Leicester City are at serious risk of breaking the English Football League’s profit and sustainability regulations, raising concerns about the club’s financial picture and a possible points deduction.
The financial pressures are likely to result in the need to sell players this summer. If found in breach, it is unclear when any punishment would come into effect.
The EFL believes Leicester, who have a three-point lead at the top of the Championship, are on course to break financial rules relating to this season. Reviewing forecasts in November, the league’s independent club financial reporting unit (CFRU) believed those figures would equate to a breach.
The CFRU determined that it was appropriate for Leicester to submit a business plan to demonstrate how it planned to comply with spending limits but the club said the relevant financial rules did not apply because they were in the Premier League last season.
The club subsequently had to submit its projected 2023-24 accounts by 1 March. Under EFL rules, clubs cannot exceed £39m losses over a three-year cycle, whereas in the Premier League maximum losses are £105m across that period. Because Leicester were relegated to the Championship last season, their maximum permitted loss for the period up until 2023-24 stands at £83m.
In 2018, Leicester agreed to pay the EFL £3.1m to settle the league’s claim they breached financial rules in 2013-14. Queens Park Rangers agreed a £42m settlement with the EFL after breaching spending limits. After winning promotion to the Premier League as champions in 2014-2015, Bournemouth were fined £7.6m for breaching financial fair play rules and later agreed a £4.75m settlement with the league. The rules and parameters, however, have changed since those cases.
“Leicester City is responsible for meeting its obligations in respect of the P&S rules which will be assessed along with the submissions of all other clubs in accordance with the league’s established processes,” read an EFL statement.
A Leicester statement on Wednesday said the EFL’s financial reporting unit acted outside of its powers in its dealings with the club.
Leicester added: “Leicester confirms it is in discussions with the Football authorities regarding its profitability and sustainability calculations. Notwithstanding the CFRP’s decision, the club remains committed to seeking an appropriate overall outcome in this matter.”
Leicester are in the FA Cup quarter-finals and could raise money from further progress in the competition while a number of players, including Jamie Vardy, Kelechi Iheanacho and Wilfred Ndidi are out of contract at the end of the season.