Leeds and Burnley 'threaten legal action against the Premier League and Everton

The Premier League are facing the extraordinary prospect of being sued for £200million by Leeds or Burnley for failing to uphold their own financial rules.

The two relegation-threatened clubs wrote to the Premier League last week warning that they reserve the right to take legal action due to their failure to take any action against Everton for the club’s extravagant spending, which has led to them posting losses of £371.8m over the last three years.

Sportsmail revealed last month that Everton’s relegation rivals were preparing to take legal action due to what they regard as a flagrant breach of the Premier League’s profit and sustainability rules, which limit clubs to losses of £105m over three years, and with the final league positions to be determined this weekend after Frank Lampard’s side ensured their survival with a stunning 3-2 win over Crystal Palace on Thursday night they have sprung into action.

Leeds United and Burnley are reportedly threatening legal action against Everton over perceived breaches of financial rules

Everton are said to be sure that they have been compliant with the Premier League rules 

Everton claim that they have complied with the all the rules and attribute their huge losses to the Covid-19 pandemic.

Sportsmail revealed in March that Everton have been seeking authorisation from the Premier League for all major financial transactions for over 12 months to ensure they complied with the regulations, which has led Leeds and Burnley to conclude that their best course of action is to sue the Premier League itself.

We can now reveal further details of an extraordinary case, which threatens to escalate into the top-flight’s most serious legal issue since West Ham paid Sheffield United £20m in compensation for breaching ownership rules by signing Carlos Tevez in 2007, including:

– The legal action is likely to come from whichever of Leeds or Burnley are relegated on Sunday on the grounds that demotion to the Championship will cost them around £200m, but with support from the other club.

Burnley need to get a result against Newcastle on Sunday to stay in the Premier League

– The Premier League are under pressure to open an independent inquiry into their handling of Everton’s spending and enforcement of their own rules.

– In their letter to the Premier League Leeds and Burnley have asked that any inquiry be fast-tracked so that any sanctions against Everton – such as points deductions – be implemented this summer and applied retrospectively to the 2021-22 season, although such a swift resolution is seen as unlikely.

– Everton stand accused of “financial doping” in attributing over £100m of their losses to the impact of Covid through claims related to lost transfer revenue and sponsorship deals, whereas other clubs limited their Covid claims to missing gate receipts

– The unhappy duo have support from other top-flight clubs also impacted by Everton’s spending such as Arsenal, whose defeat at Goodison Park in December may end up costing them a Champions League place and tens of millions of pounds.

Leeds, meanwhile, are away to Brentford in their battle to avoid Premier League relegation

The Premier League have little time to act to resolve the matter as they are due to issue so-called “golden shares” to confirm next season’s top-flight clubs at their AGM on 8 June.

In their annual accounts published last March Everton said that £170m of their losses were due to Covid – compared to the £24m offset by Leeds and £40m by Newcastle – but in a statement issued last night insisted they had complied with all regulations.

‘We have worked so closely with the Premier League to make sure we are compliant we are comfortable we have complied with the rules,’ a spokesman said. ‘External auditors have told us what we can and cannot claim against the pandemic. If they want to take legal action then they can do so by all means.’