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Leicester 'could face points deduction next season'

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10 hours ago, UniFox21 said:

Having listened to Stefan's bit on the pod, it's very apparent even the experts don't have a clue what's going on.

Seems clubs don't know how they'll be charged, the leagues can't get themselves consistent and then there's rumours of the laws changing again 

Until the actual books for the 22/23 season published for us everyone  are literally making assumptions.

Edited by coolhandfox
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9 hours ago, MPH said:

 

With regards to KDH. I think a deal has already been done for him with Brighton for the end of the season. I also think we will accept the exact amount that supposedly offered in Jan, but knowing we could sell him in june and it account for this season, it was more valuable to keep him and aid the push for promotion than to sell and have to fund a replacement in Jan. This way, we can get his replacement in at a cost to next seasons budget.

I told you this in January and you completely disagreed with me lol 

 

That if our financial situation was that grave, you were questioning why we didn’t sell in January because the transfer fees were higher (when they weren’t this January). 

Edited by CosbehFox
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2 hours ago, MonkeyTennis? said:

Does anyone know, what are the consequences - in terms of punishment and fines - if we don't go up this year?

 

Do we have some sort of sanction from the EFL in relation to their rules which would kick in if we stayed down? And would we then only be on the hook with the PL for the 22/23 season if we went up in 2025? Or do they consider more than three years?

Point deduction. Agreed business plan. Transfer embargo. Just when they kick in would be the question. 

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5 minutes ago, CosbehFox said:

I told you this in January and you completely disagreed with me lol 

 

That if our financial situation was that grave, you were questioning why we didn’t sell in January 


I did  wonder if we were taking an unnecessary  risk waiting to January, but I believe a deal is already in place to secure the transfer. If we didn’t have that secured then it’s absolutely a risk we shouldn’t have taken!

Edited by MPH
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4 minutes ago, UniFox21 said:

Really intrigued how many other clubs get fined and punished, and then how many get let off by the refreshing of the rules in the summer

The refreshing of the rules in the summer will relate to the future

clubs will be punished for breaking the rules in the past in cases are proven 

Edited by st albans fox
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A point I’m not sure has been raised elsewhere; if everyone is broke / can’t spend. Who’s paying £40m for KDH? 

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On 13/03/2024 at 17:42, gurru991 said:

In hindsight it would have been better for football if the super league had happened.

I think this is ultimately all this is about - wreck the existing infrastructure to the point that you actually want the super league.

 

The lack of punishment those clubs got for it told you everything about who really holds the cards. These clubs are more powerful than any of the authorities.

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22 minutes ago, Dan LCFC said:

I think this is ultimately all this is about - wreck the existing infrastructure to the point that you actually want the super league.

 

The lack of punishment those clubs got for it told you everything about who really holds the cards. These clubs are more powerful than any of the authorities.

yup, a bit similar to how the government are trying to wreck the nhs so that people accept  privatization 

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6 hours ago, Sly said:

A point I’m not sure has been raised elsewhere; if everyone is broke / can’t spend. Who’s paying £40m for KDH? 

Ha good question. You can be sure if it’s Brighton, the owner there will try and rinse us on the fee.

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9 hours ago, Sly said:

A point I’m not sure has been raised elsewhere; if everyone is broke / can’t spend. Who’s paying £40m for KDH? 

Perhaps this is the bubble bursting, at last :fc:

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2 hours ago, Sir Shep said:

I think we’d be lucky to get £20M for KDH with teams knowing we are basically going to have to sell. It’s a cruel dog eat dog world and football is no different sadly. 

I am still saying that's why something is off with the Brighton story with the Athletic. Someone leaked that bid (or rather there was no bid) - to try and create some noise 

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https://www.footballlaw.co.uk/articles/efl-leicester-ffp-cpsr
 

Very complex but interesting article.
 

EFL Outfoxed, For Now

 

On 6 March 2024 it was announced that a decision by the Championship Financial Review Panel (“the CFRP”) determined that Leicester City Football Club (“LCFC”) was not required to submit a business plan to demonstrate how it planned to comply with the EFL’s Championship Profitability and Sustainability Rules’ (“CPSR”) (found in Appendix 5, Part 1 of the EFL Regulations) upper loss threshold of £83 million going forward (“the CFRP Decision”) following a request from the Champion Financial Reporting Unit (“the CFRU”) on 23 November 2023.

This article will, firstly, summarise the role of the CPSR, the CFRU and the CFRP and, secondly, explain the CFRP Decision.

The CPSR, CFRU and the CFRP

The CPSR: the CPSR allow Championship clubs to make losses of £5 million a year (known as the Lower Loss Threshold), which can be increased to £13 million (known as the Upper Loss Threshold) a year through Secure Funding (as defined in the CPSR).[1] For any time that an EFL Championship club is a Premier League club during the relevant three-year assessment period, the Upper Loss Threshold is £35 million rather than £13 million. (These figures are also reflected in rule E.54 of the Premier League’s Profitability and Sustainability Rules (found in Section E of the Premier League’ Rules).)

Accordingly, across a relevant three-year assessment period, a club that has been an EFL Championship club for that period can have permitted losses of between £15 million and £39 million. Comparatively, if across a relevant three-year assessment period a club has been a Premier League club for two seasons but is an EFL Championship club for the current and most recent season, that club can have permitted losses of between £15 million and £83 million.

A club’s CPSR calculation (defined as a “P&S Calculation” in the CPSR) comprises the aggregate of the clubs Adjusted Earnings Before Tax (as defined in the CPSR) for the club’s Accounting Reference Period (as defined, and which can vary from club to club but subject to CPSR, r. 1.1.5) ending in the year in which the CPSR assessment takes place, defined as “T”, together with the Adjusted Earnings Before Tax for the preceding period, defined as “T-1”, and the period preceding T-1, defined as “T-2”.[2]

A club is only required to submit a CPSR calculation if a club’s Earnings Before Tax (as defined in the CPSR / as showing in a club’s Annual Accounts and which are to be provided by each Championship club to the EFL by no later than 1 March ‘following the end of the financial year to which those Annual Accounts relate’) for T-1 and T-2 results in a loss.[3]

If a club is required to provide a CPSR calculation and the same exceeds the Lower Loss Threshold, then that club will be required to provide, inter alia, Future Financial Information (as defined in EFL Regulations, reg. 16.16) by 31 March in the relevant season ‘to cover the period commencing from its last accounting reference date […] until the end of T+2’ together with ‘a calculation of estimated aggregated Adjusted Earnings Before Tax until the end of T+2 based on that Future Financial Information’.[4]

If following consideration of the Future Financial Information provided by a club the EFL determines ‘in its reasonable opinion’ that the club is forecasting to breach the Upper Loss Threshold in T+1 and/or T+2, then the EFL can exercise its powers in EFL Regulations, reg. 16.21, which include requiring the club to ‘submit, agree and adhere to a budget’ or otherwise referred to as a “business plan”.[5]

If a club is required to provide a CPSR calculation and the same exceeds the Upper Loss Threshold, then that club will be subject to a registration embargo, the EFL will be entitled to exercise its powers in EFL Regulations, reg. 16.21, and the matter shall be deemed a breach of the CPSR and will be referred to the CFRP to dealt with as a compliance matter.[6]

The CFRU: this is an internal and independent department at the EFL which consists of a team of accountants that the EFL Board has delegated its authority to exercise the rights and powers of the EFL in respect of the EFL’s Financial Regulations (which include the CPSR).[7]

The CFRP: the CFRP is an independent body that makes determinations on matters concerning the EFL’s financial regulations. The CFRP deals with Compliance Matters and CFRU Decision Reviews (as defined in the EFL Regulations, Appendix 6, para. 1.3 and 1.5), and Call-In Reviews (as defined in the CPSR, r. 2.12).[8] EFL Regulations, Appendix 6 provide for the composition of the CFRP and the timetabling and powers of the CFRP when dealing with those matters reserved to it.

The CFRP Decision

The CFRP Decision was made following a referral made by LCFC and is known as a ‘CFRU Decision Review’, being one of those matters reserved to the CFRP.[9]

LCFC’s CFRU Decision Review related to a decision made by the CFRU on 23 November 2023 that LCFC was required to submit a business plan pursuant to the EFL Regulations, reg. 16.21 following the CFRU reaching an opinion under CPSR, r. 2.9 that LCFC is forecasting to breach the Upper Loss Threshold of £83 million in T+1 (season 2023/24) (“the Business Plan Decision”).[10]

When dealing with a CFRU Decision Review:

[…] the CFRP sits as a review body exercising supervisory jurisdiction and this Rule shall not operate to provide an appeal against the decision and shall operate only as a forum and procedure for a challenge to the validity of such decision under English law on the grounds of:

6.7.1 ultra vires (including error of law); or

6.7.2 irrationality; or

6.7.3 procedural unfairness,

and where the decision directly and foreseeably prejudices the interests of a person or persons who were in the contemplation of The League’.[11]

LCFC’s case was that at the time of the Business Plan Decision, the CFRU had no power to make that decision and was therefore ultra vires and of no effect.[12] The CFRU’s response was that it did have the power to make the Business Plan Decision and that the same was therefore of legal effect.[13] In particular, the parties’ cases centred around the definition of “T” in CPSR, r. 1.1.20 and the interpretation of CPSR, r. 2.9.

Meaning of “T”: LCFC submitted that T was its Accounting Reference Period ending in 2024 and that as LCFC’s Accounting Reference Period runs to 30 June each year, 30 June 2024 was the relevant date.[14]

LCFC submitted that the Business Plan Decision was ultra vires because at the time of that decision, LCFC had not been required to provide its Annual Accounts to the EFL, which is the start of the assessment process under CPSR.[15]

LCFC had complied with EFL Regulations, reg. 16.19 upon relegation to the EFL Championship, but the information provided pursuant to that regulation is not the same as the information to be provided by EFL Championship Clubs for the purposes of the CPSR, which, for a relegated club, does not take place until 1 March of the first season in the EFL Championship.[16]

LCFC relied upon “T” being defined as ‘the Club’s Accounting Reference Period ending in the year in which assessment pursuant to Rules 2.2 to 2.9 takes place’ (emphasis added).[17] LCFC also drew support from CPSR, r. 2.8.1, which refers to a Championship Club providing Future Financial Information by 31 March in the relevant season if its CPSR calculation results in a loss that exceeds the Lower Loss Threshold (as explained in the first section of this article).[18]

The CFRU’s position is not explained in much detail, save that it is noted that the CFRU submitted that T was LCFC’s Accounting Reference Period ending in 2023 ‘based on the substantive point that the relevant season was the 2022/23 season and that the CFRU’s purported assessment was made in November 2023 and therefore in the 2023 calendar year’.[19]

The CFRP agreed with LCFC on its interpretation of “T”, which the CFRP said was a ‘natural reading of the text of the definition in Rule 1.1.20’.[23]

CPSR, r. 2.9: further to the above, LCFC submitted that the CFRU did not have the power to make the Business Plan Decision until after 31 March 2024.[20] LCFC relied upon the wording of CPSR, r. 2.9, which allows the CFRU to use its powers under EFL Regulations, reg. 16.21 following the satisfaction of the obligation to consider a club’s Further Financial Information. CPSR, reg. 2.8.1 states that such Further Financial Information is to be provided ‘by 31 March’. LCFC therefore submitted that any decision under CPSR, r. 2.9 cannot be made until after that date.

The CFRU noted that CPSR, rr. 2.8 and 2.9 were ‘far from perfectly drafted’ and submitted that to adopt LCFC’s position would undermine the EFL’s Financial Fair Play Objectives and would result in inconsistent treatment between, on the one hand, clubs already in the Championship and, on the other hand, clubs promoted to the EFL Championship from EFL League One and clubs relegated to the EFL Championship from the Premier League.[21] The CFRP noted that the CFRU’s case was that the words ‘or otherwise’ would need to be added to CPSR, r. 2.9 to allow the CFRU to avoid the requirement to consider a club’s Future Financial Information before reaching an opinion under CPSR, r. 2.9.[22]

The CFRP also agreed with LCFC on its interpretation of CPSR, r. 2.9 that, to reach an opinion pursuant to CPSR r. 2.9, the CFRU is obliged to firstly consider a club’s Future Financial Information and that, pursuant to CPSR, r. 2.8.1, this Future Financial Information is provided after 1 March but by 31 March of the relevant season.[24] In such circumstances, the CFRU cannot reach an opinion pursuant to CPSR r. 2.9 until, in this case, after 31 March 2024.

The CFRP clearly summarised:

[…] the EFL Regulations as currently drafted do not connect Regulation 16.19 and Appendix 5, Rules 2.2-2.9, and specifically Rules 2.8 and 2.9 in such a way as to entitle the CFRU to make a determination under Rule 2.9 before March in the first season [of a relegated Premier League club] and thereby to level the playing field in terms of financial regulation for all Clubs in the Division’.[25]

Accordingly, the CFRP decided that the CFRU did not have power on 23 November 2023 to make the Business Plan Decision and the same was of no legal effect.[26]

Conclusion

The EFL’s announcement of the CFRP Decision stated that it ‘will help in informing the EFL on the potential Rule amendments that will be proposed for consideration by Championship Clubs in the future to ensure all Clubs are treated equally under the Rules’. It is anticipated that such an amendment will, at the least, be for CPSR, r. 2.9 to include the words ‘or otherwise’ as submitted by the CFRU to the CFRP.

In the CFRP Decision, it is noted that ‘LCFC has not disputed that it is forecast to breach the [Upper Loss Threshold] in the 2023/24 season’, which was the basis for the Business Plan Decision, and that LCFC exceeded the Lower Loss Threshold in the 2022/23 season.[27]

Accordingly, once LCFC go through a CPSR assessment process in accordance with the dates and timetabling as identified in the CFRP decision, it appears that, at the least, LCFC will face further investigation by the CFRU.

It has also been reported that LCFC could face a charge by the Premier League (“PL”) for breach of the PL’s Profitability and Sustainability Rules’ (“PSR”) (found in section E of the PL Rules) upper loss threshold of £105 million over the relevant three-year assessment period ending 2022/23.[28] The PL is yet to announce any charge against LCFC.

Depending upon which league LCFC plays in next season (the club is currently first in the EFL Championship) will determine whether the EFL or the PL move to charge LCFC for breach of the CPSR or PSR. EFL Regulations, reg. 87.3-87.4 and the PL Rules, r. E.76-E.77 provide for the passing of responsibility of such investigations between the leagues.

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3 hours ago, Sir Shep said:

I think we’d be lucky to get £20M for KDH with teams knowing we are basically going to have to sell. It’s a cruel dog eat dog world and football is no different sadly. 

He would also have to want the move. Maresca said that when the Brighton rumours were circulating in January, KDH went to him and said he didn't want to leave. We won't be able to flog him at all if no offer comes in that he fancies. 

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10 minutes ago, urban.spaceman said:

Thanks for sharing, fully agree. 

 

The LCFC directors have screwed up it appears but FFP just isn't working except for the big six.

 

The disparity between the big six and the rest is getting worse. Villa have spent hugely to try to keep up but the Newcastle scenario could well happen to them where they have to cut back significantly in the summer, and then the rot potentially kicks in. 

 

People will hold up Brighton as the example of a well-run club but they sold their best players - even if it was somewhat by choice and they got the best deals, it's so much harder for clubs that have finally built a strong team after 2 or 3 good seasons to sustain it for more than one more season as their best players swiftly have to be traded out to meet FFP. 

Edited by lcfc_forever
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On 13/03/2024 at 19:59, coolhandfox said:

Full planing wasn’t granted until December 2023, highly unlikely they were going to start work straight away.

 

Also stadium financing and FFP isn’t straight forward and caused Everton issues in their case, it has to be done correctly.

 

I’d also imagine they would make any changes to stadium configuration for safe standing at the same time as developing the stadium.

 

 

 

 

Time will tell on the expansion, but I'm not holding my breath personally. We're skint and a lot of future incomings are already earmarked to repay our loans taken out by the owners.

 

Safe standing going in may well be out of the club's control sooner rather than later btw.

Edited by Sol thewall Bamba
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23 hours ago, MPH said:

 

 

To be fair all fans do something similar... i was discussing on here previously with a fan who thought we should not be punished because we won the league and the FA cup recently lol My reply was that if we criticized forest and Everton for breaking the rules then we just need to take any points deduction on the chin and move on.

 

TRYING to look  at it objectively, it does appear that Forest tried to spend their way into the prem and there has to be some foreknowledge that this will result in an overspend. We had European football and we had to pay the players accordingly to stay there and then it all went belly up and we found ourselves in an unsustainable position with a manager who made Mike Bassett look like a genius.

 

Still, we didnt budget accordingly, overstretched ourselves and i cant help think if we hadn't been so hell bent on getting a high price for our players, we wouldn't be in this mess. It just feels like we played hard ball on some deals when we really shouldn't have.

 

With regards to KDH. I think a deal has already been done for him with Brighton for the end of the season. I also think we will accept the exact amount that supposedly offered in Jan, but knowing we could sell him in june and it account for this season, it was more valuable to keep him and aid the push for promotion than to sell and have to fund a replacement in Jan. This way, we can get his replacement in at a cost to next seasons budget.

I think you are probably right on KDH and its so depressing, we all know any replacement wont be the same level of player, and to rub salt into wounds he would be playing for another team in the same division, sales are always easier to take if its abroad or a different division.

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