Leicester reveal losses for 2022/23 Premier League season amid charges for breaching Profit and Sustainability Rules

Premier League

Leicester City has disclosed that they have incurred a deficit of £89.7 million for the 2022/23 campaign, which happened to be their last season in the Premier League.

Premier League - Figure 1
Photo Sky Sports

The league accused them of breaking the Profitability and Sustainability Rules and issued a charge against them for that timeframe. This offense occurred because Leicester's accounts displayed a whopping loss of £92.5 million in the year preceding it.

After facing charges from the Professional Standards Review, the Foxes, who are currently ranked third in the Championship, have been put on a transfer embargo by the EFL.

Leicester may receive a harsher penalty compared to the four-point deduction given to Nottingham Forest if an unbiased committee finds that their delay in submitting accounts shows a lack of willingness to cooperate.

Leicester has stated that they are pursuing legal action against the Premier League and EFL in a haste manner following their announcement last month.

In this part of the blog, Rob Dorsett, who is a senior reporter for Sky Sports News, provides answers to the important inquiries related to the recently released financial statements.

Did Leicester Break Premier League Rules?

The reasons for Leicester being charged by the Premier League are quite evident. However, it must be stressed that the two consecutive losses of £92.5m and £89.7m are not the exact PSR loss numbers. It is important to remember that the PSR permits a maximum of £105m of losses within a three-year duration.

Leicester and the Premier League are not sharing the PSR figures because it is a crucial part of their legal argument.

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Still, these records clearly show that Leicester City Football Club has suffered substantial financial losses over the last couple of years, leading to the imposition of a PSR fee.

The components that contribute to the £89.7m losses are not factored into the PSR computations. This encompasses depreciation, spending on women's football, investment in community development, as well as academy expenses.

Can Leicester Face Bankruptcy Or Administration?

The club receives unwavering backing from their owners, King Power, who have the financial stability to bear these defeats without any trouble.

Despite the Premier League's accusations of overspending, Leicester City's financial situation remains completely secure.

"Leicester's Player Sales: Boosting Their Accounts?"

In this accounting period, Leicester experienced significant losses even though they made a massive £74.8 million profit from selling players. This impressive profit included the transfer of Wesley Fofana to Chelsea and James Maddison to Tottenham.

Leicester's Player Sales Earn Big, So Why The Financial Loss?

According to sources at Sky Sports News, it was described as an ideal combination of factors.

European football has not been taking place. An instance where Leicester gained £20-22m was during their participation in Europa Conference League.

Due to their low ranking and subsequent relegation, Leicester received significantly less revenue from the Premier League. They had initially planned to finish in eighth place, but ended up in 18th place. By estimating that each place in the Premier League is worth £3m in prize money, Leicester lost out on £30m in earnings.

Leicester would have met the requirements for PSR if they had ranked eighth in the Premier League like the previous year.

Additionally, there was the expense of letting go of a management group consisting of Brendan Rodgers and his team, who were deemed as having high salaries.

Leicester has also altered their accounting period to be in sync with other segments of their enterprise, which means their fiscal year consists of 13 months, including an additional month. Consequently, their deficits are actually 8.3% higher than they would have been if they had maintained a standard 12-month reporting period.

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Leicester's Messy Situation: How Did It Happen?

When Leicester got demoted, they were spending the most money on wages compared to any team outside of the top six Premier League teams.

The team has been putting money into their efforts to be able to compete in the upper levels of the Premier League. In the past three years leading up to their descent, they were able to secure the positions of 5th, 5th, and 8th.

Leicester had been participating in European competitions, achieved victory in the FA Cup and Community Shield. They had additional aspirations and were allocating financial resources to pursue them.

This is the reason why demotion was a major setback. It meant a significant decline in status, and even though they had measures to decrease expenses as soon as they were relegated - such as provisions in the players' contracts for lower salaries in the lower league - their income dropped drastically.

"Promoted Leicester: Player Sales Necessary?"

According to sources at Sky Sports News, it is highly likely that the team will need to offload some of their players during the upcoming summer transfer window, with a few of those deals expected to be completed before the end of June.

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If Leicester gets promoted, they cannot receive the money they are owed for participating in the Premier League until the next accounting period, which means the following season.

The EFL offers monetary rewards but they are not as significant as those from the Premier League and are distributed at a later date.

Leicester's Stadium And Commercial Expansion Plans

These have been postponed indefinitely.

Nonetheless, the proprietors are determined to carry out these tasks, including building a new hotel, setting up a venue, and expanding the stadium's capacity, among additional endeavors.

In the lead up to Christmas, Leicester was authorized to enlarge the capacity of their stadium by an additional 8,000 people.

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