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Leicester face threat of points deduction in the Championship next season for alleged PSR rule breach

Leicester City face the threat of a points deduction in the Championship next season for an alleged PSR rule breach.

The Foxes avoided a Premier League points deduction earlier this season after they were charged with a £24.4m breach for the 2022/23 campaign.

The Premier League challenged the initial ruling, only to see their appeal dismissed.

But with Leicester now relegated to the second tier, they now face the prospect of being deducted points next season for an alleged breach of Profit and Sustainability Rules for the 2023/24 season.

The margin of Leicester’s alleged breach of PSR rules for the 2023/24 campaign is currently unknown.

The points deduction they’ll receive if they’re found guilty is also a mystery.

Nottingham Forest were slapped with a four-point sanction last March for breaching PSR rules by £34.5m.

Forest dropped into the relegation zone but ended up beating the drop with a 17th-placed finish.

LEICESTER STATEMENT:

Leicester City FC notes the Tribunal decision which has been published today.

The Club is pleased that it successfully defended the Premier League’s challenge to the Appeal Board decision in relation to the PSR assessment period ending FY23, which was the main focus of these proceedings.

The Premier League’s own rules provide a deliberately high threshold for any challenge to the decision of an Appeal Board. In this case, the Appeal Board’s decision was only capable of being overturned if it could be shown to have resulted from a “perverse interpretation of the law” or was a decision “which could not reasonably have been reached”.

The Appeal Board decision was reached by a highly experienced panel (including two former Court of Appeal judges) and, although the tribunal may have disagreed with the decision, it dismissed the Premier League’s challenge, finding (consistent with the arguments made by the Club all along) that the Appeal Board decision “could not sensibly be seen as resulting from a perverse interpretation of the law”.

The tribunal also concluded that the Premier League was successful in establishing jurisdiction on one of the two grounds argued by the Premier League with respect to the assessment period ending FY24, and the Premier League has now referred this to an independent Commission. Consistent with its previous commitments, the Club intends to engage cooperatively in this matter now that the Premier League’s jurisdiction has been established for the period ending FY24. However, we will not be able to comment further on these proceedings until they are concluded, due to their confidential nature.

PREMIER LEAGUE STATEMENT:

Following an Arbitration Tribunal’s decision concerning jurisdiction, Leicester City FC has now been referred to an independent Commission for alleged breaches of:

– the EFL Championship Profit and Sustainability Rules (P&S Rules) for Season 2023/24

– the club’s obligation to provide its Annual Accounts to the Premier League by 31 December 2024

– the club’s obligation to provide full, complete and prompt assistance to the Premier League in response to the League’s inquiries

The Arbitration proceedings looked at (a) the Premier League’s jurisdiction to investigate an alleged breach by the club of the EFL’s P&S Rules for Season 2023/24; and (b) a previous Appeal Board decision regarding the League’s jurisdiction in respect of a breach of the Premier League’s Profitability and Sustainability Rules (PSR) for Season 2022/23.

Click here to read the Tribunal’s decision.

In summary:

Regarding (a), the Tribunal decided that the Premier League has jurisdiction to investigate and refer the club to an independent Commission for an alleged breach of the EFL’s P&S Rules. The alleged breach relates to the assessment period concluding at the end of the 2023/24 season, when the club was a member of the EFL Championship. The Tribunal confirmed that the Premier League has the power to investigate an alleged breach of the P&S Rules because the EFL validly transferred responsibility for its investigation to the Premier League in June 2024, when the club was promoted from the Championship. The Premier League continues to have jurisdiction even though Leicester City will be relegated to the Championship at the end of this season.

Regarding (b), the Premier League challenged, via Arbitration, an Appeal Board decision made in August 2024. The Appeal Board had ruled that the Premier League did not have jurisdiction to charge the club for an alleged breach of PSR. This was because the club was no longer a member of the League at the time of its accounting year-end date in 2023. The Appeal Board had overturned an earlier independent Commission decision that the Premier League did have jurisdiction. While the Arbitration Tribunal decided that the Appeal Board was wrong, they found the Appeal Board’s decision was not a perverse interpretation of the law (which was the relevant test to overturn the decision), and therefore dismissed the Premier League’s claim.

Notes

EFL P&S Rules (see EFL handbook) and Premier League PSRs (see Premier League Handbook Section E)

– The independent Commission process is confidential, however its decision will be published on the Premier League’s website

– All EFL Championship clubs are assessed for their compliance with the Profit & Sustainability Rules (P&S Rules) each year. The P&S Rules are substantively similar to the League’s Profitability and Sustainability Rules (PSRs), which provides an aligned regime for the top two divisions

– Under the EFL Regulations, when a Championship club is promoted to the Premier League, the EFL can transfer jurisdiction for any ongoing investigation into breaches of the P&S Rules to the Premier League

– Compliance with the P&S Rules is assessed by reference to the club’s P&S Calculation, which is the aggregate of its Adjusted Earnings Before Tax for the relevant assessment period

– A club’s Adjusted Earnings Before Tax figure for each season takes account of its profit or loss after depreciation and interest, but before tax, and then applies a series of “add backs”

– These “add backs” are costs that the EFL, the Premier League, and their clubs recognise to be in the general interest of the club and football, for example, investment in infrastructure, community, women’s football, youth development and depreciation of tangible fixed assets

– A club will be in breach of the P&S Rules if its P&S Calculation over the relevant period results in a loss in excess of £39 million (with that threshold increased by £22 million for each season that a club has been in the Premier League during the relevant period)

– Premier League clubs that recorded a loss across the previous two financial years were required to submit their audited Annual Accounts by the following 31 December. This requirement has been amended slightly with effect from the 2025/26 season so that each club (including each promoted club) must now, as a matter of course, submit by 31 December each year its Annual Accounts for the previous financial year

Premier League investigations and independent Commissions 

– The Premier League Board has the power to investigate any suspected or alleged breach of Premier League Rules. Rule E.77 of the 2024/25 Rules (now Rule E.83) provides that where a Promoted Club, at the point at which it becomes a member of the Premier League is the subject of an investigation by the EFL for alleged breaches of any aligned provisions within the EFL Regulations, responsibility for that investigation will pass to the Board

– There are a number of options available to the Board where it suspects or alleges a breach of the Rules. For PSR/P&S cases, the matter will be handed to an independent Commission to determine whether there is a breach and, if so, what the sanction should be

– The Premier League has access to an independent Judicial Panel, comprising a number of legal, financial and other experts. Members of the Judicial Panel are appointed, in accordance with Premier League Rules W.19, W.20 and W.26, by its independent Chair, The Rt. Hon. Sir Gary Hickinbottom, an experienced former Court of Appeal judge. It is the Chair who selects members of the Judicial Panel to sit on Commissions, which are independent of the Premier League and its clubs

– All proceedings before an independent Commission are confidential and heard in private. This includes the date and location which can’t be announced in advance

– There are a range of sanctions available to the independent Commission which include fines, points deductions, and other sporting sanctions

– Under Premier League Rule W.83.3, at the conclusion of proceedings, an independent Commission’s final decision will be made public via the Premier League’s website

Twitter users reacted as Leicester face the threat of a points deduction in the Championship next season for an alleged PSR rule breach…

@Dan_1884: A sick part of me wants a devastating record breaking points deduction that we wipe out within 5 games and then go on to win the league. Fuck the ‘big 4’ establishment shills. We’ve been woefully mismanaged for years, nothing new, the fans know it. Terribly long and inflated contracts and poor recruitment the key. However, PSR is also bollocks. A concept entirely designed to keep the minnows ‘in their lane’ at the benefit of the super powers. #lcfc

@JJDLCFC: So pleased we aren’t getting deducted any points this season! Could’ve been costly 😅

@LCFCDATA: The fact that no one of any significant importance at the club has lost their job over this whole ordeal is honestly ridiculous, and probably explains why we seem to be in an unarrestable decline…

@AKWils92: At least it’s never dull being a Leicester fan… #lcfc

@Ashleypp1986: I think the #EFL are going to make an example of us can see 10pts deduction incoming! #Rudkinout #LCFC

@jamesconnorlewi: If it happens it happens , hope we don’t get a transfer ban though. But even with -10 I fancy us getting play offs. Don’t think we’ll go up next season but I think play offs is doable

@DamoWarren2: They won’t want another situation like this season same teams going up and down. #corrupt likely to be heavy points deduction if we’re proved guilty… if we’ve over spent again why did we sign so many players last summer that we didn’t need, makes no sense.

@LestahSam: Not sure why anyone’s surprised by this. We’ll do well if we avoid a points deduction and potentially an embargo. But once again Rudkin and KP get away with it by distracting everyone with Vardy. We didn’t even get a chatGPT-written PR statement this year..,

@ashclarke10: Didn’t we all know this was coming. Is what it is, the board are fucking clueless. Sack each and every one of them..

@joshlufc91: 2 points, slap on the wrist, straight back up, round and round we go

@AdamHickin: Well they avoided it on a technicality last time by moving their accounting period so they were no longer in the PL at the end of the season, but that means they were technically back in the PL before the end of the next season. You can’t have it both ways.

@Birdiex94x: FFS 😂😂😂 Surely though the EFL are the ones that should be charging us if we were in the Championship? Thats why we got away with that loophole for the previous season in the first place. It’s just never ending 😭

@ThatCovPod: The more trouble the relegated clubs find themselves in, the better for us. #PUSB

@lcfckini: We basically cheated our way out of a points deduction and STILL got relegated. Now we’ll face an upward battle in the Championship. Thanks Khun Top and Jon Rudkin! #lcfc

@markmanderfield: In all seriousness, our board think they’ll get away with this again don’t they? Couldn’t organise a proverbial in the brewery. Shambolic leadership of the highest level. Sack the board

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