PSR is a term Leicester City fans have become very familiar with in recent years, as the club continue to suffer from their overspending.
A flawed and failing recruitment model under director of football Jon Rudkin has seen the Foxes throw millions of pounds down the drain.
Alarmingly, Leicester have allowed £192 million worth of talent to leave for nothing while their failures to replace them have been catastrophic.
For instance, Leicester’s £20 million signing of Oliver Skipp shows their incompetence in the market, and the same goes for the loan signing of Odsonne Edouard.
In January 2025, Leicester were fearing a points deduction for breaching PSR rules, but luckily, the Premier League found them not guilty, suggesting they’re treading carefully above water.
Now, one finance expert has analysed their current financial situation and explained where they currently stand with PSR.
Photo by Alex Pantling/Getty Images
Photo by Alex Pantling/Getty Images
Leicester would be allowed to lose £62.5 million in the Championship
Currently, top-flight clubs are allowed to lose a maximum of £105 million over a rolling three-year period without facing a punishment.
That number drops to £62.5 million should they suffer relegation to the Championship, as explained by TBR’s Head of Football Finance and Governance Content Adam Williams, who spoke exclusively to Leicester City News.
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“The Premier League have confirmed that no club breached PSR in 2023-24,” Williams said.
“With Leicester, however, the situation is more complicated as the dispute over the 2022-23 monitoring period is still ongoing.
“They avoided a sanction for the three years up to the end of 2022-23 on a technicality over jurisdiction between the Premier League and the EFL.
“But as far as their potential status under the EFL’s PSR system next season, we can park that for now as the 2022-23 season will not be part of next season’s three-year calculation.
“Most projections I’ve seen from the likes of Swiss Ramble have their loss for 2023-24 at about £5m. We won’t know that for sure until we see their accounts for the season, but we can use it as a starting point.
“If you move between the divisions, the way it works is you get a £35m PSR allowance for every season in the Premier League over the three-year monitoring period and £13m for every season you spend in the Championship.
“So if Leicester do go down this season, they will be allowed combined losses of £61m across 2023-24, 2024-25 and 2025-26, with some deductible expenses on top of that, plus the extra £1.5m the EFL have allowed for inflation, so £62.5m all in all.”
Leicester will be safe from PSR issues in 2025/26
The situation is looking bleak at the bottom of the table for Leicester, who are five points from safety, with Ruud van Nistelrooy losing 11 of his last 12 league games.
The Foxes also face a daunting run of fixtures, including showdowns against Chelsea, Manchester United, Manchester City, Newcastle, Brighton and Liverpool.
It would be some miracle if they pulled themselves from out of the mud in March and April but unfortunately, it’s looking like Championship football.
Luckily, Williams doesn’t think the Foxes would have any PSR issues in the Championship, which means they should be able to invest in their squad accordingly.
“They’ve made a profit on player trading this season and, after the run-in with the Premier League, I think they will be playing things more safely generally,” Williams stated.
“Their operating losses – which are your losses when you strip out player sales and signings – were £77m in 2022-23. From that, I think we can glean that they will probably post a modest profit in 2023-24 with the player trading profit added back in.
“Obviously if they go down, you lose the TV money and have a Premier League wage bill to handle, but they will readjust accordingly.
“On top of that, you have parachute payments, albeit reduced ones, given that they will have spent only one of the last three seasons in the top flight if indeed they are relegated.
“So I don’t anticipate them having any PSR issues in 2025-26 if they do go down, irrespective of the extra £1.5m allowance from the EFL.
“That said, the challenge from then is how they then gear up financially for another promotion push, which obviously demands increased investment.”
Leicester are perhaps resigned to relegation, but it’s reassuring to know that previous PSR problems shouldn’t come back to bite them.