In March 2024, the Premier League (PL) lodged a formal complaint against Leicester City Football Club Limited (LCFC) for allegedly violating the Profit and Sustainability Rules (PSR) during the 2022/2023 season. The issue was brought before an Independent Disciplinary Commission in June 2024, which ultimately ruled in favour of the PL, confirming that LCFC had breached the PSR by incurring losses exceeding £105 million during the relevant season. [1]
It is significant to note that LCFC did not dispute the fact that their losses surpassed the PSR limit during that period. However, their defence focused on the claim that the Premier League lacked the jurisdiction to pursue this complaint. LCFC argued that, as they had been relegated to the English Football League (EFL) before the end of the accounting period, they were no longer bound by PL Rules. Their stance was that once they were relegated, they ceased to be considered a "club" under Section A.1.41 of the 22/23 PL Rules, which applies only to clubs that are members of the Premier League. [2]
Premier League Rules
Under Section W of the PL Rules, the Premier League Board has the authority to handle any suspected breaches of the rules, which includes referring the matter to a commission established under Rule W.19.[3] According to these rules, any proceedings before the Commission involve the Board and the club, manager, match official, or player accused of violating the rules. [4]
The definition of a "club" is critical here. Under the PL Rules, a "club" refers to any football club that is a member of the Premier League.[5] LCFC, having been relegated and subsequently transferring their share in the League to Luton Town Football Club (upon their promotion), argued that they no longer fit this definition. Therefore, LCFC claimed the Premier League did not have the authority to bring a complaint regarding their financial conduct.
Initial Jurisdiction Decision
The PL argued for a "purposive interpretation" of the Rules, suggesting that the Commission should consider the broader objective of the PSRs—namely, promoting financial sustainability within football. The PL’s view was that this overarching goal justified applying the PSR to LCFC, even though they no longer fit the technical definition of a "club" under PL Rules.
LCFC, on the other hand, called for a more literal interpretation of the rules. They argued that if strictly adhering to the text, they would no longer be bound by the PSR once relegated, and thus the PL could not enforce its complaint against them.
The Commission, when deciding on the issue of jurisdiction, considered relevant legal precedents, including Rainy Sky SA v Kookmin Bank (2011)[6], Arnold v Britton (2015)[7], and Wood v Capita Insurance Services (2017)[8]. These cases emphasise the importance of interpreting contracts with business sense, focusing on the intention behind the language used, and taking into account the wider context. Additionally, the case of Cellino v The Football League [2016][9] highlighted the need for sports rules to be interpreted in a practical manner that aligns with their purpose rather than through rigid technicalities.
After considering these factors, the Commission concluded on 13 June 2024 that it did indeed have jurisdiction to hear the PL’s complaint against LCFC.
Appeal and Final Decision
LCFC exercised their right to appeal this decision, and on 30 August 2024, the Independent Premier League Appeal Board overturned the Commission's ruling. The Appeal Board found that LCFC had not violated the PSR and that the PL did not have the authority to pursue the complaint.[10]
The key reason for this decision stemmed from the difficulty in pinpointing exactly when LCFC's financial losses exceeded the PSR threshold of £105 million over the relevant three-season period. LCFC’s financial year ended on 30 June 2023, after they had been relegated from the Premier League. The appeal board concluded that, because LCFC had left the PL by this time, there was a window in which the club could have potentially reduced their losses, meaning it was impossible to definitively determine when the breach occurred.
While the Premier League argued that the PSR breach was a matter of common sense, the Appeal Board rejected this line of reasoning, emphasising that only clear, explicit rules could be enforced. The Board further criticised the PSR rules as being "far from well-drafted," noting that the ambiguity in their wording led to this dispute. This outcome serves as a reminder to the PL to ensure that future regulations are carefully constructed to avoid similar complications.
This case highlights the complexities that arise when attempting to enforce financial regulations in football, particularly when clubs transition between leagues. The importance of clarity in rule drafting is essential to prevent potential loopholes and ensure that financial sustainability measures can be effectively applied across the board.
References
[1] "Premier League and Leicester City Decision on Jurisdiction, July 2024," Premier League, accessed October 1, 2024, https://www.premierleague.com
[2] Premier League, Premier League Rules, 2022/23 Season, available at https://www.premierleague.com, Section A.1.41, accessed October 1
[3] Ibid. W.3.4
[4] Ibid. W.22.
[5] Ibid. s. A.1.41
[6] Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900
[7] Arnold v Britton [2015] UKSC 36, [2015] AC 1619
[8] Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173
[9] Cellino v The Football League [2016] EWHC 3175
[10] Premier League, Premier League and Leicester City Appeal Decision, September 2024, available at https://resources.premierleague.com/premierleague/document/2024/09/03/878ba66e-cf6b-4374-80f5-ee5db8657e24/Premier-League-and-Leicester-City-Appeal-decision-Sep-2024.pdf, accessed October 1, 2024.
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