A big loss for Leicester City but the owners keep faith

LEICESTER CITY may yet be relegated this season; they are precariously placed at the moment in the Premier League and their record has been very mediocre. Leicester have lost 16 games out of 26, they have conceded 46 goals, they struggle to keep clean sheets and their home performances have been poor. Manager Brendan Rodgers has, predictably, come under fire. 

The last thing Leicester City need right now is relegation. They recently announced their financial figures for 2021-22 and they revealed a £ 92.5 million pre-tax loss. Dropping out of the Premier would be a disaster, even though parachute payments would ease the pain and would give them a realistic chance of an immediate return.

In 2021-22, Leicester’s revenues fell by 5% to £ 214.6 million, although some of this can be explained by the fact that around 20% of 2019-20 income fell into the 2020-21 pot. The total for 2021-22 was the third highest in Leicester’s history and reflected the return of spectators to the King Power stadium. Matchday income, which was negligible in 2020-21, jumped back to a best-ever £ 21 million, while commercial monies went up slightly to £ 42.2 million. TV earnings, which were boosted by a decent European campaign that saw them reach the Conference League semi-finals, went down because of deferred income in 2020-21 for games played after the end of May accounting cut off.

Leicester’s wage bill reduced by 5% to £ 182 million, which equates to 85% of income. This was on par with the previous season but a vast improvement on 2019-20 when it hit an unsustainable 105%.

A major contributor to Leicester’s loss is the lack of income from player sales, which has been a feature of their business model in recent years. In 2021-22, they tried to hang on to their best players to see if it enabled them to become more competitive with the Premier’s elite clubs. On the other side of the coin, some of their signings in 2021-22 didn’t work out as planned.

In past seasons, Leicester have made good profits from selling their best talent – mostly to Chelsea – including N’Golo Kanté (£32m), Danny Drinkwater (£35m), Ruyad Mahrez (£65m), Harry Maguire (£80m) and Ben Chilwell (£50m). Between 2016-17 and 2022-23, Leicester received € 439 million in transfer fees, according to Transfermarkt, and their expenditure totalled € 569 million. At the start of this season, they sold Wesley Fofana (again to Chelsea) for £ 70 million.

But in 2021-22, their profit from player sales was just £ 9.2 million, a huge drop on the past three seasons, which have yielded a combined £ 165 million. The club’s most marketable player is currently James Maddison, who would surely earn Leicester around £ 50 million. At 26, he’s arguably at his peak, so the club must decide whether they cash-in soon or allow his value to fall. His contract expires in June 2024, so it is surely at the top of the agenda for the Leicester City management.

The club’s net debt for 2021-22 was £ 312 million, but the club has recently converted £ 194 million of loans into shares, which means there is no outstanding debt to the owners. Leicester benefit from a good relationship between the club’s owners and the fans, and this move is a very clear indication of the long-term commitment of King Power and the Srivaddhanaprabha family.

Leicester’s 2022-23 season is reaching a critical stage because of the number of defeats the team has suffered. They seem unable to carve-out victories by the odd goal – of their seven league wins, four have been by two goals, two by four goals and one by three. In other words, it appears to be feast or famine. Nine of their 16 defeats have been by a single goal margin and they have drawn just three times. The average number of defeats by a Premier side finishing in 18^th has been just over 19 in the past decade. Leicester cannot afford too many more if they are to hang onto their place in the top flight. Relegation to the Championship would not be a good way to repay the generosity of their owners.