Leicester City commence legal proceedings against Premier League over spending charges

Leicester City has initiated “urgent” legal action against the Premier League and English Football League (EFL) following charges alleging a breach of spending regulations.

The Championship club stated that they felt “compelled” to take action following charges of breaching profit and sustainability rules (PSR) issued on Thursday. If found guilty, the Foxes could potentially face a points deduction. Additionally, the club has been placed under a transfer embargo by the EFL.

Leicester has been referred to an independent commission by the Premier League for alleged breaches of PSR rules over their last three seasons in the top flight and for failing to submit audited financial statements. They are also undergoing a separate financial investigation by the EFL.

In a statement, Leicester expressed their intention to ensure that the proceedings are overseen by an appropriate and fully independent legal panel.

“The club is committed to ensure that any charges against it are properly and proportionately determined, in accordance with the applicable rules, by the right bodies, and at the right time,” the statement said.

“While LCFC would prefer the proceedings to be in public, so its supporters and the wider world can be informed about the important issues of football governance that will be considered, the relevant rules require that these proceedings are conducted confidentially, and LCFC will therefore not be able to comment further about them at this stage.

“We reaffirm the club’s position that we will continue to fight for the right of Leicester City and all clubs to pursue their ambitions, particularly where these have been reasonably and fairly established through sustained sporting achievement.”

Leicester added that the EFL’s decision to impose a transfer embargo was “both restrictive and premature”.

What’s the background?

Leicester are yet to make their accounts for their last season in the Premier League publicly available, but in the 12 months up to May 2022 they lost a club record £92.5m.

In the preceding season, when they clinched their first FA Cup victory, the club reported a pre-tax loss of £33.1m.

Premier League regulations allow clubs to incur losses of up to £105m over a three-year period, or £35m per season, before facing penalties.

At the start of the year, Leicester appeared poised for an immediate return to the Premier League, leading the Championship table with a 13-point advantage over third-placed Southampton.

However, a string of poor performances, including just one victory in their last five league matches, has seen Leeds overtake them at the summit, with Ipswich trailing by just one point.

Both Everton and Nottingham Forest have faced similar charges regarding their accounts up to the 2022-23 season from the Premier League, with the latter found guilty and handed a four-point deduction on Monday.

In November, Everton received a 10-point deduction – later reduced to six on appeal – for previous breaches of PSR, and they await potential further sanctions relating to the assessment period ending with their 2022-23 accounts.

Both Premier League clubs were required to submit their accounts by 31 December under new regulations aimed at expediting the reporting process and ensuring any penalties are imposed during the season of alleged infractions. However, Leicester was exempt from this requirement after relegation from the league.

Moreover, because Leicester was not part of the Premier League when the new ‘standard directions’ were implemented, which also outline a timeline for hearing cases, the independent commission will determine the schedule.

As a result, the proceedings, including any appeals, could extend beyond the current season, and any sanctions, if deemed necessary, may be enforced in the following season.

Leicester is now facing two financial inquiries, with the club under investigation by the EFL for a potential violation of PSR rules in the ongoing season. The club was projected to exceed the loss limits for the current three-year term.