PSR Explained: Which clubs could be at risk following Leicester City’s points deduction?

A decade ago, Leicester City were football’s great fairytale. Written off as outsiders, they stunned the Premier League by overturning 5,000-1 odds to topple the established elite and claim a title that still feels surreal today.

Even as recently as five years ago, the club were lifting the FA Cup after beating Chelsea at Wembley and pushing deep into Europe, reaching the semi-finals of the Europa Conference League. From the outside, Leicester looked like the model of a smart, ambitious club consistently punching above its weight.

But beneath the surface, the foundations were far less secure. In truth, Leicester were only ever one poor campaign away from the crisis that has now caught up with them in the Championship.

Leicester punished for PSR breach

That reckoning has arrived. After accumulating losses of around £200m across a three-year period, Leicester have been handed a six-point deduction by the EFL for breaching Profit & Sustainability Rules.

The Premier League initially charged the club in May for overspending across the accounting period up to the 2023/24 season. Following Leicester’s relegation, responsibility for the case passed to the EFL, who imposed sanctions under their own PSR framework.

Leicester were found to have exceeded the permitted £83m loss threshold by £20.8m between 2021 and 2024. An independent commission rejected the club’s claim that the EFL lacked authority to deduct points, concluding that a sporting punishment was the only appropriate response. It argued that a fine alone would undermine the integrity of the rules and be unfair to other clubs.

The Foxes have strongly criticised the decision, branding the punishment “disproportionate” and confirming their intention to explore further action. However, the financial picture is bleak. Reports suggest the Premier League had been pushing for a 12-point deduction, a penalty that could have plunged Leicester into serious danger.

As it stands, they remain just outside the relegation places on goal difference, despite being without a manager following the dismissal of Marti Cifuentes. Even so, the threat of a second consecutive relegation is very real, a scenario that would deepen the problems for a club that sat at the summit of English football only 10 years ago.

A recruitment gamble that backfired

Leicester’s original rise was built on thrift and inspired scouting rather than lavish spending. Players like Jamie Vardy, N’Golo Kanté and Riyad Mahrez were undervalued assets who powered an improbable title win.

Success changed expectations. Once established near the top, the club chose to invest heavily in order to stay there. Brendan Rodgers’ calls for renewal in 2021 saw significant outlay, with Patson Daka, Boubakary Soumaré and Jannik Vestergaard arriving for substantial fees.

More money followed a year later. Wout Faes, Harry Souttar and Victor Kristiansen were added to an already expensive squad, while Leicester’s wage bill climbed to the seventh-highest in the Premier League during the 2022/23 season. The gamble was clear: spend big to remain competitive at the top end of the table.

Instead, it ended in relegation. Leicester dropped out of the Premier League carrying the highest wage bill ever for a relegated side and then entered the Championship with unprecedented salary commitments, creating severe financial strain.

The Srivaddhanaprabha family continued to back the club in pursuit of an immediate return to the top flight, but that approach only deepened the losses and ultimately triggered the sanctions they now face. Costly contracts from that period are still weighing heavily, with players like Faes and Vestergaard either out on loan or surplus to requirements yet still on the books.

Who could be next?

Leicester are not alone in facing scrutiny. Newcastle United and Aston Villa have both navigated close to PSR limits in recent seasons and remain under pressure to balance ambition with compliance.

Despite major player sales, Newcastle have acknowledged that PSR continues to restrict their spending. While their ownership ensures they are unlikely to face Leicester’s level of crisis, their recent recruitment splurge has yet to deliver a clear return.

At Aston Villa, Unai Emery has publicly voiced frustration over spending limits, even as his side sit among the Premier League’s top teams. The club have leaned heavily on loans and creative deals despite Champions League qualification, a sign of how tightly PSR is shaping decision-making.

Leeds United are also monitoring their situation closely, with financial projections indicating they must stay on track to avoid issues of their own.

Leicester’s dramatic fall from champions to flirting with relegation in the Championship within a decade stands as a powerful warning. Success can disappear quickly, and without financial control, even the most remarkable rise can unravel just as fast.