Leicester City: Championship club start legal proceedings against Premier League and EFL over alleged spending breaches

General view inside Leicester's King Power Stadium — Leicester are second in the Championship with nine games to play after being overtaken by Leeds United

Leicester City have started "urgent" legal proceedings against the Premier League and English Football League (EFL) after being charged with allegedly breaking spending rules.

The Championship club said they were "compelled" to act after being charged with breaching profit and sustainability rules (PSR) on Thursday.

If found guilty, the Foxes could face a points deduction.

The club have also been placed under a transfer embargo by the EFL.

Leicester have been referred to an independent commission by the Premier League for the alleged breach of PSR rules for their last three seasons in the top flight and for failing to submit audited finances.

They are also subject to a separate financial probe by the EFL.

In a statement, Leicester said that they would seek to ensure that the proceedings were overseen "by an appropriate and fully independent legal panel".

"The club is committed to ensure that any charges against it are properly and proportionately determined, in accordance with the applicable rules, by the right bodies, and at the right time," the statement said.

"While LCFC would prefer the proceedings to be in public, so its supporters and the wider world can be informed about the important issues of football governance that will be considered, the relevant rules require that these proceedings are conducted confidentially, and LCFC will therefore not be able to comment further about them at this stage.

"We reaffirm the club's position that we will continue to fight for the right of Leicester City and all clubs to pursue their ambitions, particularly where these have been reasonably and fairly established through sustained sporting achievement."

Leicester added that the EFL's decision to impose a transfer embargo was "both restrictive and premature".

What's the background?

Leicester are yet to make their accounts for their last season in the Premier League publicly available, but in the 12 months up to May 2022 they lost a club record £92.5m.

A year earlier, in the season when they lifted the FA Cup for the first time, the club reported a pre-tax loss of £33.1m.

Top-flight rules permit clubs to make losses of £105m over a three-year period, or £35m per campaign, before facing sanctions.

At the turn of the year, Leicester looked certain to bounce straight back up to the Premier League, topping the Championship table and with a 13-point gap over third-place Southampton.

But a run of poor form - including one win in their past five league games - has seen Leeds overtake them at the top, with Ipswich only a point behind in third.

Both Everton and Nottingham Forest have faced similar charges relating to their accounts up to 2022-23 from the Premier League, with the latter found guilty and hit with a four-point deduction on Monday.

Everton were docked 10 points in November - which was reduced to six on appeal - for previous PSR breaches, and are waiting on a potential second punishment relating to the assessment period ending with their 2022-23 accounts.

Both Premier League clubs were required to submit their accounts by 31 December - under new rules designed to speed up the reporting process and ensure any penalties are imposed during a season when alleged transgressions take place - but Leicester were not required to do so after dropping out of the league.

And because Leicester were not part of the Premier League when the new 'standard directions' were adopted, which also prescribe a timeline when cases should be heard, the independent commission will set the timescale.

It means that the case, including any appeals, could run beyond the end of this season and may see sanctions, if applicable, enforced next season.

Leicester are now involved in dealing with two financial investigations, with the club the subject of an ongoing EFL inquiry into a possible breach of PSR rules relating to the ongoing season.

The club were forecast to breach loss limits for the ongoing three-year term.