Leicester City is bracing for possible new challenges related to financial regulations this season. The club will need to submit their financial accounts for the 2023-24 season to the Premier League by December’s end. This submission aims to determine if Leicester has violated profitability and sustainability rules.
The Premier League is set to apply a new regulation introduced last summer to scrutinize Leicester’s finances more closely. This follows their disappointment with a recent ruling from an independent commission concerning the club’s financial performance over the past three years, which ended in the 2022-23 season. The appeal panel concluded that the Premier League did not have the authority to charge Leicester for overspending during their relegation season because they were under EFL jurisdiction when the accounting period closed on June 30.
Previously, Leicester faced a £24.4 million charge for breaching the Player Salary Regulations (PSR). Based on penalties imposed on Everton and Nottingham Forest last season, Leicester could have faced up to a seven-point deduction if found guilty. The sanctions for Everton and Forest followed a formula where a three-point deduction was imposed for rule violations, plus one additional point for every £6.5 million exceeded beyond the limit, with potential reductions for cooperation or admission of guilt.
The Premier League is not expected to appeal the recent commission’s ruling but is preparing for possible actions against Leicester for overspending in the 2021-24 period. According to the latest judgment, Leicester was a Premier League club at the end of their most recent accounting period on June 30, 2024. Under the new PSR rules, clubs that incur losses in the first two years of a three-year accounting cycle must submit their accounts by December 31 to ensure any disciplinary measures or points deductions are in place by the end of the season.
Despite Leicester’s confidence that they will not breach these regulations, the Premier League remains skeptical. The club’s financial reports revealed pre-tax losses of £92.5 million in 2022 and £90 million in 2023, before adjustments for infrastructure spending. Leicester attempted to mitigate these losses by selling players and receiving significant compensation, including a £30 million deal for Kiernan Dewsbury-Hall and £30 million for Enzo Maresca.
Top-flight clubs are typically limited to losses of £105 million over a three-year period. However, this limit is reduced by £22 million for each season a club spends in the Championship during this time, setting Leicester’s allowable losses at £83 million. Although the independent commission labeled the PSR rules as “flawed,” the Premier League is currently focused on introducing new squad-cost control regulations. These new rules will cap clubs’ spending on players, coaches, and agents to 85% of their football revenue, with a 70% limit for clubs competing in European competitions, starting next season.