Everton face 3rd points deduction threat with £24m interest payments under investigation
Everton are at risk of a set of further charges as they are under investigation from another independent commission over the interest paid on their borrowing, says Kieran Maguire.
Speaking on The Price of Football Podcast on 6 August the University of Liverpool football finance expert said it is “a very big issue” for the Toffees as they paid as much as £24million on loans from the likes of Rights and Media Funding Ltd last year.
He explained that those interest costs are counted towards PSR calculations if the original borrowing was for the club’s running costs but not if it was for infrastructure like the stadium, and while Everton have claimed the latter in some cases the documentation doesn’t appear to back that up.
After two points deductions last term the second commission felt this was such a complex issue they didn’t have the time or expertise to rule on it before the season ended.
So the club is under scrutiny now over a matter which Maguire admits “intuitively seems harsh”, but it remains to be seen whether Everton will be charged again.
He said (31m): “The reason why it’s such a big problem is that if you take a look at Everton’s accounts for last year, in terms of cash the total cash interest paid was somewhere in the region of £23m-£24m…
“The reason why Everton are potentially up on a charge is that they have claimed that some of the money from a variety of lenders has been allocated to the stadium build but it doesn’t seem to have necessarily been supported in the small print of the documentation.”
Everton face more Premier League punishment
During a transfer window that has seen five players signed, various leave, and a takeover by Dan Friedkin surge towards success before collapsing it is easy to forget that the club still has another hearing hanging over them.
The Premier League had backed themselves into a corner by changing the process in order to get punishments handed out before the end of the corresponding season, penalising Everton twice in one campaign in the process.
But the scramble to get the second points deduction of two imposed on the Toffees last term saw the further debate over the interest payments pushed ahead into the summer.
Maguire has suggested that if the club are building a grand new stadium which will function as a social hub in the city of Liverpool they deserve some leeway on the accounting, but acknowledges that isn’t how the Premier League’s rules work.
The two charges last season, resulting in a total of eight points deducted after appeal, appeared to demonstrate those running the club not being as savvy as their rivals when it came to accounting, and the league cracking down with an iron fist in response.
Those views will no doubt be a matter of perspective as some have always felt Everton got what was coming to them.
But either way it won’t inspire great confidence amongst the fanbase that the current risk hanging over the club will prove to be a false alarm.
However, there must be some hope the Toffees at least have a case or they would have already been punished more heavily by the second commission last season.
In other Everton news, the Toffees are expected to see players leave before any more signings come in.
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