Leicester City are yet to pick up a win on their return to the Premier League, but escaping a points deduction for an alleged breach of profit and sustainability rules (PSR) could become their greatest victory of this season.
There weren’t huge celebrations within the offices of King Power Stadium after the independent appeal board decided to uphold an appeal lodged by Leicester regarding the Premier League’s jurisdiction over the club’s alleged breach of PSR for the 2022-23 season. According to sources with knowledge of the situation, kept anonymous to protect relationships, there was simply relief and a sense of vindication. Those high up within the club were always hopeful this was a fight they could win. There was a cautious confidence.
The Premier League’s calculation for Leicester was £129.4million ($169.6m), £24.4m over the threshold. There was an anticipation they would face a points deduction. But instead — with club accounts for 2022-23 showing that for the COVID-19 adjusted three-year cycle they were £19.5m over the £105m threshold — Leicester have successfully argued that the point of the breach was the end of their accountancy year in 2023, which was on June 30.
This was two weeks after they handed over their membership in the Premier League to Luton Town. They argued they could not be held for a breach of Premier League rules when they were not a Premier League club at the point of the breach. The decision to move their accountancy year, which they were entitled to do, saved them.
(Darren Staples/AFP via Getty Images)
The Right Honourable Sir Stanley Burnton, the Rt Hon Sir Maurice Kay and Robert Glancy KC agreed with Leicester that by the actual wording of Ruling E.49 — the PSR regulations — the initial finding of jurisdiction by the original independent commission, who had ruled in the Premier League’s favour in June, had to be reversed.
The Premier League issued a statement: “The Premier League is very disappointed with the appeal board’s decision, and the limited reasons provided for it. 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.”
Leicester have successfully argued that interpretation of the rules is not watertight in law and that the rules should be applied as they are written. That will be the end of it. The matter is now closed and there will be no points deduction for Leicester.
But it is a debate that will likely rumble on for some time, with the Premier League pledging it will, “now consider what further action it can take to ensure this (the ability to enforce its rules) is the case.”
With Everton and Nottingham Forest having previously faced points deductions, there are bound to be huge ramifications for the Premier League and the future of PSR as they are currently written.
In the wake of the ruling, there will be accusations that Leicester have got away with it, wriggled out of a tight predicament and found a legal loophole. Leicester can do nothing about that perception. This has informed the reaction at Leicester, as they are conscious of what the view will be among other clubs.
While the fallout will continue in the Premier League, at Leicester the decision provides precious hope.
The club has been on a cost-cutting exercise since relegation, with many high earners moving on to ease the financial burden — many for free, including Youri Tielemans, Jonny Evans, Caglar Soyuncu and Ayoze Perez. Most recently, Kelechi Iheanacho and Dennis Praet have left as free agents.
James Maddison, Harvey Barnes, Kiernan Dewsbury-Hall and Timothy Castagne have also been sold across the last two summer windows for a combined total of £113million plus add-ons.
Leicester have sold key players, including Dewsbury-Hall (Michael Regan/Getty Images)
Leicester have still tried to invest in their squad, much to the ire of the English Football League (EFL), who tried to impose a business plan on the club last season in the Championship. They eventually put in place a registration embargo because they believed the club was flaunting their much stricter rules.
Having bounced back at the first attempt, Leicester now find themselves trying to make up lost ground on their Premier League rivals, who are ahead of many of them in terms of ambition and spending over the last five years. They are way behind Aston Villa, Brighton and Hove Albion, Brentford, Fulham and others.
Leicester already faced a fight to avoid relegation, to buck the trend of recently promoted sides going straight back down. Whereas they were budgeting for the top eight in 2022-23, only to finish 18th (the prize money lost because of that failure to perform on the pitch is estimated to have cost Leicester at least £30million), now the target is to finish 17th. The ruling may not have a hugely significant impact on their plans for the January window as they continue to adjust their expenditure. Their budget is not expected to change.
A points deduction could have made staying up far more challenging.
It has also had an impact on their recruitment efforts, with some players choosing alternative employers because of the uncertainty about a relegation battle and a points deduction. Leicester weren’t the attractive proposition they once were to some of their targets.
Enzo Maresca, the manager who led them straight back up, was unlikely to have turned down Chelsea’s approach anyway. But he voiced concerns about the PSR situation and the subsequent lack of investment when he wanted it last January. It may have also played a role in the reluctance of Graham Potter to succeed him.
Maresca voiced concerns over the PSR situation in January (Ryan Pierse/Getty Images)
The saga has also added to the disconnect between a section of the fanbase and the board, which was hailed as the model for running an aspiring football club when they were threatening the established elite of the Premier League, qualifying for Europe and winning trophies.
Since the relegation, there has been a huge amount of criticism of the club’s hierarchy. The PSR situation was a factor in that and was seen as evidence of mismanagement. The fans also have other grievances related to the club’s financial predicament.
Leicester are not short of money. It has been a case of being unable to spend because of the threat of PSR and a lack of a safety net if they have one unpredictably bad season, as they did in 2022-23.
That campaign has hit the club hard and it will be a long time before they fully recover. Leicester are unlikely to be able to get back to the position they were in before.
It has to be one step at a time, with more difficult decisions to be taken and more challenges ahead — but, for now, the biggest dark cloud that has been hanging over Leicester for the past year has lifted.
There may be other clouds lingering, with the accounts for their season in the EFL, which will adjust the PSR threshold for a three-year cycle to losses of £83million, still to be filed. What the ruling now does is give Leicester a fighting chance to define their season and decide their destiny on the field of play rather than in another courtroom.
It could be the morale boost everyone at the club needs.
(Top photo: Alex Pantling/Getty Images)
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