Leicester have won their appeal over an alleged breach of Profitability and Sustainability Rules (PSR).
The decision by the appeal board all but ends the prospect of Leicester being given a points deduction this season.
The Premier League, which says it is “surprised and disappointed”, is unlikely to appeal this decision because there is a very high legal bar for them to do so, and this case is unlikely to reach that high bar.
The original Premier League case alleged that Leicester had made a loss for three seasons leading up to the 22/23 season of £129.4m – £24.4m more than the permitted £105m losses over three seasons.
Leicester were adamant that the Premier League did not have jurisdiction to punish them in this way, because they had been relegated to the EFL when their accounting period ended, and so they were no longer bound by the Premier League rules.
The Foxes were also adamant that they had not breached PSR in the first place.
The appeal board decided that, because Leicester’s accounting period ended after they were relegated, the Premier League could only predict that Leicester were in breach of PSR, and could not definitely say that the club was in breach.
In their written reasons, the appeal board said: “It is possible that it (the club) could have sold players during the fortnight beginning on 14 June 2023.” And in fact, because of Leicester’s accounting period, the appeal board concluded “it (Leicester) could have some six weeks of trading to reduce its expected losses.”
A key part of Leicester’s submission to the appeal board argued that “a club is only subject to the Premier League’s rules while it is a member of the Premier League”.
The appeal board agreed, saying “it is impossible to determine the precise point in time at which Leicester allegedly exceeded the cumulative adjusted loss threshold of £105m”.
The appeal board did point out that Leicester moved its accounting period to a date beyond the time when they were relegated, and while this wasn’t deliberate, it did mean that their accounting period was outside the time when they were in the Premier League, and bound by its rules.
Had they not moved their accounting period, and handed their Premier League share to Luton Town, Leicester might well have been punished.
In effect, because Leicester were relegated, they were unpunishable because of their arbitrary accounting period.
The Premier League argued that “common sense” made it obvious that Leicester were in breach of PSR, but the appeal board said they could make no reference to common sense, only what was stated explicitly in the rules.
The appeal board criticised PSR, saying: “The rules are, in relevant parts, far from well drafted.”
In the written reasons given by the appeal board, they described parts of PSR as “confusing”.
Premier League ‘surprised and disappointed’
A statement made by the Premier League:
“The Premier League is surprised and disappointed by the independent Appeal Board’s decision to uphold an appeal lodged by Leicester City FC regarding the League’s jurisdiction over the club’s alleged breach of its Profitability and Sustainability Rules (PSRs) when the club was a member of the Premier League.
“In March this year, the Premier League referred Leicester City to an independent Commission for an alleged breach of PSRs relating to the assessment period ending financial year 2022/23. Once submitted, the club’s financial results demonstrated that it had exceeded the permitted £105m threshold for the relevant period.
“Leicester City subsequently challenged the Commission’s authority to hear the case on the grounds of jurisdiction. This challenge was dismissed by the independent Commission, a decision which Leicester City appealed.
“That appeal has been upheld by an independent Appeal Board on the grounds that the club’s accounting period which ended on 30 June 2023, came after the point the club had ceased to be a member of the League.
“The Appeal Board’s decision effectively means that, despite the club being a member of the League from Seasons 2019/20 to 2022/23, the League cannot take action against the club for exceeding the relevant PSR threshold in respect of the associated accounting periods.”
Welcomed by Leicester
A statement made by Leicester City:
“Leicester City welcomes the Appeal Board’s comprehensive decision, which supports our consistently stated position that any action against the club should be pursued in accordance with the applicable rules.
“To avoid any misunderstandings which may arise in light of the statement which has been issued by the Premier League in response to the appeal decision, Leicester City wishes to emphasise the finding of the Appeal Panel that, when considering the wording which is actually used in the Premier League rules (in accordance with established principles of English law) the club did not breach the Premier League PSRs for the assessment period ending 30 June 2023.
“In its decision, the Appeal Board (which was made of up a panel of three experienced, senior lawyers, two of whom are former Court of Appeal judges) identifies flaws in the drafting of the Premier League’s rules.
“In challenging the Premier League’s attempts to charge Leicester City, the club has simply sought to ensure (in the interests of providing consistency and certainty for all clubs) that the rules are applied based on how they are actually written.”
