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Everton have been instructed to pay a compensation amount of £35 million to Burnley following a breach of Profit and Sustainability Rules (PSR) during a season in which the Merseyside club avoided relegation at Burnley’s expense.

The ruling, delivered by an independent panel, left Everton both shocked and angered. The club has already submitted an appeal, arguing that the decision establishes a dangerous precedent that could result in numerous legal disputes among Premier League clubs.

Everton described the decision as “fundamentally flawed” and expressed confidence that their appeal would overturn it.

In an official statement, the club said: “Everton Football Club is surprised and angered by the decision of a Premier League Independent Disciplinary Commission to order a compensation payment to Burnley Football Club in connection with Everton’s PSR breach in June 2022.

“Everton has appealed the decision and firmly believes the ruling is fundamentally flawed in both legal and factual terms.

“The club does not accept the panel’s conclusion that Burnley’s relegation from the Premier League in May 2022 resulted from a sporting advantage gained by Everton through a breach of Profit & Sustainability Rules, for which a substantial sporting sanction has already been imposed.

“This decision sets a dangerous and unmanageable precedent for English football, as it is based on the premise that a club can be deemed in breach of financial rules at any point during a financial year.

“Everton believes the panel’s findings misrepresent the clear evidence presented by its legal representatives and remains confident that the appeal will be successful.”

Burnley initiated legal action against Everton after their relegation in 2022, finishing four points behind their Premier League rivals.

Burnley welcomed the verdict, asserting that Everton had gained a sporting advantage through overspending.

Burnley chairman Alan Pace said: “When we were relegated in 2022, we accepted the outcome on the pitch with disappointment. However, what we could not accept—and what no club should have to accept—is competing in a league later revealed to have been compromised.

“This was not a decision we took lightly. When all other avenues for resolution were exhausted, formal action became our only remaining course.

“The Independent Commission has now confirmed, in clear terms, that a rule was broken and that a competitive advantage was unfairly obtained.

“Our action has always been about ensuring fairness in football. Clubs that follow the rules deserve to compete on a level playing field. Fans expect it. The sport demands it. The Commission’s decision reinforces the established system that protects the integrity of the game.”

Burnley had initially sought £51 million in damages and were awarded £26 million in compensation, along with an additional £9.1 million in interest payments. Everton view the penalty as unprecedented and harsher than previous sanctions, such as Chelsea’s £10.75 million fine for financial reporting breaches under former owner Roman Abramovich, and West Ham’s punishment in the Carlos Tevez case.

Everton were earlier found guilty of violating the Premier League’s Profitability and Sustainability Regulations over a four-year period ending in 2022, after being judged to have exceeded the allowable loss threshold by £19.5 million. They were initially handed a 10-point deduction in November 2023, which was later reduced to six points following an appeal.

The same three-member panel that issued Everton’s 10-point deduction also presided over Burnley’s compensation case.

Despite the ruling, Everton insist that the compensation payment will not affect their summer transfer plans or their ambitions to strengthen the squad under current owners, The Friedkin Group.

The PSR breach occurred during the ownership of Farhad Moshiri, but the compensation order applies to the club itself rather than the former owner personally.

Everton maintain that they were unaware of breaching PSR in 2022. They also point out that while Burnley’s relegation occurred in May 2022, the financial year extended until 30 June. Had they known they were over the threshold, they claim they would have had the chance to sell players after the season’s conclusion.

Everton further argue that they have already faced financial penalties, as the six-point deduction saw them finish two positions lower in the 2023–24 Premier League table, costing the club around £6 million in revenue.

The club also insists that they are currently in full compliance with PSR and that no other clubs have grounds for similar claims related to the 2021–22 season.