Manchester City and Chelsea run the risk of relegation from the Premier League after Everton‘s 10-point deduction set a powerful precedent, according to a former financial advisor to the champions.

The Toffees have been left reeling by the deduction, which plunges them to second bottom of the table, and plan to launch an appeal.

City face 115 alleged breaches of the Premier League’s financial rules and Chelsea could face scrutiny over alleged payments connected to former owner Roman Abramovich.

Stefan Borson, a lawyer who has advised City, tweeted after Everton’s news broke on Friday: ‘Without seeing the judgement/award -10 points for Everton feels harsh for a straightforward FFP [Financial Fair Play] breach to me.

‘But reinforces that sanctions against City [if proven] and now Chelsea [if charged and admitted on the off-books payments] will be potentially relegation inducing.’

A former financial advisor to Manchester City, Stefan Borson, has raised the prospect that Manchester City could be relegated for their 115 alleged financial breaches

Chelsea could be handed a points deduction after leaked files revealed a string of payments that may have breached strict football rules during Roman Abramovich’s ownership

Everton have suffered the hammer blow of a 10-point deduction for breaching financial rules

Borson tweeted that City – and potentially Chelsea – could face heavy sanctions, including relegation from the Premier League following the Everton points deduction precedent

Borson added that Chelsea may have to reappraise their transfer strategy with regards to Premier League Profitability and Sustainability rules after the Everton verdict

Borson added: ‘One thing is for sure, given the scale of this sporting sanction, Chelsea’s calculus [in my opinion] that they could breach PL P&S [Profit and Sustainability] and just take a fine as a cost of doing business, must be in urgent and immediate reconsideration.

‘The January window may be interesting. Even in the best case, they can no longer rely on being able to convince an Independent Commission to accept their Covid and Sanctions allowances as exceptional adjustments [to the extent that was the plan].’

Back in February after City were charged with 115 breaches of the Premier League’s financial rules regarding sponsors and contracts across a nine-year time span, Borson spoke of relegation being a potential sanction if they were found guilty.

He tweeted then: ‘Alarmist or not, the sheer extent of the PL charges are at a level that IF found proven, must lead to relegation.’

Mail Sport journalist Nick Harris responded: ‘Stefan is a former financial adviser to Man City, a Man City fan, a former banker, current lawyer, CEO & general counsel to a PLC dealing with allegations of historic accounting issues. Also well across FFP issues. So this is an interesting view.’

Everton were plunged to 19th in the Premier League table following their 10-point deduction for breaching Premier League profit and sustainability rules.

The club was referred to an independent commission in March for alleged breaches which related to the 2021-22 season and a hearing took place last month.

The Premier League pushed for a sizable points deduction to set a precedent after the club were charged with breaching financial rules back in 2021-22. The Toffees posted staggering financial losses of almost £372million over a three-year period.

City are accused of breaching financial rules more than 100 times in nine seasons (Sheikh Mansour pictured speaking with chairman Khaldoon Al Mubarak)

If found guilty, Man City (Erling Haaland pictured) could face a points deduction or expulsion

That is more than £250m above what the Premier League’s guidelines permits clubs to lose over a three-year rolling time frame.

Premier League table after points penalty

The technical alleged breaches related to accounting treatments, with the League arguing Everton breached profit and sustainability rules (PSR).

Reports earlier this week said Chelsea are set to face Premier League scrutiny over a series of payments connected to former owner Abramovich.

The Guardian has claimed that Abramovich, the Russian billionaire who owned the club for 19 years until he was sanctioned by the British Government last year, used offshore companies to make payments for the club.

The Premier League is already investigating the Blues after their new owners became aware of ‘potentially incomplete financial reporting’ linked to Abramovich’s era while completing due diligence as part of the takeover.

The League has not commented the allegations but it is likely it will look closely at the information reported.

A Chelsea spokesperson said: ‘These allegations pre-date the club’s current ownership. They are based on documents which the club has not been shown and do not relate to any individual who is presently at the club.’

Chelsea face scrutiny over a series of payments connected to former owner Abramovich

Everton are now in 19th place in the table but will be appealing the verdict

Portsmouth were the last Premier League team to be docked points when they entered administration in 2010 and were given a 10-point penalty, ultimately relegating them.

Everton will point out that entering administration is a more serious breach than their alleged doings.

Financial rules were loosened by the Premier League during Covid with all clubs suffering from the pandemic in terms of lost gate receipts and commercial opportunities. But Covid hit Everton harder than most, while they also point to the Russian invasion of Ukraine as a mitigating factor.

That had a direct impact on finances due to suspended commercial agreements but also a pre-agreement for a significant naming rights’ deal on Bramley Moore Dock with Russian oligarch Alisher Usmanov’s USM which never came to fruition due to sanctions.

Everton also insist they have been open and transparent during the process. They were in an imposed agreement with the League since 2021 to work within strict financial guidelines – essentially a salary cap meaning they had to sell to buy with players.

That has been evident in the last four transfer windows with Everton’s net spend during that period being -£28million, better than nearly all Premier League clubs in the time. The Toffees insist this is evidence of the club’s efforts to comply.