Leicester could face big points deduction

The Premier League has referred Leicester City to an independent commission for an alleged breach of profitability and sustainability rules (PSR) in 2023-24. The club, whose relegation to the Championship was confirmed last month, could face a significant points deduction when they begin next season back in the English game’s second tier.

This is the latest chapter in an ongoing battle involving the club, the Premier League and the English Football League (EFL), the body which runs the Championship, plus third-tier League One and League Two, the fourth division.

As Leicester have moved between England’s top two divisions over the three-year accounting period up to 2023-24, getting relegated, then promoted and now relegated again, the issue of jurisdiction was looked into by the tribunal, which found the Premier League can investigate them for alleged breaches.

Leicester have been attempting to stave off PSR sanctions ever since their shock relegation from the Premier League in May 2023. At the time, having finished in its top eight for the three prior seasons, the club asked the Premier League for mitigation as their spiralling spending was necessary to sustain a challenge alongside the Premier League’s strongest (and usually richest) teams.

For the three-year cycle ending 2023, Leicester had posted losses of £215.2million ($288m), with £105m being the sum allowed after various adjustments, including some relating to the Covid-19 pandemic.

If the 2023-24 case had proceeded as the authors of the Premier League rulebook had intended, this matter would have been resolved during the current season and any points deduction would have already been applied to Leicester’s total.

But because the club refused to submit their 2023-24 accounts to the Premier League by December 31 last year, and then proceeded to fight these two jurisdiction battles, there is no chance of the Premier League being able to prosecute the club this season.

So the matter will undoubtedly spill over into next season, when the Premier League, egged on by its EFL counterparts, is very likely to ask a new tribunal to apply a significant points deduction that would be applied in the Championship.

We know Leicester were £19.4million over the allowed threshold for the three-year cycle ending with the 2022-23 season, when the limit was £105m. Their maximum figure for the three-year cycle up to the end of 2023-24, the season they won the Championship title to bounce straight back into the top flight, will only be £83m, as the limit for a season in the EFL is only £13m, not £35m.

Given Leicester’s long fight to avoid being sanctioned by either body and their most recent failure to submit accounts to the Premier League, they are almost certainly going to be charged with an aggravated breach. This would suggest a starting position of them getting docked 12 points, though with a good chance that the Premier League will ask for even more.

There is one further thing for the club to ponder, too, as the EFL has still not completely given up on the idea that it could pick up the 2022-23 PSR investigation it was unable to complete when Leicester won promotion last year.

A big sanction would have a huge impact on a club who are already facing considerable difficulties. A growing section of the fanbase has turned on the Leicester hierarchy, accusing them of mismanagement that has led to the recent decline. There have been several protests this season and, should they now start the next one with a significant points deduction, that already-toxic atmosphere will get worse.

Some might argue that the Premier League is focusing on low hanging fruit rather than looking at bigger clubs. It is challenging for a promoted club to both spend to stay up and stay within the financial rules. I have sympathy for Leicester’s fans, not for their hierarchy.

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The Political Economy of Football V2

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