Leicester are alleged to have failed to submit their audited financial accounts to the Premier League for the 2022/23 season; Nottingham Forest were handed a four-point deduction for PSR breach earlier this week; Leicester release strong response to PL charge
Friday 22 March 2024 08:52, UK
The Premier League has charged Leicester City over an alleged breach of the league's Profitability and Sustainability Rules (PSR).
Leicester - currently second in the Sky Bet Championship on goal difference, but with a game in hand on leaders Leeds - could face a points deduction, but not this season, if found to have broken the financial regulations.
A Premier League statement read: "The Premier League has today (March 21) referred Leicester City FC to an independent Commission for an alleged breach of Profitability and Sustainability Rules (PSRs) and for failing to submit their audited financial accounts to the League.
"The alleged breach relates to the assessment period ending season 2022/23, when the club was a member of the Premier League.
"Leicester City were relegated to the EFL Championship prior to the introduction of the Premier League's new Standard Directions, which prescribe a timeline within which PSR cases should be heard.
"Therefore, the proceedings will be conducted in accordance with a timetable to be set by the independent Commission, and its final decision will be published on the Premier League's website."
Sky Sports reported on Tuesday that Leicester's accounts covering last season - which will be made public later this month - are expected to show they exceeded the £105m losses permitted over the previous three seasons.
Similar breaches by Everton and Nottingham Forest have been met with Premier League charges, with Forest now hit with a four-point deduction and another possible points deduction for Everton to follow.
However, even though it is within the rules for a Premier League rule break to lead to a club being punished in the Championship, Leicester will not face a points deduction this season.
The Premier League voted at its AGM last summer to introduce new rules to fast-track financial breaches - as happened with Everton and Forest - but those new rules were introduced after Leicester had been relegated, and so don't apply to them.
Furthermore, the timescales needed to arrange an independent disciplinary commission, for the case to be heard and then a judgement delivered - all with the possibility that the club could appeal against any sanction - mean the case is expected to drag on beyond the summer.
Leicester say they are "willing and eager" to engage with the Premier League and EFL for a resolution, but expressed their shock at the timing of the charge.
"Leicester City is surprised at the actions the Premier League has taken today," said the Championship side. "The club is extremely disappointed that the Premier League has chosen to charge LCFC now, despite the club's efforts to engage constructively with the Premier League in relation to the matters that are the subject of this charge, even though LCFC is not currently a Premier League club.
"LCFC remains willing and eager to engage constructively with the Premier League and the EFL to seek the proper resolution of any potential charges, by the right bodies, and at the right time.
"The club continues to take careful advice about its position and, if necessary, will continue to defend itself from any unlawful acts by the football authorities, should they seek to exercise jurisdiction where they cannot do so, as occurred earlier this year."
Sky Sports News chief reporter Kaveh Solhekol:
"We've been through this with Everton and Nottingham Forest. What happens now is a three-person panel will hear the case and in front of this panel the Premier League will make their case and explain why they believe Leicester have broken their rules and then the club, with their lawyers, will be able to make their case and defend themselves against this alleged breach.
"All these cases have been controversial and divisive already but what will be really controversial here is Leicester are in the Championship at the moment. They're fighting for promotion, they've got nine games to go. If they are found guilty, we know what happens in these cases - teams are hit with a points deduction.
"We have the very real prospect that if they're promoted they could start next season in the Premier League on -4, -6, -8, -9 points. We've even had the Premier League asking for a 12-point deduction in a PSR case as well."
Sky Sports News chief reporter Kaveh Solhekol:
"The simple answer to that is this alleged breach has happened over a three-year period when Leicester were in the Premier League. So it's alleged they broke Premier League rules, it isn't to do with the EFL but I can understand why some of their competitors in the EFL would be saying they had an unfair advantage because of this.
"It puts into sharp focus how controversial these rules have turned out to be. It's no surprise there's so much debate and discussion within clubs about changing these rules as soon as possible.
"Leicester are a club who provided the Premier League with one of, if not the most memorable moment, winning the title under Claudio Ranieri. After that, they actually had to balance the books, sell players and some of their managers have not been happy with operating with one hand tied behind their back.
"I don't think you could accuse them of going out and spending crazy money to gain an unfair advantage over their competitors in the Premier League.
"The clubs voted to bring in these rules and this fast-track system. But Leicester were relegated before this fast-track system was introduced so we'll have to wait and see exactly what the timetable is going to be for this case to be heard."
Sky Sports News senior reporter Rob Dorsett:
"Leicester's statement criticises the Premier League for not understanding the situation at the club, it says they will talk to their lawyers and 'if necessary continue to defend itself from any unlawful acts by the football authorities'. That's inflammatory language.
"It shows how strongly they feel about this, how angry they are about this. I wonder how that will be received by the EFL and Premier League who will argue, as the Premier League always have, that all they do is enforce the rules of PSR - rules that are voted on by the clubs themselves.
"This is going to be a long-running dispute, a long-running issue for Leicester and the Premier League. It's going to go beyond the summer. That's been made clear to me."
Sky Sports' Ron Walker:
In the simplest terms, when every Premier League team tots up their annual accounts, they are permitted to have made a loss no greater than £105m across the previous three seasons.
But there are a fair few caveats and sub-clauses to get through before any club can find itself in the clear. For a start, not all losses are created equal.
Clubs can only lose £15m of their own money across those three years. So, that's no more than £15m extra on outgoings like transfer fees, player wages and, in a lot of clubs' cases, paying off former managers compared to their income from TV payments, season tickets, selling players and so on.
Anything above that, up to the £105m barrier, must be guaranteed by their owners buying shares, known as 'secure funding', and essentially means bankrolling the club.
In those circumstances, the Premier League require clubs to submit plans to explain their financial forecast for the next two seasons.
If any club owner is not feeling particularly generous or cannot find the best part of £100m, that does not leave much wiggle room.
Of teams still in the top flight, only Chelsea and Everton utilised that full amount in the most recent published accounts (for the 2021/22 season) - with nine clubs, including Arsenal, Liverpool and Manchester United receiving no equity injection at all.
For sides who have spent any of the last three seasons in the EFL, owners can only put in £8m of secure funding for those years, leaving an overall maximum annual loss of £13m for the campaigns in question.
