10 years ago, Leicester City were the sweethearts of English football. They were the ultimate underdogs, defying 5,000-1 odds to slay the beast that is the Premier League’s top six and win the title.
Even five years ago, they lifted the FA Cup after defeating Chelsea at Wembley and reached the semi-final of the Europa Conference League. From the outside looking in, this seemed to be a well-run club exceeding expectations.
Take a closer look, however, and Leicester were one bad season away from the very disaster that they’re now coming face-to-face with in the Championship.
Leicester hit with point deduction after PSR breach
As it turns out, Leicester can delay but they cannot escape their financial troubles, resulting in losses of £200m across three years. The EFL confirmed earlier this week that the club have been docked six points for breaching Financial Fair Play rules.
The Foxes were charged by the Premier League in May for a breach in the three years up to the 2023/24 campaign and the EFL have since taken the case following the club’s relegation last year.
As a result, they’ve been sanctioned under EFL PSR rules and have gone £20.8m over the £83m limit over the 36-month period from 2021 to 2024.
An independent commission disagreed with Leicester’s argument that they did not have the power to impose a deduction in the EFL – saying: “The appropriate sanction for such a serious breach is a sporting sanction (i.e., a deduction of points) and any lesser sanction — such as a fine — does not adequately fulfil the aims of the rules, is inconsistent with the scheme of the rules, and does not do justice to other clubs.”
Leicester have hit out at the charges, describing them as “disproportionate” and confirmed they’ll be seeking next steps.
Alas, the numbers don’t make for pretty reading and, according to The Athletic, the Premier League were seeking a deduction of 12 points, which would have been nothing short of a disaster for Leicester.
As things stand, they can perhaps count themselves fortunate to still be above the relegation zone after only a six-point deduction. Currently without a manager following Marti Cifuentes’ dismissal, the Foxes sit outside the bottom three on goal difference.
The danger of relegation is very much a real one for all involved and that would surely spark even more problems for a club who climbed to the very top of English football just 10 years ago.
Leicester’s financial woes: A lesson in recruitment
When Leicester made that climb to the peak of the Premier League, they did so with second-hand boots and cheap equipment.
They were expected to crash back down the mountain as a result. Instead, a red-bull fuelled Jamie Vardy and unearthed gems such as N’Golo Kante and Riyad Mahrez did the impossible.
So, naturally, once they got to the peak, those at The King Power soon decided that it was time to spend on some well-earned upgrades. They were going to climb the mountain again, and this time all whilst looking the part.
When Brendan Rodgers demanded a refresh in 2021, it was Patson Daka who arrived from Red Bull Salzburg for a reported £23m. It was Boubakary Soumare for £17m and Jannik Vestergaard for £15m.
A year later, more arrivals came through the door. Leicester signed Wout Faes in a £15m deal, before Harry Souttar joined for the same price and Victor Kristiansen arrived for around £17m.
The Foxes were also spending £206m on staff costs, maintaining the seventh-highest wage bill in the Premier League in the 2022/23 season. They went all in with the belief that they were holding a royal flush. The result? Shocking relegation and the beginning of their downfall.
They went down with a bigger wage deal than any other side in Premier League history and then had the biggest wage bill in Championship history, which is where the true problems began.
The Srivaddhanaprabha family backed the club for the sake of an instant return to the Premier League, but welcomed greater loss and a subsequent sporting sanction which they are now paying the consequences for.
Their summer spending in 2022 is something that Leicester are still paying the price for. On big contracts and after arriving for hefty fees, the likes of Faes (on loan at AS Monaco) and Vestergaard are still lingering at the King Power.
Which clubs are still in trouble?
Leicester are the latest to be hit with financial sanctions, but who could be next? It’s an open secret that both Newcastle United and Aston Villa have had their run-ins with PSR and, according to The Athletic last summer, they’re still walking a tightrope.
Even after selling Alexander Isak for a Premier League-record figure last summer, Eddie Howe admitted in the January transfer window that Newcastle are still unable to spend freely up against PSR constraints.
The Magpies should particularly heed Leicester’s warning about recruitment. Although PIF’s financial power should never leave them in the same trouble as the Foxes, Newcastle are yet to see the fruits of their labour after spending big on Nick Woltemade, Yoane Wissa, Anthony Elanga and Jacob Ramsey last summer.
Unai Emery has also been a frustrated man as of late, claiming in a passionate rant last month that Aston Villa are not contenders to be in the top five, despite sitting third in the Premier League.
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The Villans have been limited with their spending in the last two years and have been forced to work around PSR with smart loan deals even after qualifying for the Champions League last season.
|
Teams at risk of PSR (as of the end of 2025) |
Projected pre-tax loss allowable under PSR |
|---|---|
|
Aston Villa |
£15m |
|
Newcastle United |
£83m |
|
Leeds United |
£42m |
As per The Athletic’s PSR table last summer, Leeds United could also do with remaining on course for survival if they want to avoid any of their own problems.
All of those clubs should look at Leicester, who have gone from champions to sitting on the verge of the Championship’s relegation zone in the space of 10 years, as a stark warning about PSR problems.
