What does the Burnley v Everton legal verdict mean for football? | The Football Boardroom

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1:06Christian, hi, good to see you. I'm still embedded in the England camp, still delighting after that performance the other night. But I mean, just looking at events back home, I've been particularly struck by what's happened with the Everton Burnley legal case, and particularly just trying to get my head around the ramifications of what that means for those two clubs, but also for the Premier League and other clubs going forward. I mean, there's just this open, just the whole door for more lawyers coming into football boardrooms. You're the man to talk to about this. What's your reaction to what's happened?

1:48Henry:Well, I agree with you. This is a landmark case. and for those of our audience who haven't followed it closely, in the wake of Everton being found guilty of breaching financial fair play rules, and as many of our audience will know, which culminated in a six-point penalty, it has been ruled by a panel of judges that there was a direct causal link between Everton breaching those rules and Burnley being relegated. The fact that the penalty was applied later has been ignored by this group of judges and essentially they have concluded that Burnley would have stayed up on the balance of probability if Everton had not overspent in that season.

2:46Henry:and the court have awarded Burnley an enormous sum of damages to compensate them for money lost as a consequence of being relegated somewhere between£35 and£40 million. I should say immediately, H, that Everton have appealed this verdict and I think the whole of football Premier League owner groups for sure will be waiting with bated breath to see if Everton's appeal to overturn this verdict succeeds. They may have to wait some time. I don't think it's going to happen overnight. But it is a seismic moment in terms of a complete change from a world where really the Premier League, like much of football, has been a sort of closed shop for discipline.

3:31Henry:And obviously, if this verdict is not overturned, the implications for football are pretty significant in terms of other clubs using this to try and claim compensation when they have been on the wrong end of sporting outcomes when clubs have been found guilty of breaching rules. Just before we get into the ramifications, how do you prove causal links between someone spending and something that happens on the pitch? Because you can look at clubs and say, oh, they've spent£100,£200 million. And actually, it's not necessarily affected their position in the table that much. And there seems to be an acceptance that it has helped the 21-22 season that they were looking at in terms of the breach.

4:18There was an element of sporting advantage confirmed by the overspend. But how much of a jump is that? And how do you prove a causal link to someone else then going down? Can you literally just say, look, we are spending more on wages, we are spending more on players, therefore we are more likely to stay up? But football and sport doesn't always work that way.

4:39Henry:Well, in the case of the panel, they used, would you believe, essentially statistical modelling to analyse whether or not, in effect, Burnley's relegation was or was not directly a consequence of Everton's overspending. And this statistical modelling, would you believe, produced an outcome, a result that the panel took into ultimate consideration that there was a 51.7 % chance that Burnley's relegation was a consequence of Everton's overspending in that season. Or to put it another way, the balance of probability, and that's all they had to prove as a panel, all they had to decide was that the balance of probability was that Everton's overspending led to Burnley's relegation.

5:41That's really tight. I mean, that's what, 1.7 % swing on a balance of probability? You love your numbers, you know the maths. That's tight.

5:49Henry:Yeah, it's been described by many commentators as effectively a coin flip verdict. And I think the appeal will without doubt dig into whether or not really a mathematical model establishing probabilities is the right way to think about the relationship between spending and results. There are many other variables that contribute to a team's results. Just think of a few off the top of my head, refereeing decisions, injuries, you name it. There is an element of chaos to the way football plays out, which I think many people would feel more accurately reflects reality than a mathematical model. let alone a mathematical model where the result was so close to 50-50.

6:45Henry:I think it's very clear that that will be homed in on by Everton's lawyers in the appeal, and there'll be other procedural aspects as well. I was quite struck by one point of procedure, which is that the panel that made this watershed ruling, would you believe, was the same three panel members who originally ruled on Everton having breached FFP. If you remember when that first ruling came out, they awarded a 10-point deduction, which almost everyone in football felt was wrong and extremely harsh. And it was rather quickly overturned to a six-point deduction. Seems strange to me that those three people who were perceived to have basically got that wrong would then be put in post to rule on Burnley's claim.

7:40Why on earth did that happen?

7:41Henry:Surely that is... I don't know, but I'm fairly sure that that will also form part of the appeal. But I think for our audience's benefit, I just want to, I think, finish on this by landing why I think it is seismic, why we're sitting here talking about it today. If you think about it, Henry, if this verdict stands and it is established, that when a club is found guilty of breaching financial regulations, that that directly causes another club to lose the chance of being in the Premier League. It could also be applied to the argument of losing the chance to qualify for Europe or losing the chance to finish three places higher, which makes you another£9 million a year in revenue.

8:32Henry:So the notion of loss of chance flowing from a club being found guilty of FFP could be applied by many clubs in a situation where a club is found guilty. Now, we know that so far, Everton, Forest and Leicester have been found guilty of breaches of regulations. And so I'm sure clubs will be looking at those three seasons and those three clubs outcomes and seeing whether there is any argument that that cost other clubs real revenue opportunities. But of course, the thing that's hanging over all of us, Henry, which could have wide ranging implications is, of course, the Man City case, which I know has dragged on and which I know, of course, Man City have denied all those charges.

9:22Henry:But in the event that they were found guilty of having breached any financial regulations in any number of seasons, then you could see from top to bottom in the league how many clubs might be tempted to use this to claim compensation. So as I said at the outset, from our fans and audience perspective here, this appeal will be watched by everybody in the Premier League extremely closely. It could have wide ranging ramifications if the verdict isn't overturned. And that's why I wanted to mention it today. I mean, as you say, the ramifications, how does a Premier League keeper keep a lid on this?

10:02You've been in the Premier League boardroom. You've been at three Premier League clubs. How can they actually get all this dysfunctional family to actually avoid such things? Because, as you say, this is going to scar every season, isn't it?

10:17Henry:Well, I think a couple of things that people perhaps don't realise. It's actually enshrined in Premier League rules that a club is allowed via the internal disciplinary procedures of the Premier League. So not with recourse to English courts of law. So still staying within football's, shall we say, rather closed shop legal and disciplinary system. But they are permitted to seek compensation if it can be shown that they have suffered loss because of another club breaching regulations. So that's been in the rules for a long time. A very old concept of English civil law, this notion of loss of chance, has been applied within the Premier League's disciplinary framework.

11:06Henry:And that is what has such potential wide-ranging ramifications, as you suggested. And I would describe it as a potential Pandora's box of claims if applied broadly across all sorts of breach. I have a funny feeling this verdict is vulnerable on appeal, and I'll certainly be watching with bated breath when that result comes through. CP, can I throw some other numbers at you? 52 million for Van Hecker. Spurs, it looks like from here, have been quite busy. Did we expect that? I mean, they've got Robertson and Sanessi have come in. They're being linked with Tonali, I believe. What is happening at Spurs?

11:52Are the owners putting money forward? Is this deservedly? These seem like deservedly signings.

11:58Henry:Yeah, I've been quite struck. In the several World Cups where I was in post in football clubs, it really did go extremely quiet. And I've been struck by a few clubs trying to get quite a lot done while you're over there enjoying yourself. And Spurs have caught my eye more than most because, as you say, the volume of activity they've managed to get done already. I think it kind of reminds me of my time at Villa in the summer of 2020. I get the feeling that the owners of Spurs have more or less said to their management team, never again, we cannot put ourselves in a position where we're flirting with relegation, exactly as my owners said to me in the summer of 20 when we survived with the last kick of the game at West Ham.

12:49Henry:And that summer, you know, we basically built the spine of a completely new team signing more expensive, more gifted, more experienced players who've gone on to have great careers, by the way. I sense that's gone on at Spurs and I think there's a secondary element to it. One is never again do we want to be flirting with the bottom of the league for a club of our scale and magnitude and with owners, frankly, with the resources they have. And I think, secondly, there has been a subplot really to draw a distinction between the way the club is run now versus the way it was run under Daniel. Specifically, I think, in the area of being willing to sign players on higher wages.

13:35Henry:I also see from the CEO's comments, from Vinay's comments, a sense that they, having recently been focused very much on younger players, bringing in a bit of experience, epitomised by taking a player like Andy Robertson on a free transfer, but albeit, I suspect, on very high wages. So they're definitely backing De Zerbe. They're on the front foot building out a team that has a bit of experience to add some quite exciting young players. And I think they're worth keeping an eye on this season. I always say to you, Henry, the most unappreciated advantage in Premier League football is when a good manager with good players has no European football.

14:21Henry:And I got a feeling that Spurs are going to go well this season with De Zerbi very much now at the centre of their strategy. I mean, he's almost become a sort of a manager at the club, as we've seen with managers higher up the table in terms of influence. I mean, Van Hecker is obviously a player he knew from Brighton, wanted to bring in, as you say, the sort of more experienced players. But I take absolutely your point. They're going for more experienced players. They're also going for leaders as well, particularly a player like Robertson and Van Hecker to an extent. But also they're being linked with Matheus Fernandes, who we thought was very much interesting.

15:01Manchester United, I would say the midfielder at West Ham, he's only 21.

15:06Henry:Yeah, but I think Tonali is Tonali's first choice. And it's interesting, you know, thinking about De Zerbi. You know, there are very interesting links between Deserbi and Tonali. Deserbi comes from Brescia in Italy and began his life there and also ended up playing there as a professional footballer. Tonali came through at Brescia as well. I sense that that is their number one target. What better way for Tottenham Hotspur to symbolise a shift in their approach but other than buying a 26-year-old international footballer from Newcastle in the form of Tonali for big money on big wages and that would be the symbol of the Deserbi regime really kicking in.

16:02Henry:I am struck by how hard they're going at that, how early they're going at that. I think it'll be interesting to see on the other side of that deal, Henry, whether Newcastle will learn the lesson from last summer. I've sensed in the briefings in the last couple of weeks, particularly around the very rapid sale of Anthony Gordon to Barcelona at the end of the season, there's been a lot of messaging out of Newcastle, sensible messaging, that last year they've realised hanging on all summer for the inevitable exit of Izak, going finally on the last day of the window, So that drawn out process actually meant they missed out on a lot of targets and no one really knew where they stood.

16:49Henry:So I have a feeling that they'll want to resolve the Tonali issue much, much earlier than they did the Isak issue. It's inevitable he's going, that's my view. And I think that, yes, other clubs will be linked. But if I was Spurs, I'd be pushing really hard now. Now, maybe, just maybe, you've got to hit the magic number to get it done really quickly. But I don't think Newcastle this summer are in the market for drawing out sales if they can get them resolved more quickly. So let's watch that one. What's the rumblings back in London about Arsenal making a bid for Barca, who's already lit up this, what's actually, I have to say, has been an amazing World Cup so far.

17:35but with Barcola, with France, the goal the other day how much is there in this interest of Arsenal who need a left-sided player and who can play either side with Barcola because that would be quite an exciting signing for the Champions

17:47Henry:My sources are telling me Barcola for those of our audience who haven't followed it closely, obviously had another brilliant season at PSG but after an injury mid-season struggled to get starting slots with Kovaratskalia and with Dwey on both sides and Dembele through the middle, I don't think Barcola started a quarter-final, semi-final or the final of the Champions League. A player of that ability, as you say, has already lit up this tournament. Not homegrown, very few of PSG's players are. He came through the Lyon Academy. They paid, I think, 45 to 50 million euros to Lyon for the boy. I'm hearing he wants a move to England and Arsenal are looking like they're at the front of the queue at the moment.

18:36Henry:As you say, we said in our Arsenal episode how we felt Arteta would be tasking his sporting director, Andrea Berta, with the task of bringing ready-made starting players who improved the XI and a player who has starred for the European Champions for two years running and is getting serious minutes at the World Cup for the favourites for the World Cup France. He definitely ticks the box of an elite player who would start for Arsenal. So I think that's one to watch for and the balance of probability is I think that deal gets done when less clear, but I'm pretty sure that is a marriage made in heaven.

19:21So all in all H, sitting here as I am in a very warm and sunny London, I am struck by the fact that whereas normally I think most agents would be literally on the beach or

19:36Henry:on their boats and a lot of chief executives would be taking a little bit of rest time. I am struck that some clubs are trying to get some strategic business done while the World Cup is well and truly underway. I'll keep an eye on all that for our audience and I will enjoy in the meantime, like everyone else, tuning in for my three games a night. Although I confess I haven't yet made the 2am kickoff. I'm glad you've been enjoying it and keeping your eye on all boardroom issues. You enjoy your time back in Kansas, and we will see our audience next week with our latest update. And hope you enjoyed it.

20:22Henry:See you.

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