You can find the panels written reasons for the points deduction
here.
A brief summary of the rules and some details of this case: Under the PL's profit and sustainability rules clubs can lose a maximum of £105m over a rolling 3 year period however crucially not all expenses are included in this calculation - expenses relating to infrastructure work, women's and youth football can all be excluded. Furthermore as a result of covid there further allowable adjustments - lost revenue and costs related to covid would also be factored into the £105 calculation.
When Everton filed their accounts for the 21/22 season the PL determined that Everton's total losses for the 3 year period, taking into account all deductions related to their stadium, women's & youth teams and covid, totaled £124.5m. Everton initially argued that their losses were only £87m but later accepted that it was circa £113m.
There were 4 main points of argument between the PL & Everton over how they calculated Everton's total loss:
- Interest charges on bank loans. Everton argued that these loans were a result of the stadium project and therefore should be excluded from the profit and sustainability calculation. The PL determined that the loans were not used for the stadium with Moshiri personally funding the stadium work and therefore the interest charged was an expense that applied to the profit and sustainability calculation.
- Transfer levy. Clubs pay the PL 4% of transfer fees that is put towards a players pension scheme however any surplus is then put into a youth football fund. Everton argued that as some of that money was going into youth football it is therefore excluded from P&S calculations. This was rejected as the purpose of the levy was to fund a pension scheme and only if there was any surplus would it go into youth football. The PL also pointed out that Everton (nor any other club) have ever tried to deduct this levy from their calculations in previous years.
- Player x. Firstly nobody is to name him (he's even called player x in the report). Everton signed a very expensive player who was subsequently suspended for legal reasons and later released by the club. At the time he was released he had a 'value' (from an accounting pov) of £10m and as such that £10m was recorded as a loss. Everton stated that they could have taken legal action against the player to recoup that £10m however chose not to citing the players welfare however argued that the £10m should not be included in their P&S calculations. The PL disagreed.
- Player impairment charges related to covid. PL clubs agreed that reduced values of players linked to covid were acceptable covid losses and could be adjusted for in their P&S calculations. Everton argued £xm worth of losses by not being able to sell or selling players at reduced values. The PL ultimately disagreed on the amount Everton were claiming.
And how we ended up with a 10 point penalty. Until August of this year the PL had no set guidelines as to how it was going to deal with breaches of their P&S rules however in August the PL adpoted the following sanctions policy: A fixed starting point of a 6 point penalty with a further 1 point for ever £5m over the PL's P&S limits (Everton were circa £20m over so that's where the extra 4 points comes from) with further adjustments made for aggravating or mitigating factors. Interestingly the panel didn't accept the PL's formula but still ended up coming to the same points deduction.