Leicester City are facing a points deduction next season in the Championship after an Arbitration Tribunal ruled that the Premier League has jurisdiction over their alleged breach of financial rules, as well as a possible fine.
The Foxes, who were promoted back to the top flight at the end of the 2023/24 campaign, have been referred to an independent Commission for breaching the EFL Championship's Profit and Sustainability Rules.
The case centres around Leicester exceeding the Championship's £83m loss threshold last season. Any punishment handed down by the Premier League will be applied in the Championship rather than the Premier League.
The Premier League confirmed the referral in a statement, saying: "Following an Arbitration Tribunal's decision concerning jurisdiction, Leicester City FC has now been referred to an independent Commission for alleged breaches of: The EFL Championship Profit and Sustainability Rules (P&S Rules) for Season 2023/24."
Leicester are facing a possible points deduction with the club is set for legal battle
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The club has also been charged with failing to provide its Annual Accounts to the Premier League by the December 31, 2024 deadline and for not providing "full, complete and prompt assistance" in response to the League's inquiries.
The case will now be heard by a Premier League commission, though any sanctions will be applied in the Championship.
In a separate ruling, Leicester City have avoided punishment for their PSR breach in the 2022-23 season, which could have resulted in a second points deduction. The club's accounts for the three years up to their relegation season showed a PSR loss of £124.5m, £19.5m above the £105m threshold.
Leicester had claimed victory over Premier League chiefs in September when an Appeals Board agreed they could not be punished for their 2022-23 breach because it was not confirmed until after they had formally rejoined the EFL.
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The Foxes have already been relegated to the Championship
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The Arbitration Tribunal, consisting of two Law Lords and a senior KC, upheld this decision despite ruling the Appeal Board was "wrong".
Leicester had attempted to avoid punishment for their 2023-24 breach by arguing they were not formally under investigation before their promotion back to the Premier League. However, the Arbitration Tribunal disagreed with this interpretation.
The Tribunal ruled that a March 1 letter from EFL legal and financial officials noting the forecast loss above the £83m threshold meant Leicester "was subject to an investigation by the EFL into an alleged breach".
This ruling effectively gave the Premier League the green light to take action against the club for financial breaches that occurred while they were competing in the Championship last season.
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The alignment of financial rules between the Premier League and EFL last month has closed what was described as the "Leicester loophole". This agreement ensures clubs cannot escape punishment by moving between divisions.
An EFL spokesman said: "The EFL commenced an investigation into this reporting period following the March 2024 submissions and as is permitted in accordance with EFL Regulations, jurisdiction for that passed to the Premier League at the conclusion of the 2023/24 season on the Club's promotion."
Leicester responded by saying they were "pleased" with the outcome regarding the 2022-23 proceedings but acknowledged: "The Premier League was successful in establishing jurisdiction on one of the two grounds argued with respect to the assessment period ending FY24."
