The Premier League is experiencing “litigation fatigue”. That is the phrase several boardroom sources reach for when summing up the bind top-flight English football finds itself in, seemingly embroiled in as many off-field contests as on it.
It goes some way to explaining why the punishment Chelsea received last week — a suspended transfer ban and a £10million ($13.3m) fine — for breaching Premier League rules did not make the agenda at the latter’s shareholders’ meeting: most clubs were still working out their official position on the matter.
There were elements of the case that were unique. Chelsea’s new owners at BlueCo notified the Premier League they had uncovered potential rule breaches during their due diligence when buying the club from Roman Abramovich in 2022.
Although liability lies with the member club rather than the individuals, Chelsea received additional mitigation for voluntarily providing documents exposing additional breaches that might not have been discovered otherwise. They were not given a sporting sanction (for example, being stripped of league points) and their one-year, senior-level transfer window ban was only a suspended punishment.
Despite the context, and the lack of conversation at the recent shareholders’ meeting, some clubs had plenty to say behind closed doors.
The Athletic has talked to more than a dozen football executives from across the Premier League and Football League (the second through fourth tiers of the domestic game), as well as several independent lawyers with experience in sports law, to gauge their reaction. They have all spoken on the condition of anonymity to protect relationships.
The general theme in relation to the punishment is one of bewilderment, particularly at how much credit was given to Chelsea’s owners for self-reporting the “deception and concealment”, as the sanction agreement referred to it, of their predecessors.
There is also profound interest as to what this could mean for case law and precedent in relation to the 115 charges facing Manchester City, which are still awaiting a verdict. City deny those charges.
“The [Premier] League tangle themselves in knots with these cases,” is how one Premier League football executive diplomatically put it.
Everton manager David Moyes — whose club overcame a deduction of eight points two seasons ago following a profit and sustainability regulations (PSR) breach — has said publicly he was unconvinced by the severity of the west London club’s punishment.
“What would you rather have, a £10million fine or a 10-point deduction?” he asked before his side’s 3-0 home win against Chelsea nine days ago. “The (prize) money you get for your (final) league place now, that might cover it (the fine). It would be good if we could get more of an explanation.”
Chelsea admitted to the widespread use of hidden payments between 2011 and 2018.
There were 36 undisclosed payments made to third-party entities totalling £47.5million ($63.2m), with £23m of that paid to seven unregistered agents linked to their players Eden Hazard, Ramires, David Luiz, Andre Schurrle and Nemanja Matic. Another £19m related to Chelsea’s signings of Samuel Eto’o and Willian, which the sanction agreement stated should be treated as transfer fees on behalf of the club. There was no suggestion of any wrongdoing by the players.
The transfer of Eden Hazard to Chelsea was one of the deals in the sanction agreement (Clive Mason/Getty Images)
During that period, Chelsea won two Premier League titles, two FA Cups, one League Cup, one Europa League and a Champions League.
The sanction agreement — when a club admits the relevant breaches of rules and accepts the penalty, as reviewed and approved by three members of the league’s independent judicial panel — arrived at a £10million fine and a one-year transfer ban. The fine was halved and the ban suspended for two years due to “exceptional co-operation”. Chelsea will, however, have to pay for the Premier League’s legal costs and an unpaid transfer levy of £771,000 ($1.26m) relating to the Eto’o and Willian signings.
In a separate sanction agreement relating to the tapping up of youth players, Chelsea were fined £750,000 and handed a nine-month ban from registering academy players. UEFA, European football’s governing body, previously fined the club £8.6million in 2023 for the same wrongdoing and the FA is still to conclude its own case.
Chelsea were also charged last year by the FA with 74 rule breaches relating to the domestic governing body’s agent regulations, regulations on working with intermediaries, and third-party investment in players regulations between 2009 and 2022. The outcome of the FA’s charges has not been announced.
Several lawyers attest that mitigation usually only discounts one of the punishments, but Chelsea seem to have benefited from a reduction on several fronts. It is understood that the club believe their new ownership was entitled to full mitigation across the full range of sanctions.
A lawyer with vast experience in arbitration cases suggested that the agreement has solidified the view that the Premier League interprets modest breaches of PSR as more “heinous” than the long-term, deceptive regulatory breaches committed by Chelsea. He also says: “This makes me wonder whether Manchester City and the Premier League have been waiting to see whether the Chelsea agreement was approved by the panel.”
What this means for the City case, which has cast a shadow over the Premier League since it levelled those 115 charges against the club in 2023, is at the forefront of everyone’s thinking.
“The word I would use is ‘generous’,” says a leading KC (King’s Counsel — a very high rank of lawyer in the UK). “I mean, if you look at the breaches, it’s sustained, serious, rule-breaking over a long period of time. But they’ve shown co-operation and been rewarded. That’s a very different approach to what City are taking. In the coming years, for other major cases of this sort, it’s possible that offending clubs will be very grateful for the precedent this sets.”
Not arbitrating on whether any degree of sporting advantage was gained or not, and instead narrowing the focus to establish whether the undeclared payments would trigger a PSR breach, could prove an important precedent for future case law. The panel ruling on Chelsea deduced that, even if the payments had been made properly by the club and added to their profit and loss for the relevant years, they would still not have been in breach of PSR.
One Premier League executive suggested that the agreement has made clear that PSR breaches are the only context in which a points deduction would be implemented: “It seems that if the charges are regulatory, no matter how many there are, as long as it would not have caused you to breach PSR, you won’t face sporting sanctions.”
The Premier League would take a dim view of that assessment, deeming it a broad-brush interpretation when the rule book offers a wide remit of sanctions available.
The same executive believes the league should have performed a counter-factual — a “what if?” statement that explores how an outcome would have been different if a past event or factor had not occurred — to more accurately assess the impact of the players signed with the help of these hidden payments. He connects it to the legal case launched by Burnley against Everton last year.
Burnley are seeking compensation of £50million on the basis that Everton gained a sporting advantage by breaching PSR in 2021-22, which contributed to Burnley being relegated that season and them staying up.
For example, the executive points out that by signing the players mentioned above, Chelsea not only had a potential sporting advantage — qualifying for the Champions League — but also the benefit of selling, for example, Hazard to Real Madrid in 2019 for £85.5million, plus add-ons.
“Should that have been taken off their PSR total that season? It was too simplistic,” he said. “The Premier League have made a rod for their own back by saying Chelsea didn’t get a points deduction because the payments would not have breached PSR. If City are not found guilty of inflating their sponsorship revenues but are found guilty on 70 or so charges, which wouldn’t have caused them to breach PSR, then the logic is that it will be a fine only.
“If that happens, there will be war.”
The commission stated this was a record fine that would “greatly exceed” any previous fines imposed for a breach of its rules. The previous highest had been West Ham’s £5.5million fine in 2007 for breaking third-party ownership rules in the signing of Argentinian duo Carlos Tevez and Javier Mascherano, which equates to £9.37m in today’s money.
Down in the EFL, the record fine was issued to Queens Park Rangers, who made a settlement worth £42million after breaking spending limits in the year they won promotion to the Premier League in 2014, with wages comprising 195 per cent of their turnover.
“The numbers are interesting, because they are historical and they haven’t applied RPI (the Retail Price Index, a measure of inflation) to reflect today’s value, and certainly not football inflation, which has run at an even quicker pace,” says the same executive quoted earlier in the piece.
“I’ve never known a legal case where you don’t uprate the numbers to give a true value on the date of sanction or agreement. (The sanction agreement has) artificially, intentionally or not, reduced the scale of the wrongdoing.” The counterpoint to that is that the PSR loss limit of £105million ($140m) over three years — designed to curb excessive spending and guard against high debts being built up — has not been raised in line with inflation since its introduction in 2015-16.
The sanction has raised questions about the relationship of this case to those of Everton and Nottingham Forest, who were hit with six-point (later increased to eight) and four-point deductions, respectively, for breaching PSR.
“It’s extraordinary that they haven’t considered sporting advantage,” continues the Premier League executive. “I actually think the proper starting point should have been points deductions. Based on the previous approach, you’re looking at a 15-point deduction. If it’s good for the goose, it’s good for the gander.”
The commission detailed the aggravating factors alongside the mitigating ones in its judgment.
Chelsea modified their search parameters upon request, facilitated interviews with former employees no longer within jurisdiction and have ensured nobody with knowledge of the hidden payments remains at the club. Their approach to factual gaps and disputed issues saw them “willing to make concessions, assumptions and inferences which were adverse to its interests”, which saved the Premier League significant time and costs. It was felt there had to be recognition of this transparency in the sanctioning, otherwise it would disincentivise self-reporting.
By the same token, had the Premier League charged Chelsea and referred the case to an independent investigation, this more adversarial approach could have seen the club withdraw their co-operation and retract the 200,000 documents they had voluntarily provided, making it a much more difficult case to prosecute.
There is a sense from some in the game, however, that the EFL would have come down harder on a member club if they had behaved this way.
In 2024, for example, the second-tier Championship deducted Sheffield United two points due to their previous owner defaulting on payments to other clubs during the 2022-23 season.
An EFL club’s chairman suggested “all the competitions were distorted” by the actions detailed in the sanction agreement — and that “expulsion from the Premier League would not have been disproportionate”.
A former Premier League executive argues that, as the indiscretions were discovered during due diligence, it should only have affected the price rather than the punishment.
As part of the 2022 purchase of Chelsea, £150million was retained as a ‘holdback’ amount, only to be paid on May 30, 2027, five years after the club’s sale was completed. This would be reduced via any losses incurred by the club stemming from activities that took place before BlueCo’s arrival. Chelsea view this as standard business practice in deals of this scale.
Another executive, who has experience of working in leagues across Europe, has more sympathy with Chelsea and the behaviour of their owners, believing it is fair that they were credited. But he believes the former executives responsible for the breaches should face punishment: “Where are the sanctions on the individuals involved? Who is taking responsibility for what went on? Do they not get a worldwide ban (from football)?”.
At the academy level, the ban will see Chelsea prevented from signing players between the ages of 11 and 16 for one transfer window.
“Most (other clubs) are probably just happy they (Chelsea) can’t sign the best under-16s this summer,” says one head of academy.
If clubs wish to challenge the sanction agreement, it is likely they would need to join forces and launch their own case, but it is doubtful many will want to part with money to pay for legal costs or have the stomach for yet more drawn-out legal proceedings.
“If you have ligation fatigue, you have to have approval from clubs as to how you get off the hamster wheel, not just change policy overnight and be incredibly lenient,” says an executive mentioned earlier.
“Mediation is a good thing and should be encouraged, but who can trust it now?”.