Leicester City have been referred to an independent commission by the Premier League for an alleged breach of profitability and sustainability rules (PSR) for 2023-24.
The Premier League said in January that although none of its clubs for that period had been charged with a PSR breach, Leicester — who spent last season in the Championship, which is run by the English Football League (EFL) — remained at risk of a sanction.
The club’s most recent accounts, published last month, stated they made a loss of £19.4million ($25.1m) in 2023-24. In the previous seasons, they recorded deficits of £89.5m (2022-23) and £92.5m (2021-22). Premier League clubs can report losses of £105m over a three-year cycle, though there are ‘add-backs’ that are allowable under the calculations.
As well as being referred to the commission for an alleged PSR breach in 2023-24, Leicester have also been referred over the club’s obligation to provide accounts to the Premier League by December 31 and to provide full and prompt assistance to the league in responses to its inquiries.
As Leicester had moved between divisions during the three-year accounting period, the issue of jurisdiction was looked into by the tribunal, which found the Premier League can investigate the club for alleged breaches “because the EFL validly transferred responsibility for its investigation to the Premier League in June 2024, when the club was promoted from the Championship”, a statement from the Premier League said on Tuesday morning.
The statement also said the tribunal found that the Premier League still has jurisdiction to investigate despite Leicester being relegated to the Championship this season.
On the referral for the alleged 2023-24 breach, a Leicester statement read: “Consistent with its previous commitments, the club intends to engage cooperatively in this matter now that the Premier League’s jurisdiction has been established for the period ending FY24. However, we will not be able to comment further on these proceedings until they are concluded, due to their confidential nature.”
The Premier League amended its PSR rules last month. Among several new rules relating to promoted clubs and the limits on their losses, there was an addition that clubs are still under Premier League jurisdiction until they have satisfied everything under the rules for the season in which they were relegated.
What are the profitability and sustainability rules?
Premier League clubs are assessed for their adherence to the competition’s profitability and sustainability rules each year.
Compliance with the 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 £105million ($140m) 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.
Previously, 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, meanwhile, follow similar rules and are permitted to lose up to £39m over a three-season period (or £13m per season).
What about Leicester’s previous PSR charge?
The Premier League, Tuesday’s statement said, failed in its attempt to have an appeal board decision over jurisdiction for the 2022-23 period overturned. Though the tribunal found the appeal board decision was wrong, they said it “was not a perverse interpretation of the law”.
Leicester said they were pleased to have defended the challenge over the 2022-23 jurisdiction: “Although the tribunal may have disagreed with the decision, it dismissed the Premier League’s challenge, finding (consistent with the arguments made by the club all along) that the Appeal Board decision ‘could not sensibly be seen as resulting from a perverse interpretation of the law.”
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