Leeds open legal proceedings against Leicester over financial rule breach

Leeds United have opened legal proceedings and served a statement of claim against Leicester City after being denied automatic promotion in 2023-24, when the latter broke financial rules.

According to sources with direct knowledge of the situation, speaking anonymously to protect relationships, Leeds took action after Burnley’s recent legal victory over Everton. They were awarded £35million ($47m) following the latter’s breach of profitability and sustainability rules (PSR) in 2021-22.

A statement of claim sets out why the claimant is taking action against a respondent. In this case, Leeds have included specific losses, but also requested an assessment of damages as a result of Leicester’s PSR breach. As it stands, the hearing is not set to take place until next summer.

Last month, it was revealed Everton had been ordered to pay Burnley £35m in compensation and interest. In 2021-22, the Lancashire club were relegated and have since successfully argued they would have stayed up if Everton had been sanctioned with a points deduction for their PSR breach.

Everton finished four points above Burnley to retain their Premier League status and ultimately received a six-point deduction for the 2021-22 breach in 2023-24. As a result of their relegation, Burnley missed out on significant income which rewards playing in the top flight. This includes the Premier League TV deal and commercial opportunities.

An independent commission concluded: “On the balance of probabilities, Everton’s breach of the PSR caused Burnley to be relegated.” Everton have since made it clear they will appeal the decision.

That case, while it does not set a binding precedent, has set a framework for other clubs in similar situations to follow. Leeds may argue they would have been automatically promoted in 2023-24 if Leicester had adhered to PSR rules.

Leicester finished two places above Leeds and won the Championship title that season, while the latter lost in the play-off final and had to play another season in the second tier. Leicester were given a six-point penalty in the Championship last season as a punishment for breaching spending rules in that title-winning 2023-24 campaign.

Leeds and Leicester each declined to comment when approached by The Athletic.