Welcome to the Financial Fair Play derby, also known as Leicester’s FA Cup quarter-final against Chelsea at Stamford Bridge.
The approach to the ground from Fulham Broadway is normally a peculiar hive blending street preachers, stalls peddling scarves and pins, and matchday programme sellers. There is still an aftershock ringing in the ears from the Thursday lunchtime in 2022 when the club shop fell silent and the pies ran cold, on the day Roman Abramovich’s sanctions forbade Chelsea from raising a penny of revenue for as long as he remained in charge.
The hum of the world’s tiniest violin, quite possibly – but here in west London, nobody needs telling how quickly economic fortunes can change.
This FA Cup tie is not just one small step to Wembley, one giant leap to end the season with a flourish before next year’s tumble into the unknown. For both clubs, the future is tinged with uncertainty.
What should be an acid test of promotion-chasing Leicester’s Premier League credentials comes with a note of trepidation.
It is not inconceivable that they start next season with a points deduction if they are found to have broken spending rules, though they are currently caught in a grey area between the regulations of the top flight and those of the English Football League (EFL). They go into the weekend top of the Championship, four points clear of the play-offs.
Any punishment for the losses they have made – as great as £92m in 2022 – could take place midway through the 2024-25 campaign, should the club be found guilty of breaching the Premier League’s profit and sustainability regulations (PSR) relating to the three-year period before their relegation in 2023.
That is assuming they are promoted – they recently succeeded in their argument that the EFL’s metrics should not apply to them because for most of the past three years, they were not in the Championship. An independent commission found in their favour.
Though Leicester are yet to publish their accounts for this year – they must do so by 31 March – the numbers do not look good. Nor is it the first such dispute between Leicester and the EFL. In 2018, the club finally agreed to pay the league £3.1m over a claim dating back to the 2013-14 that they had breached financial fair play rules.
“There is always this challenge for clubs that are pushing for promotion,” football finance expert Dr Dan Plumley of Sheffield Hallam tells i.
“We know where the raw data is at and it looks like they’d be very much up against the regulations.”
A familiar tune in the realm they travel to on Sunday, where Chelsea’s £90m loss over the past year has raised serious doubts over their ability to meet both the Premier League’s PSR and Uefa’s FFP rules, should they qualify for European competition next season. A peripheral issue, perhaps, for a team who go into the weekend 11th, but winning the FA Cup would grant them entry to the Europa League.
Everton’s 10-point deduction, reduced to six on appeal, has set a precedent – and that was only for a breach of £19.5m over the £105m loss limit. Leicester and Chelsea’s current projections suggest their deficit will be even greater.
Both face a miserable, perpetual cycle ahead: the more they sell, the further the fall and the louder the cries for investment. And repeat, ad nauseam.
“It’s highly likely Chelsea will need to sell some players before the end of June,” Plumley warns.
“We know they were trying to get one or two of the books in January, particularly the homegrown players because they represent pure profit. We know there’s a delicate situation, we know the spending strategy was very aggressive and high risk and now we’re seeing the other side of that when it’s not quite worked out for them.”
Conor Gallagher, Marc Cucurella, Armando Broja and Trevoh Chalobah are all understood to be up for sale. Newcastle are likely to activate their option to buy Lewis Hall for £28m move permanent this summer, and Romelu Lukaku, on loan at Roma, is likely to move on too.
If the ceiling under which Chelsea will have to operate is frustrating, at Leicester it is potentially suffocating. How excited anyone can be at promotion is dependent on how much of Sheffield United and Burnley you happen to have watched this season. The Blades sold arguably their two best players, Iliman Ndiaye and Sander Berge, before the campaign began, in what many deemed a meek acceptance of inevitable relegation.
Leicester will be forced to make tough choices of their own, but there is a sense that as the 2015-16 champions of England and FA Cup winners in 2021, they are now simply too big to pocket the parachute payments and be on their way.
Those who they could feasibly sell for a decent fee, Wilfried Ndidi, Kelechi Iheanacho, Jannik Vestergaard, Dennis Praet among them, are out of contract in June. Manager Enzo Maresca has said talks over their futures will not take place until they know which league they are playing in next season.
Their significant losses were incurred in a period when they sold James Maddison for £40m and Wesley Fofana for £70m. They do not want Kiernan Dewsbury-Hall to follow them – Brighton, Brentford and Arsenal are keen. They may have no choice.
There is some hope yet. The Premier League is considering changing its PSR rules to comply more closely with Uefa’s version, focusing on the “squad cost” rule, incorporating wages, transfer fees and agent fees. Chelsea’s wages to turnover figure is currently in line with Uefa’s rules.
“There’s always been this recommended wages to turnover ratio of 70 per cent, which has never been enforced but it’s been recommended,” Plumley explains.
“If you look at the big six clubs in England, they’re well within that as an average over the last few years. The Premier League are looking to set it at 85 per cent.
“Unfortunately that’s the reality, that any set of regulations will benefit those big clubs because they’re well set, large revenues, relatively lower cost base against revenue compared to other clubs.
“But if the Premier League changes their regulations completely for the new season coming up, where does that leave Leicester? Does that mean they don’t get charged because we’ve changed the regulations completely?”
The potential rule changes have not been universally accepted by Premier League clubs. So what next for its one-time champions? They can offset some of their losses if they can show the proportion spent on infrastructure, the women’s team and youth development.
Yet the landscape ahead is rocky. The gulf between Championship and Premier League already feels insurmountable, but they will start their return to the top flight on the back foot. First for a dress rehearsal.
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