Everton position on PSR calculation after summer transfers as key deadline nears

A general exterior view of Everton's ground Goodison Park
-Credit: (Image: Robbie Jay Barratt - AMA/Getty Images)

The sales of Ben Godfrey and Lewis Dobbin have led to hope Everton will comply with Premier League spending rules for the first time in three years.

The deals, for combined fees of around £21m, provided a significant boost to the club’s accounts heading into the final day of the financial year most top flight clubs work to.

Combined with other business - most notably towards the end of last summer’s transfer window - there is cautious optimism within the club that it can avoid a repeat of the prosecutions that led to two unprecedented points deductions last season.

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Everton were hit with a 10 point sanction in November as the club became the first to be punished under the league’s Profit and Sustainability Regulations (PSR). While the deduction was reduced upon appeal it generated shock across the world of football and was the catalyst for a fierce and ongoing debate around the Premier League’s regulatory credentials.

A second deduction followed when Everton were found in breach of the rolling £105m, three year loss limits for a second consecutive year, while Nottingham Forest also received a points penalty for breaking a smaller threshold defined by its previous years in the Championship.

The cases against Everton made an unusual amount of detail about the state of the club’s finances public and the case notes from the second hearing revealed Everton’s combined PSR loss for the financial years ending in 2022 and 2023 was just under £67m. That means the club had to limit its PSR loss - a figure that does not include expenditure in a host of areas - for the 12 months to the end of June 2024 to just over £38m.

Predicting the true state of the club’s accounts remains difficult because the details for the current financial year will not be made public until March 2025 and they will include activity not yet known about outside the club.

But as the PSR deadline approached there was hope inside Everton that work to improve its position had made a positive impact. Everton’s PSR loss last year was £62.7m and there is a case to suggest that has been reduced. While 2023 included the big money sale of academy product Anthony Gordon, this year’s figures will feature the sales of Demarai Gray, Ishe Samuels-Smith, Alex Iwobi and Tom Cannon, all of which were completed late last summer. The managerial and boardroom changes that led to around £10m in exit packages in 2023 have not been replicated this year. The club’s higher league finish will also have led to a merit payment improved by millions of pounds.

Director of football Kevin Thelwell made clear in his pre-summer comments that all business would take place against a challenging financial and regulatory backdrop. Since then the sale of Dobbin to Aston Villa for around £10m and the departure of Ben Godfrey for what the ECHO believes to be an initial £11m fee have further strengthened the club’s position. The decision by the club to reject out of hand Manchester United’s opening bid for Jarrad Branthwaite, one deemed unacceptable by Everton, has added further hope the club is ending this year in a better PSR position than recent seasons.

While there are clear positives visible from the outside, issues do still remain. The club faces PSR challenges for the upcoming financial year, while it increased its debt burden this year through the near £200m of loans provided by 777 Partners as part of its failed attempt to secure a takeover. The full impact of such activity on the club’s accounts is not yet clear. The club also has an outstanding PSR argument with the Premier League over its treatment of interest on loans the club said were for the new waterfront stadium. Defeat in that argument would re-define the club’s PSR calculations by millions of pounds.

However, with that dispute having been trailed back in February the failure to resolve it in time for Everton to be able to deal with the consequences within the current financial year could be a point of mitigation - as could other side effects of the treatment of the club, including the millions it lost in merit payments through points deductions that cost Everton a far better final league position.