Leicester City have won their appeal against a decision that could have seen them punished with a points deduction for an alleged breach of Premier League profitability and sustainability rules (PSR).
The Premier League initially referred Leicester to an independent commission in March 2024 for an alleged breach of PSR rules for the three-year reporting period ending in 2022-23, which saw the club relegated to the Championship after a nine-year stay in the top flight. Leicester subsequently questioned the commission’s jurisdiction to hear the case.
The commission had dismissed Leicester’s challenge to its authority, but an independent appeal board has now overturned that decision, ruling in favour of Leicester, who no longer face the threat of a points deduction.
Leicester said in a statement that they welcomed the decision, saying it “supports our consistently stated position that any action against the club should be pursued in accordance with the applicable rules”.
They added: “To avoid any misunderstandings which may arise in light of the statement which has been issued by the Premier League in response to the appeal decision, Leicester City wishes to emphasise the finding of the appeal panel that, when considering the wording which is actually used in the Premier League rules (in accordance with established principles of English law) the club did not breach the Premier League PSRs for the assessment period ending 30 June 2023.”
Leicester are now back in the Premier League (Plumb Images/Leicester City FC via Getty Images)
The Premier League, meanwhile, said they were “surprised and disappointed” with the ruling, arguing that it undermines the enforcement of PSR regulations and could allow clubs to evade accountability under similar circumstances.
“The League remains of the view that the original commission took the right approach in interpreting the rules in a practical and workable way that gives effect to their intended purpose,” a Premier League statement read.
“In overturning the original commission’s findings, the Premier League considers the appeal board’s decision fails to take into account the purpose of the rules, all relevant parts of the PSRs and the need for effective enforcement of alleged breaches to ensure fairness among all clubs.
“If the appeal board is correct, its decision will have created a situation where any club exceeding the PSR threshold could avoid accountability in these specific circumstances. This is clearly not the intention of the rules.
“It is of critical importance that the Premier League is able to enforce its rules consistently to maintain the principle of fairness. The League will now consider what further action it can take to ensure this is the case.”
Everton and Nottingham Forest were given points deductions last season for PSR breaches relating to the same accounting period.
How did we get here?
Leicester recorded record losses of £92.5m for the financial year ending May 31 2022. This came on the back of a £31.2million loss for the previous year and £67.3m for the year ending May 31 2020, but as PSR work in a three-year cycle, that is removed.
Leicester did not secure any income from European football in 2022-23 and dropped from eighth in the Premier League table in 2022 to 18th in 2023, which equates to a loss in merit payments of about £30m.
They did bank two large transfer fees in the 2022-23 financial year with the sales of Wesley Fofana to Chelsea and James Maddison to Tottenham Hotspur.
Leicester then sold Harvey Barnes, Timothy Castagne and George Hirst after the 2022-23 PSR deadline last summer, bringing in more than £50m, but they also spent over £20m on new signings and held onto several high earners.
What are profit and sustainability rules?
All Premier League clubs are assessed for their adherence to the competition’s profitability and sustainability rules each year.
Their compliance with said rules is assessed by reference to the club’s PSR calculation, which is the aggregate of its adjusted earnings before tax for the relevant assessment period.
Under the PSR, clubs are allowed to lose a maximum of £105m over three seasons (or £35m a season) but certain costs can be deducted, such as investment in youth development, infrastructure, community and women’s football.
There were also specific allowances relating to Covid and, to help clubs, the league combined the two pandemic-hit seasons into one, turning the three-year accounting period into four years.
Championship clubs are permitted to record losses of £13m per season.
(Marc Atkins/Getty Images)
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