Leicester City lose money but gain a trophy

IT has become very clear Leicester City have moved to the periphery of the Premier League top six, as evidenced by their title win in 2016 and FA Cup success in 2021. Their 2020-21 campaign was excellent, a first-time FA Cup win, beating Chelsea 1-0, and a top five placing. They have come a long way from the days when they were considered an underachieving, inconsistent club.

Yet despite the memorable triumph at Wembley stadium, Leicester City made a pre-tax loss for the third consecutive year, albeit half as much as 2019-20 when their deficit was £ 67.3 million. City’s loss of £ 33.1 million was partly due to the almost wipe-out of matchday income, which declined from £ 13.1 million to £ 0.5 million. The other contributory factor was a 22% increase in staff costs, with the wage bill rising to £ 191.2 million from £ 157.5 million.

Leicester’s turnover totalled £ 226.2 million, a 51% rise on 2019-20 and the seventh highest in the Premier League. Only once, 2016-17, have the club enjoyed a higher level of income. The club appears to have lost around £ 50 million in revenues during the two covid-affected seasons.

Media contributed the biggest slice of the pie, £ 184.5 million, representing 82% of total revenues. Aside from matchday earnings, the club’s commercial activities grew to a record £ 41.1 million (£29.3 million 2019-20).

The loss of matchday earnings and the increase in player compensation meant the wage-to-income ratio at Leicester was 84.9%, a substantial figure and one of the highest at the top level, but less than 2019-20’s enormous 105%. Importantly, it should be noted the rise in wages was partly due to deferred salaries. 

The club’s squad is currently valued at £ 462 million by Transfermarkt. In 2020-21, Kelechi Iheanacho, was the top scorer with 19 goals, ending a five-year run in which Jamie Vardy was leading marksman. Leicester have a number of players who would command decent transfer fees, such as Wifried Ndidi (£ 50 million-plus), Youri Tielemans (£50 million) and James Maddison (£ 45 million).

Leicester made a £43.9 million profit from player sales in 2020-21, compared to £ 63.1 million a year earlier. The profit was made almost entirely from the sale of England defender Ben Chilwell to Chelsea for £ 45 million. Leicester also went into the market, signing Wesley Fofana from Saint-Étienne for £ 31.5 million and Timothy Castagne for £ 18.5 million from Atalanta. Since rejoining the Premier in 2014 and up until the end of 2020-21, Leicester ranks as the eighth highest spender having paid out £ 473 million. 

The club is looking to expand the King Power Stadium, raising its capacity to around 40,000. The ground is currently valued at £ 41.5 million and has a crowd limit of 32,000. Leicester have also made investments in Leicester City Women FC and new training facilities, as well as spending £ 2.1 million on the King Power pitch.

There’s no doubt Leicester City benefits from having generous and responsible owners, but the club now owes them £ 180 million. Gross debt now runs to £ 287.6 million, but with cash increasing by 24% to £ 50.9 million, net debt totals £ 236.8 million, some 33% higher than 2020.  

The club has examined its cash flow forecasts and the conclusion is that it is still reliant on external bank funding and its holding company, King Power International (KPI). Leicester entered into a five-year £ 42.5 million loan with KPI and has also replaced its £ 52.5 million loan from Macquarie Bank with an £ 80 millian, four-year facility. There is also an undrawn £ 35 million standby loan with KPI for use in severe circumstances.


The current season hasn’t gone as planned and their league form has deteriorated. They were also humbled in the FA Cup by midlands rivals Nottingham Forest, but they are still in the UEFA Europa League and will play Rennes in the last 16. Football’s fickle nature has been underlined once more by some calls for manager Brendan Rodgers to be replaced just nine months after winning the FA Cup, but the Leicester board recently gave him a vote of confidence. Oh dear. 

Leicester City hit by a loss, but still rising nicely

LEICESTER City may reach their first FA Cup final since 1969 and could well meet the club they faced back in the days of David Nish, Allan Clarke and Peter Shilton. Unlike in 1969, when Leicester were relegated to the old second division, the current side, under Brendan Rodgers, is also in a good position to qualify for the UEFA Champions League. 

It’s been an interesting few days for the Foxes. Ahead of their FA Cup tie with Manchester United, they announced a pre-tax loss of £ 67.2 million for the 2019-20 season. Like most of their peers, Leicester’s financial performance was hit by covid-19. Their pre-tax loss came in at £ 20.2 million in 2018-19.

Leicester’s income totalled £ 150 million, a drop of £ 28 million on 2018-19 and the lowest since 2015-16. All main revenue streams declined: matchday dropped by 11% (a result that could have been worse), while media income fell by 16% and commercial by 19%.

While these figures were impacted by the pandemic, they are only influenced by the early stages of the crisis. Leicester’s figures will probably look far worse in 12 months’ time when the financial report for 2020-21 is published.

Leicester’s position for 2019-20 was undoubtedly helped by the £ 63 million profit on players sales. Leicester sold central defender Harry Maguire to Manchester United for £ 80 million and over the past few years, regular big money sales have helped the club’s balance sheet. These include Riyad Mahrez (£ 60 million, Manchester City), Danny Drinkwater (£35 million, Chelsea) and N’Golo Kanté (£32 million, Chelsea). Leicester have also been investing in their own squad, paying £ 40 million to Monaco for Youri Tielemans in 2019-20 and £ 31.5 million for Wesley Fofana of Saint-Etienne this season. One of this season’s in-form players, Nigerian striker Kelechi Iheanacho, was bought from Manchester City for £ 25 million in August 2017.

Leicester’s rise up the hierarchy in Britain has gathered pace since 2015-16 when they performed one of the great shocks in football history, winning the Premier League for the first time. This was followed by a good run in the Champions League in 2016-17 and fifth place in the league in 2019-20. The club acknowledges that 2016 was the springboard to change Leicester City from an also-ran into a club on the fringes of the “big six”. The club has undergone a dramatic change, strengthening its management, adding more directors and ramping-up its administration and technology. 

Leicester’s revenues have grown since 2016, but they still have a long way to go to match the bigger clubs. Their total of £ 171 million is still half of Arsenal’s income, for example. Their wages have doubled since 2016 to £ 158 million, amounting to a rather concerning wage-to-income ratio of 105%. In 2019 the ratio was 83.8%.

Leicester’s net debt has gone up by 147% to £ 162 million. The directors have reviewed the club’s cash flow forecasts and they revealed that the company is reliant on continued funding from external banks as well as King Power International. Leicester have entered into two five-year loan facilities for a total of £ 30 million to finance the working capital requirements of the club and have increased and extended a £ 45 million facility with Macquarie Bank to January 2022. Leicester have also agreed a further £ 16.4 million facility with Macquarie. Should the economic climate worsen for football, the club also have a £ 35 million standby facility with King Power.

A place in the Champions League for 2021-22 would doubtless ease Leicester’s situation – in 2016-17, their European adventures were worth around £ 100 million. The club competed in the UEFA Europa League in 2020-21, but went out cheaply to Slavia Prague in the round of 32. 

Leicester City may also win some silverware in 2020-21 although they still have to beat Southampton to reach the FA Cup final, and then it would be Manchester City or Chelsea. The Saints won’t need reminding Brendan Rodgers’ men hit nine against them in 2019-20 and let’s not forget the Foxes have beaten both Chelsea and City this season. After losing four FA Cup finals between 1949 and 1969, perhaps it is their time?

@GameofthePeople

Photo: PA Images