Leicester City is facing potential financial fair play issues as they lead the Championship this season after relegation from the Premier League. The club incurred significant losses in recent years, with £92.5m in the 2021-22 season, leading to concerns about compliance with profit and sustainability rules.
The English Football League (EFL) has its own version of the Premier League’s profit and sustainability rules, permitting Leicester to lose £83m from 2021 to 2024. However, some costs are deducted for “healthy” expenditure, such as the academy, women’s team, and charitable work.
Leicester’s precarious financial situation prompted the EFL to request a business plan to demonstrate compliance with the spending cap. The club argued against submission, citing their previous status as a Premier League club. An independent panel ruled in Leicester’s favor, but the EFL is reportedly still pursuing potential punishment.
The official accounts for the 2022-23 season, set to be released by March 31, will determine if Leicester exceeds the profit and sustainability loss limit of £105m from 2019 to 2023. If found in breach, they could face a points deduction, likely before or during the next season.
Relegation is expensive, and despite player sales, the financial burden remains. The EFL may impose financial penalties, but they lack the authority for a points deduction in the Premier League.
Leicester’s fate hinges on their ability to avoid financial punishment by June 30, with opportunities for additional funds through FA Cup progress, sponsorships, and potential player sales, influencing their financial performance.