“Leicester City Escapes Premier League Sanctions for PSR Breach After Key Legal Ruling”
Leicester City has emerged victorious in a critical legal battle with the Premier League after being accused of violating Profitability and Sustainability Rules (PSR). The Foxes had been facing the threat of potential points deductions this season after years of overspending, with the Premier League determining that Leicester had exceeded the allowable three-year loss limit by £24.4 million between 2019 and 2023.
This ruling, however, confirms that Leicester City will not be penalized, allowing the club to avoid a points deduction this season. A significant factor in this outcome was their strategic player sales made late in the 2023-24 financial year, which played a crucial role in reducing their financial losses.
Football finance expert Dr. Rob Wilson provided insights into how Leicester managed to avoid the points deduction, the implications this has for the future of the PSR regulations, and the possible impact on Manchester City’s forthcoming case under similar scrutiny.
Leicester’s case was built around the precise wording of the PSR rules, particularly around when the assessment period officially concludes. Under Premier League regulations, a club is deemed to have breached PSR if its accounts show losses exceeding £105 million as of June 30 in any given year. While Leicester City did surpass that threshold, the situation became complicated due to their relegation that season.
Following relegation, Leicester transferred their Premier League status to Luton Town on June 13, 2023. By the June 30 deadline, Leicester was technically a club in the English Football League (EFL), meaning they were no longer under Premier League jurisdiction for PSR enforcement, despite spending 98.4% of the PSR period as a Premier League club. This key timing issue became the focal point of the case.
Additionally, Leicester made a strategic decision to extend their financial year-end date from May 31, 2023, to June 30, 2023. This extension coincided with their official exit from the Premier League. Leicester argued that this extension gave them extra time to meet PSR compliance requirements. Interestingly, the Premier League did not contest this point, and this fortuitous timing became a cornerstone of Leicester’s successful defense.
While this decision does not entirely eliminate the possibility of Leicester facing penalties for any alleged financial breaches during the 2023-24 season, the club appears confident that the £30 million sale of academy graduate Kiernan Dewsbury-Hall to Chelsea at the end of June has bolstered their financial standing and helped them comply with PSR rules moving forward.
The Premier League expressed its “surprise and disappointment” with the ruling, as Leicester seemed destined for punishment. This case raises significant questions about the future enforcement of PSR regulations and may set a precedent for how such cases are handled, potentially influencing the upcoming case against Manchester City.