Leicester City have successfully avoided a Premier League points deduction following a successful appeal against a ruling on their adherence to Profitability and Sustainability Rules (PSRs).
This development is a significant relief for the newly-promoted club, who were facing a potential sanction after being referred to an independent commission in March over suspected financial breaches.
Initially, Leicester challenged the commission’s jurisdiction to hear the case, arguing that the financial issues in question occurred during their Championship tenure rather than their current Premier League status.
However, the commission dismissed this challenge earlier this year. The King Power Stadium side then escalated the matter to an independent appeal board, which has now overturned the commission’s decision.
The appeal board found that Leicester did not breach the PSRs for the assessment period ending 30 June 2023. Additionally, the board identified “flaws in the drafting of the Premier League’s rules,” adding a layer of complexity to the case.
This ruling comes after Leicester had been under the threat of a points deduction, which loomed large last month. The potential sanction was linked to an investigation into their financial practices during their first season back in the Championship.
PSRs are designed to prevent clubs from spending beyond their means, thereby safeguarding them against financial crises and maintaining competitive balance within the league.
UK clubs are permitted to report losses within a specified threshold, beyond which they face penalties such as fines or points deductions. Leicester’s financial issues have been attributed to their substantial outlay in recent years, both in transfer fees and player wages.
The club was at risk of facing a situation similar to Everton’s, who had received two separate points deductions for financial overspending in consecutive three-year periods.
Everton’s initial ten-point penalty was reduced to six on appeal, with an additional two-point deduction imposed for the subsequent period.
Leicester had been charged by the Premier League in March for surpassing the £105m loss limit for the financial period ending 2022-23.
The charges were delayed due to Leicester’s legal challenge, which argued that the Premier League lacked jurisdiction over them during their Championship campaign.
The club’s financial losses of £215.3m between 2020 and 2023 were cited as exceeding the permitted limit. Meanwhile, the EFL had also begun its own investigation into Leicester’s finances for the 2023-2024 season, forecasting further overspending.
Although an attempt to enforce an EFL-run business plan was overturned on appeal, Leicester faced a transfer ban last season, reflecting the ongoing scrutiny of their financial practices.
The appeal board’s recent decision marks a crucial victory for Leicester City, providing them with a reprieve from potential points deductions and reaffirming the need for precise and fair enforcement of financial regulations in English football.