On Thursday evening, it was announced that Leicester City had been referred to an independent commission by the Premier League for an alleged breach of profit and sustainability rules (PSR).
The alleged breach comes in the three-year reporting period that ended in the 2022-23 season, which saw Leicester relegated from the Premier League after a nine-season stay.
But what does this all mean, how will it affect Leicester this season, and what could happen next? The Athletic explains…
What are the Premier League accusing Leicester of?
The Premier League’s statement said it had referred Leicester City to an independent commission for an alleged PSR breach and for failing to submit their audited financial accounts to the league for the 2022-23 season, when they were still in the Premier League.
The Premier League has yet to see the accounts – although they were submitted to the English Football League earlier this month – and Leicester believe they do not have to share them with the Premier League as they are now an EFL club and therefore not bound by the top flight’s new December deadline brought in after Leicester were relegated in May 2023.
After failing to deal with Everton’s 2021-22 breach last season, the Premier League introduced an “expedited” process for this season and it has already led to a four-point deduction for Nottingham Forest this season. Everton are also facing a second possible points deduction for breaching last season, too.
Earlier this campaign, the EFL tried to force Leicester to submit a business plan for the rest of this season because it believed they were on target for overspending in the current season. But at an independent arbitration hearing, the club successfully argued they did not need to meet that request as the EFL could not make an assessment about this season until next season.
Whatever may have happened last season, Leicester argued, was a matter for the Premier League and that process could not even start until the club’s 2022-23 accounts had been published at Companies House in the coming weeks.
In short, Leicester believe there is no clarity over which body — the Premier League or the EFL — has the ability to sanction them or when they can do it.
“The club continues to take careful advice about its position and, if necessary, will continue to defend itself from any unlawful acts by the football authorities should they seek to exercise jurisdiction where they cannot do so, as occurred earlier this year,” a club statement said.
In terms of the breach, the two leagues clearly think there is a case to answer.
The 2022-23 calculation is based on an average of the two pandemic-hit seasons — 2019-20 and 2020-21 — plus 2021-22 and 2022-23. Leicester posted a pre-tax loss of almost £100million for the two Covid seasons, so the PSR number will be circa £50million, which was followed by a club-record loss of £92.5million in 2021-22.
Clubs are then allowed to “add back” money they spent on community programmes, infrastructure, the women’s team and youth development — expenditure the league wants to encourage — and deduct losses that are directly attributable to the pandemic.
But even with these allowances, it is clear that Leicester were at risk of breaching the Premier League’s upper threshold for permitted losses, £105million, even before the deeply disappointing 2022-23 campaign started.
What deals did they do during their last three seasons in the Premier League?
During the 2020-21 season, Leicester stuck with their model of cashing in on one key asset for a big price and reinvesting the money, selling Ben Chilwell to Chelsea for £50million and using that cash to bring in defenders Timothy Castagne for £21million and Wesley Fofana for £30million.
The following season, they did not sell a big asset, but still spent a total of £55million across the signings of Patson Daka (£23million), Boubakary Soumare (£15million) and Jannik Vestergaard (£15million).
Last season, they pumped the brakes and only brought in Wout Faes for an initial £15million just before the deadline, having sold Fofana to Chelsea for £70million.
In January 2023, by which time the club had realised they were in a relegation battle, they decided to reinvest some of that money on Harry Souttar and Victor Kristiansen for a combined total of £30million. That means they made a profit on player trading last season of £25million.
But that must be set against their operating loss, which was exacerbated by the dramatic fall in Premier League prize money when they dropped from eighth to 18th. With every place in the table now worth about £3million, that slide represented a year-on-year hit in the region of £30million. They also had to make a substantial pay-off to manager Brendan Rodgers when he left the club in April 2023.
Is there any possible mitigation for Leicester?
A statement released by the club on Thursday evening said: “LCFC has repeatedly demonstrated its commitment to the PSR rules through its operating model over a considerable period, achieving compliance while pursuing sporting ambitions that are entirely credible given the consistent success that the club has achieved in that time, both domestically and in European competition.”
Leicester may try to offer the mitigation that they were reasonably ambitious in their spending as they tried to challenge the elite of the Premier League, having finished fifth twice and eighth, won the FA Cup and reached a European semi-final, and could not have predicted their shocking 2022-23 season.
However, recent cases suggest an independent panel is unlikely to buy that argument and any claim of previous ‘good behaviour’ will raise eyebrows elsewhere in the game given the fact the club went into administration in 2002 and broke the EFL’s spending rules in their 2013-14 promotion campaign.
Are they in trouble with the EFL, too?
Very much so. The EFL wants to prosecute Leicester this season because it believes there has been a breach and any sanction should be applied as soon as possible.
The league feels the current dispute over who should charge Leicester, and when any punishment should be applied, was avoidable because the Premier League should have started an investigation last season. Under rule 87 in the league’s handbook, the EFL would have had a much clearer right to carry on a PSR case this season if it had already started in the Premier League last season. This frustration explains why the league’s independent FFP unit tried to force Leicester to submit a business plan — a move that was given short shrift by a panel in January.
Although Leicester moved on 10 players in the summer for a combined total of £85million, they have retained a strong squad with the highest annual player wage bill in the division, estimated at around £80million. There appears to be little sympathy for their plight elsewhere in the division.
The Premier League now seems keen to push for a points deduction this season, too.
For the EFL, the rationale is simple. It wants to deter other relegated clubs from gambling on promotion, believing they can deal with any penalties once back in the financial comfort of the Premier League.
The fact the club have two leagues trying to punish them this season is surely an ominous sign.
What are the likely punishments?
If found guilty, it will likely be a points deduction similar to the six-point penalty Everton have been given this season (reduced from 10 points on appeal). That seems to be the starting point for what recent panels have called a “significant” breach.
Nottingham Forest had their points deduction reduced to four for not initially contesting the charge and for their cooperation with the process.
However, it seems increasingly likely that any penalty for Leicester, who clearly believe they have mitigating circumstances, will come next season. There are only six weeks left of the current campaign, meaning there is an incredibly small window for Leicester to respond to the charge and for the case to be heard.
Would that be the end of it?
No, it seems from Leicester’s statement they are up for a fight on this, unlike Forest, who opted for a path-of-least-resistance approach to have their penalty reduced for good behaviour.
Leicester’s legal team, led by Nick De Marco, has already written to both leagues warning them that they will ask for a Rule K arbitration hearing (the FA system for settling disputes) to get a ruling on whether the Premier League has the right to charge and sanction them this season, which will prolong the process.
The stakes are high for Leicester. If they got a points penalty now and that stopped them from getting promoted, they would face a huge cost-cutting exercise or be in breach again. They would be forced to accept a business plan from the EFL, which effectively means operating under special measures.
Such an exercise could leave them stuck in the Championship for several years as they regrouped and possibly affect their chances of staying up should they return to the Premier League.
But another factor is the views of clubs they are competing against this season. Some feel Leicester cynically chose to keep a Premier League-level squad together this season, knowing they were unlikely to be punished for it until they had already gained their objective.
Leicester would no doubt reject that accusation, but nobody can be happy about this situation — it is a muddle that reflects poorly on the game.
The EFL hopes this case draws attention to something it has wanted for some time: one unit to handle PSR cases for both leagues, with one body of experts to hear them.
“In terms of alignment of rules, there are two things,” EFL chairman Rick Parry said earlier this week. “One is yes, there should be an alignment of rules and if the Premier League moves to squad-cost ratios in line with UEFA, we pretty much have, albeit in a slightly different fashion, at Leagues One and Two level. It clearly makes sense to do the same in the Championship.
“The other point we’ve been pushing for four years without any success is what the more recent cases highlight, which is the need to have one single independent unit and one single independent panel, carrying out all the investigations rather than Premier League doing some, us doing others, and some falling between the stools.
The Premier League had previously ignored them, but this case could change their mind.
Leicester charged
Re: Leicester charged
In short, sounds like Leicester were planning to ‘fall between the cracks’
Re: Leicester charged
Fuckin stupid to have a system in place where there's confusion regarding jurisdiction. Asking for a Leicester to come along and play the system. Did they really need it to happen before acknowledging it needed changing.
Re: Leicester charged
Which is exactly what they’ve taken advantage of. Leicester & QPR both received fines for previously ‘breaking the bank’ to get promotion. QPRs was around 8m I think but that hit them hard because they only lasted a couple of seasons despite spending big. Leicesters previous fine was, in essence, peanuts and worth the gamble in going up.
This is why the EFL want business plans to be filed in December of the current season. I’m guessing we complied? Otherwise we’d have surely heard something by now.
This is why the EFL want business plans to be filed in December of the current season. I’m guessing we complied? Otherwise we’d have surely heard something by now.
Re: Leicester charged
Yep assume so as we, by all accounts, are playing by the rules.
That's another annoying thing, some relegation rivals last season breaching rules, promotion rival this season. Not fair at all. Why fucking bother playing by the rules if cheaters benefit at your expense.
I hope to fuck we go up this season. Shit show if we miss out to Leicester.
That's another annoying thing, some relegation rivals last season breaching rules, promotion rival this season. Not fair at all. Why fucking bother playing by the rules if cheaters benefit at your expense.
I hope to fuck we go up this season. Shit show if we miss out to Leicester.
Last edited by Rick on Fri Mar 22, 2024 3:20 pm, edited 1 time in total.
Re: Leicester charged
Should be a condition clause somewhere that makes it clear rules apply the same for demoted and promoted clubs over both sets of league regs. As mentioned always going to be someone who will exploit a loop hole.
Re: Leicester charged
Hence the push for the independent regulator.
Re: Leicester charged
I'd just relegate any fucker who breaks rules. Bollocks to points deductions. Off top of my head there's Man City, Chelsea, Everton, Forest, Leicester who've been fucking about. That's 25% of last season's Prem? Needs a strong deterrent.
