Revealed: Everton could be ‘problem club’ as four-step plan ending in disqualification revealed today
The likes of Everton could be identified as a “problem club” and steered away from future sanctions under the terms of a new independent regulator for English football, Football Insider analysis shows.
This site exclusively revealed in December that real-time monitoring of club finances would be among the powers of the regulator, and that has been confirmed in the government’s policy proposal today.
Everton have lost in excess of £370million over the last three financial years alone and are expected to post another sizable shortfall when they release their next set of annual accounts before the end of March.
A deficit of that magnitude would ordinarily see the Toffees fall well foul of the Premier League’s three-year loss limit, which currently stands at £105m – but Covid exemptions and add-backs ultimately helped the club swerve punishment.
Everton maintained a constant dialogue with the Premier League for several months to ensure they were operating within the division’s defined financial parameters.
That liaison process, which has now been concluded, was on a voluntary basis and not mandated by the top flight.
However, the talks were similar in both form and function to the four-step “escalating approach to regulation” outlined in the government’s proposal for an independent regulator.
Real-time monitoring forms the first step, followed by informal engagement, followed by operational intervention, and – in the most extreme cases – disqualification.
This facet of the White Paper has been almost entirely overlooked by the media but is arguably the most important for the existential future of clubs at all levels of the pyramid.
“It has huge benefits,” finance expert Kieran Maguire told Football Insider.
“For too long, we have been looking in the rearview mirror when it comes to identifying problem clubs. We are relying on annual accounts, they could be nine or even 12 months out of date. By that time, it’s too late.
“It’s prevention instead of cure. This can help us identify when we’re going off-piste. This way, you can nudge the club in the right direction by saying ‘this doesn’t look too great’.
“You can have liaison with the likes of HMRC to ensure that payments are being made. Some clubs, you’ll have to do nothing with, some a little bit more, and others you have to bring in the accountants to pay them a visit.”
The regulator will also have the power to implement a new owners’ and directors’ test, impose a new financial distribution system, prevent clubs from changing colours and crests, and stop clubs from joining breakaway leagues.
The bill is almost certain to pass through Parliament, but it will likely take over a year before it becomes law.
Everton meanwhile are seeking external investment in exchange for equity in order to see the construction of their new stadium at Bramley-Moore Dock through to completion.
Owner Farhad Moshiri has been in talks with private equity firm MSP Capital about a possible funding deal, although the group is also reported to be interested in a deal to acquire Tottenham in full.
In other news, Keith Hackett claims Sean Dyche should be handed touchline ban as “irresponsible” Everton footage emerges