Kiernan Dewsbury-Hall’s future with Leicester City hangs in the balance, with the club just 48 hours away from a potential second breach of financial regulations.

To comply with the EFL’s Profit and Sustainability Rules (PSR) this year, Leicester must generate cash before the close of the accounting period on Sunday, June 30. Their most viable option for raising a significant sum is to sell star midfielder Dewsbury-Hall, and a deal with Chelsea is reportedly in the works.

As an academy graduate, any revenue from Dewsbury-Hall’s sale would count as pure profit, potentially solving Leicester’s PSR issues for the 2023-24 season. The EFL had already flagged Leicester as at risk, placing the club under a registration embargo in early spring.

The £10m compensation paid by Chelsea for manager Enzo Maresca and his staff provided some relief but did not entirely resolve the problem. Leicester still needs to generate additional funds, and selling Dewsbury-Hall appears to be the most efficient solution.

The 25-year-old midfielder has previously expressed a desire to remain at Leicester, a sentiment that quashed a potential move to Brighton. However, a reunion with Maresca at Chelsea is reportedly more appealing, provided Leicester’s valuation is met.

A deal involving a player trade would not jeopardise Leicester’s PSR compliance. While the entire profit from Dewsbury-Hall’s sale would be recorded in this year’s accounts, the cost of acquiring a new player would be amortized over the length of that player’s contract.

For instance, if Dewsbury-Hall is sold for £40m, Leicester would record that amount as profit immediately. If they sign a Chelsea player for £15m on a five-year deal, only £3m of that transfer fee would be accounted for this year.

To meet PSR requirements for the 2023-24 season, Leicester’s losses cannot exceed £13m, the Championship’s threshold. Usually, PSR calculations are assessed over a three-year cycle, but the EFL employs a double-jeopardy rule. This means clubs previously found in breach of PSR have their losses capped.

Leicester has been charged by the Premier League for the three-year cycle ending in 2023. If found guilty by an independent panel, the club could face a loss cap for the first two years of the EFL’s current three-year cycle, which would be a maximum of £35m. Thus, they only need to meet the £13m threshold for the season just concluded.

Selling Dewsbury-Hall and adhering to PSR would help Leicester avoid a second potential sanction for the upcoming season. Based on the cases of Everton and Nottingham Forest, Leicester could face at least a six-point deduction if found guilty of the charge from March.

If they fail to comply with PSR for 2023-24, the nature of their punishment remains uncertain. The Premier League has never deducted points on behalf of the EFL, so a fine seems more likely. However, such a penalty could further complicate Leicester’s ability to meet PSR requirements in the future.

Thus, the sale of Dewsbury-Hall seems to be a critical move for Leicester as they navigate these financial challenges, aiming to maintain regulatory compliance and avoid further sanctions that could jeopardise their competitive standing.