Leicester City’s fall from grace continues. Just over a decade removed from an improbable Premier League title, the club is now battling relegation in the Championship after being docked six points for breaching the English Football League’s financial rules. The sanction, applied with immediate effect on , leaves the Foxes outside the relegation zone only on goal difference.
The penalty stems from breaches of Profitability and Sustainability Rules (PSR) during the 2023-24 season, a period when Leicester were operating in the Championship following their relegation from the Premier League. Further charges related to a failure to cooperate with investigations and late submission of financial accounts were also levied against the club. While Leicester successfully appealed a previous PSR charge in September 2024 on a technicality, this latest ruling proves far more damaging.
The club has stated its disappointment with the independent commission’s decision and intends to consider its next steps, potentially including an appeal. However, the immediate impact is stark. Leicester now sits level on points with West Bromwich Albion and Blackburn Rovers, with only goal difference separating them from the drop zone.
The roots of Leicester’s financial woes can be traced back to ambitious spending in the years leading up to their relegation. Between the 2021-22 and 2022-23 campaigns, the club invested over £100 million in player acquisitions. However, it wasn’t just the transfer fees that proved problematic. it was the associated salaries and contract structures.
“Everybody assumed that they would be a top-eight club,” explained football finance expert Kieran Maguire. “They effectively budgeted for that and didn’t take into consideration the potential downside.”
Maguire points to a degree of complacency in Leicester’s contract negotiations. Unlike many Premier League clubs, Leicester reportedly failed to include clauses in player contracts that would automatically reduce salaries in the event of relegation – typically ranging from 30% to 50%. This oversight proved costly when the club was relegated in 2023.
“They had one bad season and they had no comeback in terms of relegation clauses and relegation avoidance clauses,” Maguire added. “It does seem that these contracts were awarded in such a way that they ignored the existential risk of relegation.”
The financial strain was significant. In the 2022-23 relegation season, Leicester was spending 116% of its income on salaries. While that figure decreased to 102% in the 2023-24 season, a £107 million wage bill remained “unprecedented for a second-tier football club,” according to Maguire. Even after winning the Championship title in 2024, the financial pressures persisted.
The club’s wage expenditure dwarfed that of other relegated teams. Leeds United and Southampton, also relegated in 2023, had wage bills of £84 million and £80 million respectively. The Championship median average was just £29 million.
Concerns about the club’s financial strategy were raised even before the relegation. The Leicester City Supporters’ Trust expressed reservations about the risks associated with the club’s spending. “There weren’t enough safeguards in there for thinking what could go wrong,” said a representative of the Trust. “We were all saying, what if we get relegated? The fans could see them walking into it.”
The initial PSR charge in March 2024, which Leicester successfully appealed on a technicality, foreshadowed the current crisis. The subsequent breach of the PSR threshold by £20.8 million ultimately led to the six-point deduction. The club’s reliance on player sales to address its financial difficulties has also taken a toll, as consistent departures of key players have inevitably impacted on-field performance.
“They’ve relied on player sales to dig them out of a really messy situation,” Maguire observed. “But if you keep selling your best players then that catches up with you.”
The situation at Leicester serves as a cautionary tale about the dangers of overspending and the importance of prudent financial planning in football. The club’s dramatic decline from Premier League champions to Championship relegation battlers underscores the fragility of success and the critical need for sustainable financial practices. With the season entering a crucial phase, Leicester face an uphill battle to avoid further descent and secure their Championship status, all while grappling with the fallout from this significant points deduction.
