Everton have been hit with a 10-point deduction by the Premier League for breaching the profit and sustainability rules, leaving them in the relegation zone.
It was gathered that the club will appeal the decision, which was made by an independent commission after a hearing last month.
The Premier League accused Everton of violating the financial regulations in the 2021-22 season, when they posted staggering losses of almost £372million over a three-year period.
The league argued that the club had overspent on transfers and wages without generating enough income.
The deduction puts Everton in 19th place in the table, with only 11 points from 12 games.
The club issued a statement saying that they were ‘extremely disappointed’ by the outcome, adding that they had ‘strong grounds’ to challenge it.
Meanwhile, Chelsea and Manchester City could face similar sanctions if they are found guilty of their own alleged breaches of the financial rules.
The Premier League is investigating both clubs over different issues related to their sponsors and owners.
Chelsea are under scrutiny over payments connected to their former owner Roman Abramovich, who was sanctioned by the British Government last year.
It is claimed that Abramovich used offshore companies to make payments for the club, which could be a breach of the financial rules.
The Premier League is also looking into Manchester City’s financial dealings over a nine-year period, involving 115 alleged breaches of the rules regarding sponsors and contracts.
The club could face a hefty fine or a points deduction if they are proven guilty.
Stefan Borso, a former financial advisor to Manchester City, tweeted that the Everton case set a ‘powerful precedent’ and that Chelsea and City could face ‘relegation inducing’ sanctions if they are charged and admitted.
He also suggested that Chelsea should rethink their strategy of paying fines as a cost of doing business and that the January transfer window may be interesting.