The truth about Leicester City’s talks with the EFL over £61m issue as transfer embargo mooted

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Leicester City’s summer has been dominated by their transfer activity, or lack of it.

A number of high-profile players have departed the King Power Stadium but Marti Cifuentes has only been able to make one addition, the signing of 38-year-old free agent Asmir Begovic.

King Power have been dealing with financial problems of their own and with only a few days of the window remaining, it seems as if more outgoings are likely than anyone coming in.

The lack of activity has sparked some speculation among supporters about the possibility of the club being under embargo, or on an EFL-imposed business plan.

And here, EFL Analysis can exclusively reveal what exactly is going on at Leicester City right now.

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Are Leicester City under a business plan?

EFL Analysis’ Chief finance expert Adam Williams has been following the Foxes closely throughout the summer due to the ongoing problems with King Power and the lack of recruitment.

Williams confirmed that Leicester are under no form of transfer embargo or business plan as it stands.

However, the latter isn’t as straightforward and it’s thought that the Championship club may be in talks with the EFL ahead of submitting their financial accounts at an earlier period.

He said: “If the EFL had placed Leicester City under a formal embargo they would be obliged to disclose that. So we can say with certainty that isn’t the case. Where things get a little murkier is with the business plans that the EFL can either impose or work on with individual clubs on an informal basis. It’s an issue of semantics, really.

“The EFL has worked with clubs in the past when they are forecasting a PSR breach, i.e., when a club hasn’t yet breached but is on track to do so at the end of the financial year. The EFL revised its rules in April so that clubs who were relegated from the Premier League any previous given season wouldn’t slip through the cracks here in terms of jurisdiction.

“Under this new system, Leicester will be required to submit its audited financial accounts for the previous financial year in December, then the EFL can take pre-emptive action from March onwards. That can be in the form of a ‘business plan’ or demanding that clubs make sales once the June transfer window opens.

“But the distinction we need to make is between this season’s PSR assessment and the referral by the Premier League to an independent commission for an alleged breach in 2023-24. The club can’t really control the outcome in that case, which is still ongoing. It’s down to the legal branch at this point. A points deduction could well be beckoning, but that’s for a previous PSR period, not this one, so there wouldn’t be a business plan imposed FOR THIS SEASON on that basis.

“What Leicester do have control over is how they position themselves in the current three-year assessment window, which encompasses 2023-24, 2024-25, and 2025-26.“

Why have Leicester City been so quiet in the transfer window?

While it’s been quiet so far, there is still time to get some deals over the line.

Joao Rego is one of those admired by the Foxes and any transfers may go down to the wire, despite the priority being to remain on the right side of the PSR calculations, according to Williams.

“I suspect that the lack of incoming activity is more about resetting their PSR position as opposed to any formal business plan,” he added. “Will there have been a liaison process with the EFL? Yes, probably. But that’s standard, and I suspect that will be more about keeping the authorities on-side given the issues they have had with non-cooperation in the past. The club have also previously briefed that the PSR issue hanging over them has stifled them in the transfer market in terms of attracting players, so that could be a factor too. But the way I see it, Leicester have much more breathing space in this current assessment window.

“Leicester have only made one permanent signing this summer, and that is Asmir Begovic on a free. The wage bill will have come down pretty significantly with the players who have left the club, and they have generated somewhere around £45m in fees. The £90m that Leicester lost in 2022-23 has now dropped out of their three-year PSR calculation, which is a positive. The £19m they lost in 2023-24 will probably swing back to a positive result as far as PSR is concerned when allowable costs are factored in.

“In 2025-26, their three-year loss limit is about £61m. So their compliance this season hinges on their financial result in 2024-25. Dewsbury-Hall was a ‘pure profit’ sale, which will help, but the signings they made will have increased amortisation by somewhere around £20m. They were running at an operating loss of about £80m the previous season and, even with Premier League TV money, that negative is going to remain.”