and competitive balance, is a matter for debate and discussion among all stakeholders. But what is clear is that the status quo is no longer tenable, and that change is urgently needed if the Premier League is to avoid further damage to its reputation and credibility.
For Everton and Forest, the immediate focus will be on securing their top-flight status on the pitch, while also fighting their legal battles off it. But for the wider football community, the PSR saga should serve as a wake-up call and a catalyst for reform. The beautiful game deserves better than to be reduced to a legal and financial farce, and it is up to those in positions of power and influence to ensure that it is not.
Citations:
[1] https://www.nottinghampost.com/sport/football/football-news/no-common-sense-former-everton-9120376
[2] https://www.skysports.com/football/news/11095/13041990/premier-league-financial-fair-play-rules-explained-what-restrictions-are-there-on-clubs-spending-what-they-want
[3] https://talksport.com/football/1764643/everton-nottingham-forest-premier-league-points-deduction/
[4] https://www.youtube.com/watch?v=jfZfXbApbbU
[5] https://www.skysports.com/football/news/11661/13065512/could-profit-and-sustainability-rules-be-about-to-change-premier-league-clubs-set-to-discuss-this-week
[6] https://www.theguardian.com/football/2024/jan/15/premier-league-charge-nottingham-forest-everton
[7] https://www.youtube.com/watch?v=YCFp9_G0Bmc
[8] https://www.forbes.com/sites/steveprice/2024/01/15/how-premier-league-rules-prevent-profitability-and-sustainability/?sh=4052646082c2
[9] https://www.espn.co.uk/football/story/_/id/39314204/everton-nottingham-forest-charged-premier-league-financial-breaches
[10] https://www.liverpoolecho.co.uk/sport/football/football-news/former-everton-ceo-makes-premier-28611545
[11] https://www.sportingnews.com/uk/football/news/premier-league-profit-sustainability-rules-financial-fair-play/42ef3c1a91043e191482250d
[12] https://www.youtube.com/watch?v=sPDuqwu0NlI
[13] https://kennedyslaw.com/en/thought-leadership/article/2024/the-premier-league-s-profit-and-sustainability-rules-relegation-danger-for-those-in-breach/
[14] https://www.footballinsider247.com/everton-points-deduction-appeal-wyness-is-bullish-about-reduction-after-robust-case/
[15] https://www.skysports.com/watch/video/sports/football/13049063/explained-what-are-the-premier-leagues-profit-sustainability-rules
[16] https://www.birminghammail.co.uk/sport/football/football-news/no-common-sense-former-aston-28691320
[17] https://cominghomenewcastle.sbnation.com/2024/2/8/24064428/premier-league-to-apply-changes-to-profit-and-sustainability-rules
[18] https://www.football.london/arsenal-fc/news/ex-everton-chief-makes-bullish-28614188
[19] https://www.90min.com/posts/what-are-premier-league-profit-and-sustainability-rules
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