Business With Blain: Cunning Foxes Get Out Of A Hole
How did Leicester escape punishment, and what does it mean for the Premier League?
When Leicester City (LCFC) confirmed their bounce back into the Premier League as champions after one season in the EFL Championship, the joy of their fans may have been tempered by the sad expectation that they would start the 2024-25 season with a significant points deduction due to a breach of the Premier League’s much-maligned Profitability and Sustainability Rules (PSR).
It was assumed that their clear breach of the upper threshold of £24.4million would undoubtedly bring a points deduction. But, there was no public sign of the case being prosecuted and all had remained quiet since LCFC’s solicitors had written to both the Premier League and the EFL in March 2024, outlining the club’s intention to seek arbitration under Rule K of the Football Association’s (FA) rules.
The letter presented LCFC’s case strongly, asserting that the Premier League and EFL operated their rules differently, requested that the EFL lift the transfer embargo that they had imposed and requested that the Premier League did not commence proceedings while the Foxes were in the EFL. Finally, and most importantly, the letter asserted that the Premier League actually had no jurisdiction over LCFC.
Nonetheless, the Premier League served a Complaint on 31st March 2024, and subsequently amended that on 17 July 2024, reducing the breach down to £19.5m.
The Premier League of course argued that LCFC were bound by their rules for the 2023 Financial Year (FY23) with the club insisting this was not the case as they were no longer a member of the Premier League at the time of the alleged breach, and so the rules did not apply to them.
In simple terms, the LCFC legal term asserted that if they were not a member of the Premier League, they were not bound by its rules and so therefore there could be no breach.
When an Independent Commission reached its jurisdiction decision about the Profit and Sustainability (E.49) Rules, in a decision dated June 13th, it found in favour of the Premier League and decided that the PSR did, in fact, apply to LCFC.
The club appealed the decision and on 30th August, The Right Hon. Sir Stanley Burnton and his colleagues The Right Hon. Sir Maurice Kay and Robert Glancy KC published their decision.
Their conclusion was: “LCFC did not breach Rule E.49, and the finding of jurisdiction must be reversed.”
What this means is that on appeal, LCFC have successfully argued that the PSR for FY23 did not apply to them and therefore they have not breached.
The PL said they were “surprised and disappointed by the Independent Appeal Board decision”, and the EFL also issued a statement saying it “shared the frustrations of the Premier League”, and went on to say that “it cannot be right that clubs potentially escape the scrutiny of the agreed rules and sanctions due to movement across the divisions”.
It is easy to see why many fans believe that Leicester have ‘got off on a technicality’ and/or have ‘exploited a loop hole’. There was already general frustration that Everton and Nottingham Forest have been punished, while Chelsea and Manchester City are still under investigation.
So, what has gone on here to cause the Premier League to suffer a defeat of epic proportions? A defeat that sets a precedent that means in the same circumstances as LCFC no club could be in breach of the Premier League’s PSR as they currently stand…
Simply put, the Premier League does not seem to understand their own rules well enough to avoid schoolchild errors in their application, and as the Appeal Board said in their judgment: “The Rules are, in relevant parts, far from well drafted.”
Critical to the decision of the Appeal Board was the chronology of events — the sequence and timing of which assured that LCFC could not be punished now — and although there are options for the Premier League to continue to seek a prosecution, it is unlikely they will as they would almost certainly lose again.
28 May 2023: The PL Season ends, and LCFC are relegated.
31 May 2023: The PL request LCFC to undertake the necessary formalities to transfer its share in the PL to a club that had won promotion from the Championship.
13 June 2023: LCFC transfer their share to Luton Town and cease to be a member of the PL.
30 June 2023: LCFC’s Financial Year ended.
01 March 2024: LCFC’s accounts signed-off.
As can be seen, LCFC had left the Premier League before their Financial Year ended, and this is what saved them. Had their financial year ended on May 31st as it had in 2022 (a change they made in April 2023), then their appeal would have likely failed.
LCFC’s escape from potential punishment is a product of badly written rules, poor application of the rules with regards to the timing of the transfer of LCFC’s Premier League Shareholding, and the sharp legal mind of LCFC’s barrister Nick de Marco, who has acquired celebrity and not a little money over the last few years of the PSR debacle under Richard Masters, making himself the go-to defence lawyer in these matters.
The arrogance of the Premier League during the Everton, Nottingham Forest and now Leicester cases has proven to not always be backed by solid legal foundations and each subsequent case has seen them get an increasingly bloody nose.
This does not look good, especially with Chelsea and Man City yet to be dealt with, and already football fans, perhaps wrongly, are assuming that they too may “get away with it.”
It is astonishing that the Premier League Chair Alison Brittain has remained silent throughout these failings and the tenure of the beleaguered CEO Masters looks increasingly fragile.
A fragility that may be overcome, or decisively broken by the outcome of those two cases with Chelsea and Man City.