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 18th 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.

Deloitte report confirms the Premier rampage just goes on

AS ANDREA Agnelli departed Juventus, he spoke of the need for a new football system in Europe to prevent one league dominating and sweeping-up all the major talent in the world. He was, of course, referring to the Premier League, and in doing so, he echoed the thoughts of La Liga’s president, Javier Tebas.

Agnelli and Tebas are on opposing sides in the European Super League debate, but clearly people are worried about the power of the Premier League. Interestingly, Agnelli is an advocate of a 12-team Super League which would undoubtedly inflict upon European football the sort of damage he fears from the Premier.

Deloitte’s Football Money League for 2023 (based on 2021-22’s financials) underlines the scale of the Premier League’s hold on modern football. There are 11 Premier clubs in the top 20, with another five in the 10-team “bubbling under” section, which also includes Benfica, Ajax, Sevilla and Villareal.

The latest list also shows that Manchester City are now the most compelling force in world football; they have the strongest squad, the leading manager, global reach and powerful backing. While the nature of their ownership will always draw some criticism, they are not just building a team, they are creating a corporate body that includes a multi-club, multi-country structure.

City’s total revenues amounted to € 731 million, a 13% increase on the previous season. Only two other clubs generated over € 700 million: Real Madrid (€ 713 million) and Liverpool (€ 702 million). Liverpool, who had a spectacular season in 2021-22, saw their income go up by 27% – only Tottenham Hotspur enjoyed better growth (29%), taking their revenues to € 523 million.

  2021Revenues €mMatchdayCommercialBroadcasting
1Manchester City173164373294
2Real Madrid2713.888318307
4Manchester United5688.6126309254
5Paris Saint-Germain6654.2137383139
6Bayern Munich3653.668378207
Source: Deloitte

Six of the top 10 are from the Premier League, with two from Spain and one apiece from France and Germany. It is fair to assume that within the elite, the two Manchester clubs, Liverpool, Real and Barca, Paris Saint-Germain and Bayern Munich will constantly fight for the top six. While Manchester City have jumped to top spot in the past two years, Liverpool have also risen from the lower reaches of the top 10 to the top three. PSG have become much more proficient in their commercial activity to cement their place, while Barcelona have dropped significantly and find themselves in seventh position just two years after topping the table. Bayern Munich, for all their scale, have also fallen, sixth place being their lowest in a decade.

The London trio, Arsenal, Chelsea and Tottenham, all generated healthy increases, but they hover just above mid-table. Since 2014, Chelsea have never gone higher than seventh, never lower than ninth. Tottenham have risen to become a top 10 side, while Arsenal’s slump sent them spinning from top six to below halfway in 2019 to 2021. They edged back into the top 10 in 2021-22.

Deloitte have tried to emphasise the contribution made by clubs with women’s sides, but the figures reveal the challenge of driving growth and popularity of this segment of the game. The Money League’s 20 clubs generated an average of € 2.4 million per women’s team, with Barcelona earning € 7.7 million. Deloitte highlighted that there is great disparity in the domestic leagues in Europe; in Spain, Barca’s revenues dwarfed most of the league, notably Atlético Madrid, whose income totalled just € 0.1 million. Likewise, in England, Leicester City’s € 0.4 million is but a fraction of Manchester United’s € 6 million.

Deloitte, in summing up the women’s game, called for better governance to allow all teams to be more competitive. Women’s football has become as polarised as the men’s game in a much shorter timeframe, but the report says: “The answer is not simply to follow the template of the male equivalent.”

While the concept of a European Super League may have been parked for the time being, it hasn’t gone away. It is worth noting that the dozen clubs who initially announced their involvement are all in Deloitte’s top 16. The top 20 generated € 9.2 billion in 2021-22, the 12 rebels contributed just under 70%. The potential damage is very real.

Meanwhile, the Premier League’s growth rate could introduce more clubs to the top 20 – Fulham, Aston Villa and Brighton could all find themselves knocking on the door in 12 months’ time. And of those who made the 20 this time, Newcastle United, one of the success stories of the current campaign, may make a significant jump in 2022-23, and Manchester United’s position may also strengthen.