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Leicester have announced losses of £89.7m for the 2022/23 season – the final year they were in the Premier League.

It is the period for which they have been charged by the league for allegedly breaching Profitability and Sustainability Rules and come after accounts showed Leicester had made a record £92.5m in losses the previous year.

The EFL has subsequently placed the club under a transfer embargo after the PSR charges, with the Foxes currently third in the Championship.

It is understood Leicester could be hit with a stiffer punishment than the four-point penalty handed out to Nottingham Forest if an independent commission sees their failure to submit their accounts on time as a lack of co-operation.

After the announcement last month, Leicester said they were taking “urgent” legal action against the Premier League and EFL

Here, Sky Sports News’ senior reporter Rob Dorsett answers the key questions surrounding the latest published accounts.

Is this why Leicester have been charged by the Premier League?

They give pretty clear indicators of why the Premier League has charged Leicester, although it’s very important to point out that these two successive losses of £92.5m and £89.7m are not the specific PSR loss figures – which, remember, allows for a maximum of £105m of losses over any three-year period.

Leicester and the Premier League are keeping those PSR numbers closely guarded, as they are at the core of their legal dispute.

Nevertheless, these accounts give a very clear indication of the fact that Leicester have lost huge amounts of money in the past two years, hence the PSR charge.

These elements, which are part of the £89.7m losses, are not included in the PSR calculations. For example, depreciation, expenditure on women’s football, community development expenditure, academy expenditure are not included.

Are Leicester at risk of going bust or falling into administration?

No. The club has incredibly strong support from King Power, its owners, which can stomach these losses very comfortably.

The club is completely financially secure, even though the Premier League charge clearly suggests Leicester have been spending beyond their means.

Leicester have sold a lot of players over the years, hasn’t that helped their accounts?

Leicester have recorded these huge losses, despite £74.8m of profit in terms of player sales in this latest accounting period, which includes the sale of Wesley Fofana to Chelsea and James Maddison to Tottenham.

If they’ve made so much money out of player sales, why have Leicester lost so much money?

Sky Sports News has been told it amounted to a ‘perfect storm’.

There has been no European football. Leicester earned £20-22m when they were in Europa Conference League, for example.

They received much less Premier League revenue from finishing so low in table, and being relegated. In effect, they had budgeted to finish eighth, but finished 18th. When you use a rough calculation of each Premier League place being worth £3m in prize money, cost Leicester £30m in lost income.

If Leicester had finished eighth in the Premier League, as they had the previous season, they would have been fine for PSR.

There was also the cost of dismissing a ‘very expensive’ management team in Brendan Rodgers and his staff.

Leicester also shifted their accounting period to align with other parts of the business, so it actually covers a 13 month accounting period, with an extra month. So in effect, their losses are one twelfth higher than they might have been.

How have Leicester got into such a mess?

Leicester, when they were relegated, had the biggest wage bill outside of the Premier League’s ‘big six’.

The club have been investing at levels to compete at higher end of Premier League – they finished 5th, 5th, and 8th for the last three years before relegation.

Leicester had also been competing in Europe, won the FA Cup and Community Shield. They had further ambitions and were funding that ambition.

That’s why relegation was such a hit. It was such a big fall from grace and although they did have mechanisms in place for cost reductions to kick in immediately on relegation – such as clauses within player contracts for reduced wages in the lower division – their revenue reduced dramatically.

Will Leicester have to sell players, even if they are promoted to the Premier League?

Sky Sports News has been told that yes, they almost certainly will have to sell players this summer, and some of those before the end of June.

Even if Leicester are promoted, they will not get the money they are due from participation in the Premier League until the following accounting period, so in effect, the next season.

Any prize money from the EFL, which is much less important than money from the Premier League, is also paid at a later stage.

What about Leicester’s ambitious plans to extend the stadium, and increase their commercial interests around the King Power Stadium?

These have been put on hold indefinitely.

However, the ownership is still committed to doing this work, including a new hotel, venue and increasing the stadium capacity among other things.

Leicester were granted planning permission to increase the stadium capacity by 8,000 just before Christmas.