Leicester City find themselves in an FA Cup quarter-final for the first time since winning the competition three years ago when, in front of the largest crowd to attend a match since the coronavirus lockdown, they defeated Chelsea at Wembley. For Leicester, the day can be broken down into lasting snapshots of a memorable victory: Youri Tielemans pinpointing the top corner with a shout from 25 yards, Brendan Rodgers then rushing down the touchline and Prince William presenting Kasper Schmeichel with the trophy. Then the confetti rained down as Schmeichel and Wes Morgan lifted the silverware above their heads, smiling.
Leicester, three points clear at the top of the Championship, could well get their hands on another trophy this season, but as they prepare to visit Chelsea in the Cup on Sunday, it is pertinent to remember the extent to which weeks that followed The unforgettable victory at Wembley shaped their current situation. Three days later, Leicester lost 2–1 at Stamford Bridge, leaving them reliant on favors when it came to Champions League qualification. They then lost at home to Tottenham on the final day, missing out on the top four in the final games of the season for successive years. After two near misses on their return to Europe’s elite competition and having secured the most prestigious domestic cup for the first time, Leicester attempted to make a run for it.
Related: Raheem Sterling’s journey to England may be coming to an end, but he has delivered an exciting ride | Barney Ronay
As the club statement accompanying their 2021-2022 accounts outlined, detailing a record £92.5 million loss: “The club sought to build on the successes of previous seasons.” They were, of course, the masters behind perhaps football’s greatest miracle when they won the Premier League against all odds in 2016, two years after promotion from the Championship. Perhaps the most important line came from the club’s CEO, Susan Whelan. “To remain compliant with the rules of the game, both domestically and in Europe – where we aim to compete regularly – our ongoing investment strategy must continue to reflect our underlying revenue growth,” she said, before referring to the importance of player trading – in basically buy cheap to sell high – and smart recruitment.
Now we know that Leicester are at serious risk of falling foul of those rules; they face the potential double whammy of a points deduction from the Premier League after allegedly breaching the Profitability and Sustainability (PSR) rules covering the three-year cycle ending in 2022-2023, and a penalty from the English Football League if they break similar rules the three-year cycle ending this summer. Unless Leicester generates cash through sales by June 30, the EFL club’s financial reporting unit, a panel set up two years ago to monitor regulatory compliance, believes Leicester will have exceeded the allowed losses of £83 million over the relevant period. Leicester have confirmed they are “in discussions with football authorities regarding profitability and sustainability calculations”.
After missing out on Champions League qualification in 2020 and 2021 – losing to Chelsea on the final day both years – the club was determined not to stand still. They spent around £50m on players including Patson Daka, Boubakary Soumaré, Ryan Bertrand and Jannik Vestergaard, none of whom made a lasting impact in the top flight before last season’s disastrous relegation.
Leicester’s wage bill of £182 million in 2021-22 was the seventh largest in the Premier League and for the first time since returning to the top flight they did not sell a major asset. In the previous five years they secured huge fees for N’Golo Kanté, Danny Drinkwater, Riyad Mahrez, Harry Maguire and Ben Chilwell, netting more than £250 million. It was thought Tielemans, who joined Aston Villa on a free transfer last year, would be next but the club received no bids. The impact of Covid hampered clubs’ ability to sell players in a crashed market. Leicester understandably felt they could go ahead, but finished eighth. And then 18th.
The destabilizing noise about Leicester’s struggle to meet PSR is nothing new. In the summer before they were relegated, Rodgers admitted finances were far from ideal and told how he missed out on transfer targets after the club curbed spending despite selling Wesley Fofana to Chelsea for £75m. Since the January window, Enzo Maresca, who took charge last summer, has expressed his frustration at not being able to add to his squad. His main target was Internazionale midfielder Stefano Sensi, but he was told the club had to sell players before reinforcements could be made.
All clubs are aware that selling homegrown players is pure profit – it was seen as a golden method of offsetting expenses – although Leicester rejected a £20m bid from Brighton for Kiernan Dewsbury-Hall in January. The off-field revenue streams that can make a world of difference to balance sheets, such as lucrative commercial deals or increased ticket sales through stadium expansion, work slowly. It is also important to note that the PSR rules include provisions for allowable expenditure, such as money invested in improvements to stadiums and training grounds, women’s football and the community.
As Leicester prepare to release their final set of reports for the 2022-2023 season at the end of this month, they find themselves in a special position. Their owner, King Power International, has deep pockets, but Leicester, like all other clubs looking to destabilize the order in the top flight, must play by the rules. The summer after one of their most beautiful days turns out to be a noose around their necks. Not so long ago, Leicester was rightly defended the but one fatal misstep, if they didn’t already know it, could prove extremely costly.