Leicester City, the newly crowned Barclays Premier League champions, are fighting against the imposition of a fine of about £10 million in a financial fair play (FFP) case, it can be revealed.
The Football League has confirmed that the case against Leicester is “still ongoing” over losses sustained in the 2013-14 season, when the club won the Sky Bet Championship title to be promoted back to the top flight.
The disclosure by The Times yesterday that Bournemouth have been fined £7.6 million for financial rules breaches, points to the size of the sanction facing Leicester being slightly higher.
Bournemouth’s losses last season, when they also won promotion, were £38.3 million, but after the fine and £4.6 million of expenditure of the stadium are removed, that leaves a deficit of £26 million, which was liable to an FFP fine.
Leicester’s position is more complicated but they are facing action based on reported losses of £20.8 million for the 2013-14 season, plus a further £11 million from a controversial sponsorship deal totalling £30.8 million, which, if proved, would mean a fine of about £10 million.
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The case centres on Leicester’s shirt-sponsorship and stadium-naming rights deals, and has echoes of Paris Saint-Germain’s FFP sanction imposed by Uefa two years ago.
Vichai Srivaddhanaprabha, the Leicester owner and Thai businessman who made a fortune through duty-free shops and took over the club in 2010, also sponsors the shirts and stadium through his company, King Power.
Leicester’s accounts reveal that the King Power sponsorship deals suddenly jumped from £5 million to £16 million in 2013-14 — the sponsor was the same but new deals had been done with the owner via an agency called Trestellar Ltd.
The Football League’s position is that this is a case of an owner trying to reduce losses on paper by injecting more money into the club via sponsorship deals that were above the market value, something that its FFP rules do not permit.
PSG’s similar attempt to do that via Qatar Sports Investment, their owner, was not accepted by Uefa and the French club were fined €60 million (about £47 million).
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Ed Thompson, a financial analyst who runs the website financialfairplay.co.uk, said that Leicester’s sponsorship deal looked “highly suspect”.
Leicester’s accounts state that the deal with Trestellar allows the club to “exploit and monetise its unique brand” in the UK and the Far East.
It adds: “The club’s directors believe that thanks to a process of cutting costs and increasing revenues, the results for this year will comply with the acceptable limits set out in the Football League Championship FFP regulations.”
