It's not as clear cut as that because it's not as simple as having budget of £105m and spending £124.5m, though that's the final tally. They lost far more than £124.5m over 3 seasons, they lost closer to £370m but were allowed to write some of it off per the rules.

My understanding is that their argument is twofold, 1) They think they should have been able to write off more of the losses and 2) There were good reasons that they had reduced income that tipped them over (covid, no transfer fee for Sigurdsson and unexpectedly poor results in the league).

The difficulty is a team can invest with an expectation that it will return better results and money, but football is unpredictable and if it doesn't work out then you can get punished like this. You could definitely argue they acted recklessly and took an unacceptable risk, but it's not just outright stupidity.

It's a 3 year rolling loss tally, if they get punished again then it's likely partly the same mistake as last time, not a fresh one.

Given that the accounts are over a three year period it's more like being penalized twice for screwing up the same year.