FootBiz newsletter #47: Have Leicester avoided PSR reckoning? Plus John Textor re-ignites PSG row, Barca and Milan news

Good morning everyone, and welcome to PSR week.

The Premier League is expected to announce today which clubs are facing charges for breaking Profitability and Sustainability Rules (PSR) in the 2021-24 reporting cycle, and talking to various people who know more than we do about this sort of stuff it sounds increasingly likely that they’ve all found ways to comply.

The biggest question from interested observers is how on earth Leicester City are going to come in under the line.

The Foxes displayed their vulpine cunning in avoiding a sanction last year despite breaching the PSR limit by nearly £25m, with Nick DeMarco KC helping them get off a charge after they moved their accounting year and were deemed to no longer be under the jurisdiction of the Premier League after their relegation.

Some expect Leicester to find a buyer for their old training ground or another land parcel they own, but it may not even be necessary.

While owners and fans in the top two divisions (as well as football finance nerds) are waiting with baited breath, there is intrigue over what is increasingly forecast to be a lucky escape, with the club privately expressing considerable confidence that they will not be charged.

Leicester have already narrowly avoided one PSR charge - and an inevitable points deduction given the Everton and Nottingham Forest precedents - this season. The club were charged by the Premier League with breaching their £105m three-year loss limit by £24.4m for the 2020-23 period last March, but the case was never heard. (During seasons spent in the EFL, that £35m-a-year threshold is reduced to £18m.)

After launching an appeal, DeMarco and Leicester's lawyers persuaded an independent commission that as they were relegated at the end of the 2022-23 season they were not a Premier League club when they submitted their accounts 30 June 2023, so could not be charged.

With that previous, if unpunished, £24.4m overshoot hanging over them, Leicester's finances remain stretched following pre-tax losses for the last two years of £92.5m and £90m, before removing the infrastructure spending and other costs that are deductible for PSR purposes.

Football finance expert Kieron O’Connor, who has written the well-regarded Swiss Ramble blog since before PSR was even a twinkle in the Premier League's eye, has forecast that despite raising £75m through player sales last summer, Leicester will be around £12m in breach.

With Leicester bullish of avoiding a breach on the eve of the announcement, there are all sorts of rumours doing the rounds about how they may have done so, such as the sale of property assets in a manner previously exploited by Chelsea, whose own compliance with PSR over this period is likely to be highly contingent on last summer's sale of their women's team to a sister company, Blue Co 22, and how it is assessed by the league.

A more straightforward explanation for Leicester's confidence however is the possibility that their retained counsel may have identified another legal loophole which entitles Leicester to claim the full £35m allowance in their first season back in the Premier League.

This possibility was first highlighted on X by an Everton fan last September and was written about extensively by The Athletic's Matt Slater this weekend. That theoretical extra cushion could be hugely significant for Leicester, and enable them to escape a PSR charge despite being significantly over what was assumed to be the threshold for the second successive season.

That Everton account spotted an apparent inconsistency in the Premier League handbook, which states that a club's PSR allowance “will be reduced by £22m for each season covered by T-1 and T-2 for which the club was in membership of the Football League.”

T-1 and T-2 refer to the first two seasons of the PSR accounting period, but there is no mention in the Premier League handbook of the PSR threshold being reduced in the event of EFL membership in the most recent season, T.

No-one at the Premier League was willing to comment or even discuss this issue yesterday, but the consensus from sports lawyers canvassed by FootBiz was that any anomaly was an oversight rather than a deliberate policy. This apparent anomaly has not arisen before, as no club recently promoted to the Premier League has been in danger of a PSR breach, so the size of the allowance has not been particularly relevant.

While Forest were charged (and ultimately docked four points) as a result of their post-promotion spending splurge in the summer of 2022, the charges were not issued until the 2023-24 season, making their promotion season T-1. Forest are among the clubs monitoring the Premier League's actions with interest, and will be seriously unhappy if Leicester have benefitted from a bigger PSR allowance due to an ambiguous rulebook.

Ipswich are also unlikely to be thrilled at discovering that they could have spent more on transfer fees following promotion last summer, as they were working to a PSR threshold of £39m for the last three years based on two seasons in League One and one in the Championship. For their part, the EFL rules are clearly set out in Appendix 5 of their handbook that the loss limit is £13m in the Championship, but it is the Premier League who are enforcing the rules in this instance. For the second time in less than six months poorly drafted rules may have condemned them to an embarrassing defeat.

We expect to know by the end of play today… but there’s lots of other news too, including some more fun in France, rivals protesting Barcelona’s rule-bending and a lot more besides.

Table of Contents

• Lyon lose appeal in wild weekend

• Barca update

• Red Bull enter Spain

• M&A Murmurs

• Tamworth count the cost

• For premium subscribers

• New stadium in Milan

Lyon lose appeal in wild weekend

There are no quiet weekends, seemingly, in the life of John Textor.

The man who unsuccessfully spent Friday trying to appeal the weighty sanctions placed on Lyon by French regulators then spent Monday:

• reigniting his public feud with PSG chairman Nasser al-Khelaifi

• accusing Vincent Labrune, the president of the French league, of being Al-Khelaifi’s “lap dog”

• having WhatsApp messages leaked where he described the club’s crown jewel (who he needs to sell this month) as an “asshole”

Here’s the story:

An editorial in L’Equipe this week responded to Lyon’s continued sales of academy products - in this instance, midfielder Maxence Caqueret joining ambitious Serie A outfit Como - with a column from the paper’s top writer asking “is Lyon’s soul also for sale?”

Because it is quite the pickle Lyon have found themselves in, simply having to sell players this month to try and avoid an enforced relegation… but at the same time refusing to sell to the richest club in France, with whom John Textor has once again inflamed relations.

If you’d like to revisit the WhatsApp conversation that blew up the original rift between Lyon owner Textor and Paris Saint-Germain’s Nasser al-Khelaifi, then we covered that back in December right here.

PSG are one of a number of top clubs who have been interested in acquiring one of Lyon’s top talents, academy product Rayan Cherki, amid their need to raise money but Textor has completely ruled it out.

"Right now, it’s impossible. I don't want to sell players of that caliber to Nasser Al-Khelaifi until we shake hands, share a beer, and agree to help the French league together,” Textor said.

“Clearly, my relationship with Nasser is no longer what it used to be, but men are men, and we can accept that. However, for now, I won’t sell anyone to him… selling our best players to PSG is not our model.”

The likelihood of Al-Khelaifi, a muslim, sitting down for a beer with Textor seems fairly remote and even more so after the American went on the radio and accused president of Ligue 1, Vincent Labrune, of being Al-Khelaifi’s “lapdog” and PSG of exerting influence over the league as well as France’s football regulator the DNCG - who recently announced tough sanctions against Lyon including a transfer ban and a provisional relegation.

On Friday, Textor and Lyon had gone to an appeal hearing hoping to have those sanctions overturned - but they were unsuccessful.

Part of Lyon’s case in this appeal was that they had already sold a few players this month and are making progress on others, though they made a loss on Gift Orban and had to give Anthony Lopes away for free simply to shed his wages. Jeffinho, the only other sale for money so far this month, was sold to another Textor club, Botafogo.

Another part of Lyon’s case on Friday was an attempt to convince the French regulators (DNCG) that recent offers to invest in Textor’s Eagle Football vehicle prove it is not only financially viable but a successful project. This might just explain why we saw reports of the Syed brothers being granted exclusivity to buy Textor’s Crystal Palace stake go public last week, and then Sportsbank’s exclusivity to buy into Eagle Football itself go public a day later.

The club has also explored selling the academy training ground.

Lyon released a lengthy statement expressing their disappointment that their appeal had been unsuccessful, but they will continue to make efforts to comply.

Former Lyon owner Jean-Michel Aulas piled on Textor by admitting he regrets selling the club to Eagle Football, claiming he had favoured a bid from former Liverpool owners the Gillett family, describing Textor’s actions as owner as “the antithesis of what I would have done.”

One of Lyon’s few trump cards remaining is the sale of Cherki, who is considered one of the most exciting young playmakers in Europe and should net a significant fee but who Textor called an “asshole” in WhatsApp messages leaked to a French journalist on Monday. In messages to another unnamed club, Textor also claims that Dortmund have had an interest in the player but that he is “happy to tell them to fuck off”.

Textor then went on RMC radio on Monday evening and blasted Labrune and Al-Khelaifi for how they conducted themselves during the league’s blundering negotiations over a broadcast rights deal, which ended up nearly halving in value.

Textor said: "I was completely shocked, in July, to be in a meeting of the presidents to discuss viable alternatives on television. The president of the League, who should have been running the meeting, barely opened his mouth.

“Nasser sat there and ran the meeting when he shouldn't even have been in the meeting because he is a stakeholder with his own television channel. And every time someone proposed a different idea, Nasser would bark at them and intimidate and bully and the president of the League was just sitting there like a lap dog. He didn’t say anything.

“I wasn't aware that the League was so incredibly dominated by this man (Al-Khelaïfi). I wasn't aware of the influence of PSG on the League and even on the DNCG."

PSG responded: “It's a shame that class and elegance can't be bought because that would have allowed Mr. Textor to avoid making a fool of himself through his crude and mendacious outrages against our President, our institution and our fans.”

Just another week in the world of Eagle Football!

Barca update

A growing group of La Liga clubs have protested the Spanish government’s decision to allow FC Barcelona a stay of execution in registering Dani Olmo and Pau Victor.

Valencia, Atletico Madrid and cross-town rivals Espanyol are among the clubs who decided to go public with their opposition after Olmo and Victor were given permission to take the field again - with Olmo featuring as a substitute in Barcelona’s 5-2 shitpumping of Real Madrid in Sunday’s Spanish Super Cup final.

The vocal opposition could lead to more legal action.

Red Bull enter Spain

Red Bull continue to take on more partners in football, signing a deal with Atletico Madrid to become one of their biggest sponsors as they ink their first Spanish deal.

The Austrian energy drink company, which is arguably more famous for its sports marketing division than taurine beverages these days, recently made a minority investment in Leeds United to add to their stable of clubs and then added Jurgen Klopp as their global head of football.

It is understood the two-and-a-half year pact could serve as a get-to-know-you period for a deeper sporting alliance eventually.

M&A Murmurs

I now get a flurry of emails if we don’t include an M&A section in the newsletter.

Sometimes there just aren’t any deals to report! Not the case today though. Lots of movement, particularly in Italy.

Many questions in Genoa over the reported sale of the club to Romanian investor Daniel Sucu.

Sucu, who also owns Rapid Bucharest, has been announced as president of Genoa CFC acquiring 77% of Italy’s oldest club after committing to a capital increase of €42m.

From what we hear, though, the deal was done through someone who did not have the authority to do it.

As was reported many months ago, investment bank Moelis have the deal to sell Genoa, as well as the portfolio of other clubs formerly owned by 777 Partners which are being sold on behalf of A-Cap and other creditors. However, the Sucu deal was done without them and there are questions over the legality of that.

This one could take some time to shake out, but as of now the club are operating as if Sucu is the new majority owner.

Presidio Investors have been dallying in their acquisition of Hellas Verona, with both sides privately pointing the finger at each other.

With the Veronese club fighting relegation the reported €120m price-tag has raised the eyebrows of onlookers, especially as the would-be owners are planning to build a new stadium which would require significant investment.

Owner Maurizio Setti remains keen to conclude a deal.

Another struggling Serie A club facing a stalling deal is Monza, which the Berlusconi family had been trying to sell for €60m to Mario Gabelli.

Gabelli is an Italian-American who owns a New York-based asset management firm bearing his own name and is still hopeful of striking a deal even though the club looks destined to be relegated to Serie B after picking up just one win all season.

Tamworth count the cost

The FA are unlikely to scrap extra time in FA Cup ties next season following the abolition of replays this year despite unhappiness that the additional 30 minutes' playing time reduces the chances of minnows pulling off a cup upset.

Fifth-tier Tamworth suffered such a fate last weekend, conceding three goals to Premier League Tottenham in extra-time following a valiant goalless draw over 90 minutes at their 4000-capacity ground. Until this season Tamworth's efforts would have earned them a lucrative replay at the Tottenham Hotspur Stadium, worth an estimated £1m, which would have covered the club's entire wage bill for three-quarters of the season.

The Times reported yesterday that the FA will give clubs the opportunity to consult on whether to maintain the current system at the end of the season, but they do not anticipate any push to change. 

The EFL scrapped extra time in the Carabao Cup six years ago for all rounds except the final to ease the workload of top players, but that is a midweek competition and the FA Cup is fundamentally different. Over 740 teams enter the FA Cup qualifying competition every summer and replays are still in place until the first round proper in November, which involves 80 clubs, with 44 more from the Premier League and Championship joining at the third-round stage in January.

Footbiz has been told that any consultation process would be lengthy and there would be no time to make a significant change before next season, while the FA would require compelling evidence that the competition would be improved to abolish extra-time. There is also no prospect of bringing back replays due to the expansion of European football this season, which has eaten up all the midweek slots in the European season.

For premium subscribers

Some articles for those lucky enough to be premium subs:

• why VAR needs to be scrapped - by Rob Draper

• why we are entering a new era of club ownership - by Ed Malyon

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New stadium in Milan

AC Milan and Internazionale are close to presenting an offer to the city that would see them buy the historic San Siro stadium before redeveloping the land and building a new shared arena.

Local authorities gave the clubs until the end of March to table an offer but the two giants of Italian football are working together to get things tied up within 30 days after the independent valuation of the land that they commissioned priced it at just under €200m.

There is still a question over whether the iconic stadium can be demolished, as it was deemed to be of significant cultural heritage by the regional authorities and was considered a barrier to the clubs remaining in the San Siro area.