Leicester City are facing a charge for allegedly breaching the Premier League’s Profit and Sustainability Rules in their final campaign before they were relegated, Sky Sports News can reveal, meaning they could face a points deduction next season.
It is understood Leicester’s accounts covering last season – which will be made public later this month – are expected to show they exceeded the £105m losses permitted over the previous three seasons.
It could mean Leicester are formally charged by the Premier League as soon as next week, Sky Sports News understands.
Similar breaches by Everton and Nottingham Forest have been met with Premier League charges, with possible points deductions to follow.
However, even though it is within the rules for a Premier League rule-break to lead to a club being punished in the Championship, Leicester will not face a points deduction this season.
Why won’t Leicester be deducted points this season?
The Premier League voted at its AGM last summer to introduce new rules to fast-track financial breaches – such as happened with Everton and Forest – but those new rules were introduced after Leicester had been relegated, and so don’t apply to them.
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Senior reporter Rob Dorsett explains how the EFL plans to change its financial rules due to Leicester exploiting a loophole. Leicester haven’t breached the EFL’s financial rules
Furthermore, the timescales needed to arrange an independent disciplinary commission, for the case to be heard and then a judgement delivered – all with the possibility that the club could appeal against any sanction – mean this case is certain to drag on beyond the summer.
The Foxes could nevertheless start next season – whichever division they are in – with a negative points tally if they are charged by the Premier League, and that charge is upheld by the independent commission.
What do Leicester’s Championship rivals think?
Sky Sports News has been told that a number of Leicester’s competitors at the top of the Championship are monitoring the situation closely and will consider taking action if they are convinced Leicester have gained an unfair advantage.
On Wednesday, Leicester avoided sanction from the EFL, despite their latest accounts indicating they are on course to break the second tier’s financial rules by the end of the season.
Leicester have not yet broken any of the EFL financial rules and would argue they have several months to make sure they are compliant – possibly by selling players before their current financial year ends in late June.
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Highlights of the Sky Bet Championship match between Sunderland and Leicester on Tuesday
The club won their case with the independent Club Financial Reporting Panel, which decided they did not need to comply with an EFL-imposed business plan because they were subject to Premier League rules when the alleged offence occurred.
There has been no comment from Leicester or from the Premier League on this issue.
Last year, the club announced record losses of £92.5m for the 2021/22 season and it is expected their next financial accounts will also show a significant deficit – although the £70m sale of Wesley Fofana to Chelsea, which was completed in this accounting period, will soften the blow somewhat.
‘No way’ Leicester will face points deduction this season
Sky Sports senior reporter Rob Dorsett:
“It’s a huge story. It is possible that, even though Leicester are alleged to have breached financial rules in the Premier League, they could be punished if they’re in the Championship.
“There is the scope within the rules for that to happen. There has to be an agreement between the two leagues but it’s not without precedent that you fall foul of the rules in one and are punished in the other.
“They are not going to get a points deduction this season, whatever the outcome of these charges. There’s two reasons – one is that there just isn’t enough time.
“The Premier League would have to bring an independent commission together with KCs, give Leicester enough time to prepare their case and hear that case. Leicester could then appeal. There’s no way that’s going to happen between now and the end of the season.
“Even though the Premier League tries its best when it charges a club to force through the punishment in the same season, it can’t do that here. At the AGM last summer, they voted for a change in the rules that brought in fast-tracking – but that was brought in after Leicester had been relegated.”
What are the Premier League’s Profit and Sustainability Rules (PSR)?
Sky Sports’ Ron Walker:
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Sky Sports chief reporter Kaveh Solhekol explains the Premier League’s Profit and Sustainability Rules, when penalties may be handed out and why the process is being fast-tracked this season
In the simplest terms, when every Premier League team tots up their annual accounts, they are permitted to have made a loss no greater than £105m across the previous three seasons.
Sounds straightforward but do not worry – this would be a very short article if it were that easy. There are a fair few caveats and sub-clauses to get through before any club can find itself in the clear.
For a start, not all losses are created equal.
Clubs can only lose £15m of their own money across those three years. So, that’s no more than £15m extra on outgoings like transfer fees, player wages and, in a lot of clubs’ cases, paying off former managers compared to their income from TV payments, season tickets, selling players and so on.
Anything above that, up to the £105m barrier, must be guaranteed by their owners buying shares, known as ‘secure funding’, and essentially means bankrolling the club.
In those circumstances, the Premier League require clubs to submit plans to explain their financial forecast for the next two seasons.
If any club owner is not feeling particularly flashy or cannot find the best part of £100m down the back of the sofa, that does not leave much wiggle room. Some Premier League clubs have expensive tastes.
Of teams still in the top flight, only Chelsea and Everton utilised that full amount in the most recent published accounts (for the 2021/22 season) – with nine clubs, including Arsenal, Liverpool and Manchester United receiving no equity injection at all.
Oh, and for sides who have spent any of the last three seasons in the EFL, owners can only put in £8m of secure funding for those years, leaving an overall maximum annual loss of £13m for the campaigns in question.
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