The Football League is coming under pressure from its clubs to conclude its investigation into a 2014 marketing deal entered into by Leicester City, which some league clubs believe may have been created to cheat financial fair play rules. The league’s chief executive, Shaun Harvey, is understood to have told directors at its board meeting on Thursday that discussions are ongoing with Leicester but that the league is increasingly being asked by its clubs to bring the issue to a conclusion before the end of this season.
Some Championship clubs are understood to feel frustrated that Leicester could win a remarkable Premier League title this season, with the issue about whether they complied with or contravened Football League rules in their 2013-14 promotion season still not resolved.
A league spokesman said that a “timeline” was agreed at the board meeting for resolving the FFP issues, but did not disclose what the deadlines are.
As the Guardian reported this week, Leicester entered into the deal in January 2014 with a company Trestellar to market the club’s sponsorship rights worldwide, which produced an immediate £11m increase in commercial income. That was the first season in which clubs had to comply with financial fair play rules, introduced by the league’s clubs to reduce excessive spending on players’ wages, and limit clubs’ losses to £8m. The rules carry the sanction of fines for clubs which make excessive losses and gain promotion to the Premier League.
Leicester argue that they complied with the new rules. The income from Trestellar helped reduce the club’s loss in 2013-14 to £21m, which they say was within the permitted limit, when allowable additional expenditure, including on youth development, was taken into account.
Trestellar was a new company set up on a Sheffield business park by the son and daughter of Sir Dave Richards, the former Premier League chairman, who was reported to be working closely with Leicester at the time, including on how to comply with FFP rules. The company name is an echo of Richards’ former company Three Star Engineering, which went into administrative receivership in 2001. It has no telephone number, corporate presence at the registered Sheffield address, or website. Richards’ son, David Jr, said they did not need a telephone number or website as they are already well known and busy, and that the accounts show they have worked to produce substantial marketing deals for Leicester.
The club’s 2014-15 accounts, published last month, state that Trestellar, having bought the rights to licence Leicester City around the world, particularly in the far east, sold the main sponsorships, of the club shirt and stadium, back to the owners, the Thai duty-free company, King Power. Owned by the billionaire Vichai Srivaddhanaprabha, King Power had invested around £100m in Leicester’s promotion push after taking the club over in 2010, and were already sponsoring the shirts and stadium.
The league has said for more than a year that it is in “ongoing discussions” with Leicester over its 2014 finances, understood to centre on the Trestellar deal. If the club does not reach an agreement satisfactory to the league, the league could take the issue to a football disciplinary commission, a quasi-legal process.
A Football League spokesman said: “The league’s chief executive appraised the board on the outstanding FFP matters, and a timeline for bringing them to a conclusion was then approved.”
