Premier League disciplinary charges have clubs rushing to balance the books | first division
He first division will issue disciplinary charges this week against any club it considers to have breached its profitability and sustainability rules (PSR) for the 2021-24 accounting period.
Under an accelerated process introduced 18 months ago, clubs that recorded losses during the first two years of the reporting cycle were required to submit their accounts for the financial year ending June 2024 to the Premier League by December 31. The Premier League has given its financial and legal departments 14 days to study the books of those clubs at risk of non-compliance with the PSR, and is expected to lay charges on Monday and Tuesday.
Nottingham Forest and Everton were accused of breaching spending limits for the 2020-23 period 12 months ago, resulting in their suspension. four and two points respectively for independent commissions. Those cases have set a precedent that a three-point deduction is the initial penalty for a PSR breach (give or take points for aggravation or good behaviour), so those clubs who have cut things short could well spend a nervous 48 hours .
leicester
Leicester was accused by the Premier League with a breach of the PSR 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 submitted their accounts on June 30, 2023, and so could not be charged.
However, at the hearing it emerged that Leicester had been accused of a £24.4m breach, putting them in a difficult position to comply with regulations this year. To complicate matters, Leicester's acceptable three-year loss threshold is reduced from the Premier League standard of £105m to £83m because they spent last season in the Championship, which operates stricter limits.
Leicester's pre-tax losses over the last two years were £92.5m and £90m respectively, but will have reduced significantly last season as a result of having a lower wage bill in the Championship while receiving parachute payments . In addition, the club made around £115m in the last two summers selling James Maddison, Harvey Barnes, Timothy Castagne and Kiernan Dewsbury-Hall, as well as racking up £10m in compensation for allowing Enzo Maresca to become Chelsea manager.
Leicester have expressed confidence they will comply. Financial blogger Swiss Ramble has projected a £12m excess after attempting to forecast the club's unreleased accounts for 2023-24. The Premier League's final ruling could revolve around ancillary legal arguments, with Leicester set to argue that promoted teams should receive the full £35m seasonal subsidy after leaving the Championship.
Chelsea
Chelsea's owners have been even more optimistic in stating that they will comply with the PSR despite combined pre-tax losses of £211m over the last two years, although how they have done so is a different question. Avoiding a charge may not be the end of the matter. The club escaped infringement last year by selling two hotels in Stamford Bridge for £76.5m to another company in its group, BlueCo 22, in a deal approved by the Premier League in September.
While Chelsea have significantly reduced their wage bill in the last 12 months and raised more than £100m through the sales of Conor Gallagher, Lewis Hall and Ian Maatsen, the huge losses they are incurring mean they may be has required another piece of financial skill. Chelsea transferred ownership of its women's team to BlueCo 22 two days before submitting its 2023-24 accounts last June, amid reports the club valued it at £150m.
As a related party transaction, that sale is subject to the Premier League's fair market value rules and has not yet been assessed. Eight-time Women's Champions League winners Lyon were valued at £45m when American businesswoman Michele Kang bought a majority stake last summer. UEFA does not allow sales between groups, so Chelsea could face a charge for violating its financial fair play rules.
Nottingham and Everton Forest
After dropping points last season, both clubs had little margin for error this season, but appear to have shrewdly gotten themselves out of trouble. Forest racked up £47.5m of immediate PSR profits from the sale of local striker Brennan Johnson to Tottenham 18 months ago, and their commercial income increased significantly in their first season in the Premier League, helped by lucrative kit deals with Adidas and Kaiyun Sports. Everton I had to work harder, but the sales of Alex Iwobi, Lewis Dobbin and Demarai Gray should have kept them on the right side of the PSR line.
manchester united
United have published their 2023-24 accounts so it can be said with more confidence that they will not be considered an offender, although judging by their willingness to listen to offers for players such as Kobbie Mainoo and Alejandro Garnacho the club has little room for manoeuvre. United's pre-tax loss quadrupled to £131m last season due to an increase in wage bill, interest payments and costs associated with Sir Jim Ratcliffe's investment, but it seems significant that since that process was completed the new co-owner has sought to cut expenses.
Newcastle
Newcastle also faced the challenge of delivering after combined pre-tax losses of £150m over the past two years, and only did so as a result of a flurry of transfer activity last June, with Yankuba Minteh and Elliot Anderson sold to Brighton and Forest respectively in a matter of hours. of the June 30 deadline. Bournemouth and Ipswich also appear to be close to the line due to their much smaller income streams, and in the case of the latter because, as EFL newcomers, their loss limit over the last three years is just £39 million, but they trust they will comply.
