Leicester avoids PSR penalty thanks to relegation loophole

Leicester City has successfully won its appeal after previously being charged with a penalty for breaching profit and sustainability rules (PSR). Premier League officials originally charged the Foxes for exceeding the three-year loss limit of about $137 million. Leicester recorded combined losses of nearly $170 million ending in the financial year of 2022/23.

In the spring, the Premier League presented its case against Leicester to an independent commission. This commission agreed with the English top-flight officials that the Foxes broke the financial rules. The ruling seemingly meant the newly promoted side would face a substantial points penalty back in the top division.

Leicester, however, appealed the commission’s decision. That led to the case going to an independent appeal board. This board has surprisingly sided with the Foxes. As a result, Leicester will not face a points penalty during the current international break.

The timing of PSR penalty ultimately saved Leicester

Leicester’s triumph comes down to the timing of the financial year compared to its relegation from the Premier League. Financial periods for every top-flight team end on June 30th of each year. Nevertheless, Leicester officially suffered relegation to the second-tiered Championship more than a month before this date in 2023.

Because the Foxes were not technically a Premier League club in June of 2023, they argued that the division did not have jurisdiction in the case. Financial decisions by the club during this month were not as a top-flight team. This comes even though they were found guilty of breaching financial laws for years while in the Premier League.

The independent appeal board ultimately agreed with Leicester. Premier League officials, on the other hand, claimed that they were “surprised and disappointed” by the ruling. “The Premier League is very disappointed with the appeal board’s decision, and the limited reasons provided for it,” read a statement from the league.

“The league remains of the view that the original commission took the right approach in interpreting the rules in a practical and workable way that gives effect to their intended purpose. In overturning the original commission’s findings, the Premier League considers the appeal board’s decision fails to take into account the purpose of the rules, all relevant parts of the PSRs and the need for effective enforcement of alleged breaches to ensure fairness among all clubs.”

The ruling will now influence future similar cases

In a statement of its own, Leicester praised the appeal board’s decision and called on PSR to be written more clearly. The club claims that the financial laws are currently open for interpretation, which can confuse those involved in similar cases.

Avoiding a points penalty is significant news for Leicester. The club and their fans were bracing for the punishment to come down. After returning to the Premier League this summer, the Foxes have somewhat struggled back in the top division. They have managed to secure just one point in their first three league matches so far this season.

Looking ahead, the ruling now affects how the Premier League handles clubs suffering relegation. Assuming PSR remains the same moving forward, teams that suffer the drop could use a similar defense as the Foxes.

Meanwhile, clubs staving off relegation are open for punishment. Everton and Nottingham Forest faced charges and picked up points deductions in the 2023/24 season. The duo finished 15th and 17th in the top flight last year.

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