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Leeds United and Burnley have threatened to sue the Premier League and Everton unless they can prove how the latter lost £371.8 million in three years without breaking financial rules.
The two clubs sent a letter last week warning they reserved the right to bring a claim for substantial damages over the losses posted under regulations allowing teams to lose £105 million over a three-year period, albeit with certain exemptions.
Those exemptions include losses caused by the coronavirus pandemic but Leeds and Burnley have raised concerns that media reports and Companies House filings show Everton’s are more than three times that of clubs of a similar size.
News of the letter, which was sent on May 13, emerged less than a day after Frank Lampard’s side secured their Premier League survival, leaving Leeds and Burnley to battle it out to avoid the drop on the final day of the season on Sunday.
The two clubs and the Premier League declined to comment, while an Everton spokesman said: “We have worked so closely with the Premier League to make sure we are compliant we are comfortable we have complied with the rules.
“External auditors have told us what we can and cannot claim against the pandemic. If they want to take legal action then they can do so by all means.”
Any such action would arguably be the most serious facing the Premier League and a member club since West Ham United were forced to pay Sheffield United £20 million in 2009 after being fined instead of deducted points for breaching third-party rules in signing Carlos Tevez and Javier Mascherano.
Upon announcing their annual results in March, Everton blamed £170 million of their losses on the “dramatic and ongoing financial impact” of the pandemic.
By contrast, Villa said they lost £56 million due to Covid and Newcastle United £40 million.
Everton said in a statement in March: “Losses of at least £170m are attributed to the impact on the Club of the Covid-19 pandemic, with £103m of that figure coming in the 2020/21 financial year. Continued investment in the playing squad, coupled with the impact of the pandemic, has resulted in the club posting a loss of £120.9m for the year ending 30 June 2021.
“The wide-ranging impact of Covid-19 on Everton – which further market analysis has indicated could include an additional £50m – covers lost revenues, additional costs due to strict Covid-19 playing protocols and a significant contraction in the transfer market which resulted in the inability to generate the level of transfer fees which could reasonably have been expected pre-pandemic.”
The statement said the club had also been “working formally with the Premier League regarding its ongoing compliance with Profitability & Sustainability regulations” and had committed “significant amounts to a complex new stadium project” – a sum also exempt from the £105m figure.