When the Rules are Broken: Lessons from Burnley’s £40m Victory Over Everton

Imagine you are in a competition where everyone agrees to play by the same set of financial rules. Now, imagine a competitor breaks those rules to gain an edge, and as a result, you lose your "seat at the table"- costing you millions in future income. This isn't just hypothetical; it is the core of the landmark legal battle between Burnley and Everton.

The Case in Plain English

 The Premier League has "Profitability and Sustainability Rules" (PSR) that limit how much money a club can lose over three years. Everton admitted to exceeding these limits by £19.5 million during the 2021/22 season. Burnley, who were relegated that same year, argued that if Everton hadn’t overspent on players, they wouldn't have gained a "sporting advantage" that allowed them to stay in the league.

The Independent Commission agreed, concluding that Everton's breach directly caused Burnley’s relegation. They ordered Everton to pay Burnley nearly £40 million in damages and interest.

What is a "Loss of Chance" Claim?

While the Commission in this specific case found causation on the "balance of probabilities" (meaning it was more likely than not that the breach caused the loss), these types of claims often rely on the principle of "loss of chance".

In simple terms, a "loss of chance" claim is a legal principle used when a defendant’s conduct or breach of contract deprives you of a real opportunity to achieve a positive outcome. You don't have to prove you definitely would have suffered a loss; you just have to show that you had a significant chance that was taken away from you. Damages are then calculated by looking at the total value of that opportunity and multiplying it by the mathematical likelihood of it happening.

Why This Matters to You

This ruling is what lawyers call a "landmark case" because it creates a "floodgates effect". It demonstrates that regulatory breaches can have massive, quantifiable knock-on effects for competitors. Whether you are a football club or a commercial business, if a competitor’s failure to follow the rules has cost you a real opportunity, the law may provide a path to meaningful compensation.

If you believe your business has suffered a loss due to a competitor's regulatory breach or breach of contract, now is the time to seek expert advice from MSB on your potential for recovery. 

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