New Delhi: The Premier League is set to issue disciplinary charges this week against the clubs deemed to be in breach of its profitability and sustainability (PSR) rules for the 2021-24 accounting period. As part of the fast-track process established 18 months ago, clubs that reported losses in the initial two years of this reporting cycle must submit their accounts for the financial year ending June 2024 to the Premier League by December 31.
The Premier League had granted its financial and legal team 14 days to go through the books who are in danger of a PSR regulation breach and is expected to issue any charges on Monday and Tuesday.
Nottingham Forest and Everton faced penalties for exceeding spending limits during the 2020-23 period, leading to an independent commission deducting four and two points from their totals, respectively. These cases have set precedents indicating that a three-point deduction serves as the initial penalty for violations of PSR regulations.
Leicester City
The Foxes (Photo by Joe Prior/Visionhaus via Getty Images)
Leicester City were charged by the Premier League for violating PSR regulations for 2020-23 last March, but the case was never heard. An independent commission accepted that because Leicester were relegated at the end of that season, they were not a Premier League club when they reported their accounts on 30 June 2023 and, therefore, could not be charged.
However, during the hearing, it was revealed that Leicester had been charged with a £24.4 million breach, making it difficult for them to comply with the requirements this year. To make matters worse, Leicester’s acceptable three-year loss level has decreased from the Premier League standard of £105 million to £83 million because they spent last season in the Championship, which has harsher rules.
Foxes’ pre-tax losses for the past two years were £92.5m and £90m, respectively. However, these losses are expected to have decreased significantly last season due to a lower wage bill in the Championship, supplemented by parachute payments. In addition to that, the club also made about £115m in the last two summers by selling James Maddison, Harvey Barnes, Timothy Castagne and Kiernan Dewsbury-Hall and even banked £10m in compensation for allowing Enzo Meresca to become Chelsea manager.
Leicester City have expressed confidence that they will comply. According to finance blogger Swiss Ramble, the club is expected to exceed the limit by £12m based on estimates of their unpublished 2023-24 accounts. The Premier League’s decision may depend on additional legal arguments, with Leicester prepared to claim that promoted teams should receive the full £35m seasonal allowance after moving up from the Championship.
Manchester United
The Red Devils (Photo by ben radford/Corbis via Getty Images)
Manchester United have published their accounts, so based on that it can be accounted that they will not be found guilty of breaching PSR rules. However, the club’s openness to offers for players like Kobbie Mainoo and Alejandro Garnacho suggests they have limited financial flexibility. Last season, the Red Devil’s pre-tax loss rose sharply to £131m due to higher wages, interest payments, and expenses tied to Sir Jim Ratcliffe’s investment. After the completion of this process, the new part-owner has focused on cutting costs, which seems like an important move.
Chelsea
The Blues (Photo by Visionhaus/Getty Images)
Chelsea’s owners have been even more confident in their ability to comply with PSR despite total pre-tax losses of £211 million over the last two years, although how they managed to get that done is altogether a different question. Avoiding a charge may not be the end of the situation. Last year, the club avoided a breach by selling two hotels at Stamford Bridge for £76.5 million to another firm in their group, BlueCo 22, in a transaction approved by the Premier League in September.
Although the Blues have cut their wage bill in the last year and raised over £100 million from selling Conor Gallagher, Lewis Hall, and Ian Maatsen, their substantial losses suggest that they may require further financial advice. Chelsea transferred their women’s team to BlueCo 22 just two days before submitting their 2023-24 accounts last June, with reports estimating the deal at £150 million.
The sale is yet to be assessed by the Premier League whether that falls under fair-market value rules or not. The eight-time Women’s Champions League winners Lyon were valued at £45m when the majority stakes were bought by the American businesswoman Michele Kang. Inter-group sales are not allowed by UEFA, so Chelsea could face a charge of breaching the fair play rules.
Newcastle United
The Magpies (Photo by Joe Prior/Visionhaus via Getty Images)
Newcastle also faces a problem in complying following a cumulative pre-tax deficit of £150 million over the previous two years. The club did the same as a result of frenetic transfer activity last June with Yankuba Minteh and Elliot Anderson moved to Brighton and Forest respectively, within hours before the 30 June deadline. Bournemouth and Ipswich both appear to be near the line due to their smaller income streams, with the latter’s loss limit for the past three years being only £39 million, although they are sure of meeting it.
Nottingham Forest and Everton
Nottingham Forest and Everton (Image via @NFFC and @Everton ‘X’)
Nottingham Forest and Everton both have lost points last season and had little margin for this season, but it appears that they have accurately traded their way out of trouble. Tricky Trees banked £47.5 million of immediate PSR profit from the sale of academy striker Brennan Johnson to Tottenham Hotspurs 18 months ago which increased their commercial income significantly in their first Premier League season. The kit deals with Adidas and Kaiyun Sports heavily added to their numbers.
Meanwhile, Everton have had to work hard to save themselves from getting charges as they sold Alex Iwobi, Lewis Dobbin and Demarai Gray which kept them on the right side of the PSR line.
This week, PSR enforcement swings into action with past points deductions for Everton and Nottingham Forest serving as stark warnings for Premier League clubs. Football Sports News: Latest Cricket News, Cricket Live Score, Sports Breaking News from Sports Today
