Leicester lost almost £90 million for the second year in a row, while their pre-tax deficit only marginally decreased by £2 million. Despite the substantial loss, player sales revenue increased by £66 million, from £9 million to £75 million.
After being promoted to the Premier League in 2014, Leicester made £137 million in earnings over the course of four years. However, they have now reported five consecutive years of losses totaling more than £300 million.
The poorer on-field results countered this, with income falling £37 million (17%) from £214 million to £177 million, made worse by an increase in operating expenses of £31 million (11%) to £330 million.
Conversely, net interest payable decreased by 33% from £19 million to £12 million, mostly as a result of King Power turning £195 million in loans into equity.
The club’s absence from European play for the first time in three years and a cut in Premier League merit payments were the primary causes of the revenue decline, which dropped £36 million (24%) from £151 million to £115 million in broadcasting.
The match day fell from £21.0m to £18.4m, a reduction of £2.6m (13%) due to the absence of European fixtures. But from £42 million to £44 million, commercial increased by £2 million, or 5%.
While it is evident that Leicester’s £90 million pre-tax loss is not fantastic, it is important to note that they are not the only team to report a significant loss—half of the Premier League’s teams lost more than £50 million in the previous season. In fact, three teams—Aston Villa ($120 million), Tottenham ($95 million), and Chelsea ($90 million)—lost even more than Leicester.
Player sales
When you take into account that Leicester made £75 million in profit from player sales last season compared to just £9 million the year before, their entire deficit becomes even more alarming. In fact, this set a new club record, breaking the previous peak of £63 million in 2019–20.
The obvious business plan was to sell one of the Big Six teams—N’Golo Kanté, Danny Drinkwater, Riyad Mahrez, Harry Maguire, and Ben Chilwell—each season in order to help balance the books. Chelsea was frequently the recipient of these big-name sales. Transfermarkt reports that Leicester has profited handsomely this season from the sales of players, notably Timothy Castagne to Fulham and Harvey Barnes to Newcastle United. In order to help the team meet Financial Fair Play requirements, it is also very likely that Leicester will try to offload some of its players at the conclusion of this season, or before the end of the 2023–2024 accounting year.
It is clear that revenue is well down on the club’s £233m peak in 2016/17, which included £70m from the Champions League. Since those heady days, it has dropped £56m (24%), due to a £76m reduction in broadcasting income, partly offset by growth in both commercial £19m and gate receipts £2m. To highlight the challenge faced by ambitious clubs like Leicester, all of the top five clubs earned at least three times as much, while Manchester City’s £713m was more than half a billion higher than the Foxes.
Leicester’s Premier League TV distribution will be replaced this season by a parachute payment of around £44m. If they don’t get promoted, this will reduce to £36m in the second year, then £16m in year 3.
Even though revenue slumped, Leicester’s wage bill increased £24m (13%) from £182m to £206m, which means that this grew by an incredible £87m (73%) in just five years.
However, last season’s total was adversely impacted by two technical factors, as it included:
- “significant” costs for the sacking of Brendan Rodgers, the highest paid manager in the club’s history, which were “unplanned”.
- additional costs following the extension of the accounting year-end.
Leicester’s wages have usually been a cut above the rest of the mid-tier clubs in the Premier League. While some others have also seen good growth since then, Leicester’s were still the highest of that group last season.
As a result, Leicester’s £206m wages were the seventh highest in the top flight in 2022/23, only behind the Big Six clubs. Indeed, they have been in this elevated position for the last three seasons – and the one before that they were 8th.
Leicester’s 116% was the highest (worst) wages to turnover ratio in the Premier League, a fair way ahead of the two other clubs that have been charged with breaches of the Profitability and Sustainability Regulations, Nottingham Forest 94% and Everton 92%. Leicester’s wages should be much lower this season following the large number of departures last summer. Even when players left on a free, this still reduced the payroll. In addition, you would have to assume that at least some of the players had relegation clauses in their contracts.
In the last six years, the majority of Leicester’s funding has come from loans, split between £255m from the owners and £64m from banks, while another £44m came from dipping into cash reserves. A substantial £153m has been invested in infrastructure, mainly the new training ground, while £151m (net) was spent on improving the squad. Another £45m was used to cover operating losses, while £15m went on interest payments.
Since King Power acquired Leicester City in August 2010, the owners have put in an incredible £444m, including over quarter of a billion in the last four years alone.
Six point deduction likely
Leicester have been charged by the Premier League with breaching its Profitability and Sustainability Regulations (PSR) for 2022723.
Leicester City responded strongly to this, saying, “We are taken aback by the measures the Premier League has taken.” Even though LCFC is not presently a Premier League team, the club is deeply saddened that the Premier League has decided to charge LCFC at this time, despite the club’s attempts to interact positively with the Premier League regarding the issues that are the focus of this charge.
