The delicate picture concerning Leicester’s finances has been laid bare after it emerged the club lost £89.7m for the 2022-23 season, underlining the cost of a shock relegation.
Leicester’s attempt to bridge the gap to the Premier League’s elite saw them inflate their wage bill to one of the biggest outside the top six, presenting severe challenges to comply with financial regulations.
Last month Leicester issued legal proceedings against the Premier League and English Football League after the former charged the club with allegedly breaking profit and sustainability rules (PSR) for the cycle ending 2022-23. The latter placed them under a transfer embargo for allegedly breaching financial regulations relating to the upper-loss threshold in their PSR calculations.
Leicester, third in the Championship and vying for an immediate return to the top flight, are facing a points deduction regardless of which division they start next season. The embargo prevents from registering new players or extending the contracts of existing players without consent from the EFL.
A statement accompanying the accounts released on Tuesday said: “The club is determined to ensure that any charges against it are properly and proportionately resolved, in accordance with the applicable rules, by the right bodies, and at the right time.”
Leicester point towards the absence of European football, a significant drop-off of about £30m in Premier League revenue after finishing 18th and the sacking of Brendan Rodgers as key factors behind the loss. Leicester’s run to the Europa Conference League semi-finals in 2021-22 was worth about £22m.
The statement on Tuesday acknowledged that the investment in the squad “was, for the first time, not matched by on-pitch results”. Leicester lost a record £92.5m in 2021-22, when they finished eighth.
The latest numbers are particularly alarming given they include the £75m of profit generated from the high-profile sales of James Maddison and Wesley Fofana. Maddison was sold for £40m to Tottenham two days before the 30 June accounts cut-off last year. Fofana joined Chelsea the previous summer in a deal worth up to £75m.
Leicester need to sell players before June this year to ease PSR concerns for the year-end 2023-24, with Kiernan Dewsbury-Hall, Mads Hermansen and Wout Faes among their biggest assets. High-earners Jamie Vardy, Wilfred Ndidi, Kelechi Iheanacho and Jannik Vestergaard are out of contract this summer.
Relegation has also prompted Leicester to delay plans to expand the King Power Stadium by 8,000 seats, to a capacity of 40,000. The club received planning permission to also build a new hotel and business centre, events arena and a flagship fan store last year. The club is fully committed to the project but ideally want to undertake the expansion when the club are back in the top flight.
Leicester’s chairman, Aiyawatt Srivaddhanaprabha, moved to reassure supporters about the financial future of the club, owned by the Thai duty-free retailer King Power International, in his programme notes for the win over Norwich on Monday.
Srivaddhanaprabha assumed control of the club following the death of his father, Vichai, in 2018. “I want fans to be assured that the club’s financial position is entirely secure and that my personal support for Leicester City, and that of King Power, remains as strong as it has ever been,” Srivaddhanaprabha said.
Susan Whelan, Leicester’s chief executive, acknowledged the damaging consequences of relegation after top-flight finishes of fifth, fifth and eighth in the three preceding seasons. Leicester also won the FA Cup in 2021. “After a sustained period of growth and success for the club during the last decade, the 2022-23 season was a significant setback, the consequences of which will be felt for some time,” Whelan said. “We must now focus on rebuilding and seeking to return to and re-establishing ourselves in the Premier League.”
