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Leicester City will have concerns as major week set for PSR and Premier League

Leicester City's King Power Stadium
-Credit:Joe Prior/Visionhaus via Getty Images


This week is expected to be a crucial one for Premier League clubs facing profit and sustainability regulation (PSR) concerns.

First reported by the Guardian, the Premier League will look to dish out punishments to any clubs found to be in breach of PSR, with the process having been amended 18 months ago so as to have issues settled in the same season, with clubs having to submit their accounts by the end of December for assessment.

The financial and legal departments of the Premier League, whose 20 clubs make up its shareholders, were given a fortnight to assess the accounts and determine whether or not there had been any breaches.

The aim of PSR is, essentially, to ensure financial prudence and that clubs operate within their means in a sustainable manner. Clubs are permitted to lose £105m over a rolling three-year assessment period, with allowable deductions for such things as investment into infrastructure, investment into the academy and the women’s team, and money spent on community initiatives. Losses attributable to the COVID-19 pandemic were also permitted.

Of the member clubs, Leicester City are understood to be one of those with reasons for concern. The Foxes were hit with a PSR breach last year relating to the three-year period that took in 2020/21, 2021/22, and 2022/23 seasons, but the club successfully argued against a punishment because when they submitted their accounts they had already been relegated and were not a Premier League club as they submitted accounts on June 30, 2023. An independent commission agreed with the Foxes.

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But what was determined was that the club were in breach to the tune of more than £24m, and given that they spent last season in the Championship, where losses are allowable up to £13m and not £35m, meaning they had a PSR threshold of £83m and not £105m, that makes compliance a challenge.

While the club have expressed their belief they will be compliant, according to figures presented by football finance expert Swiss Ramble, the projection is that the club are at risk of a breach this time around.

The Foxes posted pre-tax losses of £92m and £90m for 2021/22 and 2022/23, while Swiss Ramble forecasts a £5m loss for 2023/24, making a total pre-tax loss of £187m. That, taking into account allowable deductions totalling £64m for the three-year period, puts Leicester at £95m, which would have been compliant had the Foxes been a Premier League side last season, but falls £12m short of the allowable PSR loss given their season in English football’s second tier.

The Swiss Ramble figures are projections and not set in stone, and it is expected that Leicester will try to argue that it was unfair for them to be subject to the £13m limit instead of the £35m limit after winning promotion from the Championship. How that argument plays out remains to be seen.

PSR changes from next season, with the 2024/25 financial period the final one accounted for where punishments can be dished out before a move to the squad cost ratio rule, similar to the one that UEFA have implemented in their competitions.

Looking ahead, Swiss Ramble figures suggest that the club could lose as much as £79m for the current financial year and remain compliant for the three-year reporting period as the £92m drops off the assessment. But the current concerns will lie with whether or not they can find a way to square their PSR issues up to 2023/24 with the Premier League, and given the fact that three punishments have been dished out to clubs, twice to Everton and once to Nottingham Forest for breaches, it is likely that there will be little room for manoeuvre, especially with the club having managed to poke holes in the Premier League’s rules last season in order avoid sanctions.