Leicester's finances relatively good for top flight

The authoritative Swiss Ramble reviews Leicester City’s 2020/21 accounts, when they reduced their pre-tax loss from £67m to £33m, as revenue rose £76m from £150m to £226m, though wages were also up £35m from £157m to £192m.

Although the £33m loss is obviously not great, it’s actually one of the better financial results of the clubs that have reported so far in 2020/21, certainly compared to huge deficits at Chelsea £156m and Tottenham Hotspur £80m, as football counted the cost of the pandemic.

The Foxes have now reported three consecutive years of losses, adding up to £121m, which is in stark contrast to the 4 years of profits after promotion to the Premier League in 2014. That included the amazing £92m surplus in 2017, which is actually the 3rd highest profit in PL history.

Revenue increase helped by on-pitch success, but also recognition of revenue from delayed 2019/20 season. Broadcasting rose £77m (71%) from £108m to £185m, while commercial grew £12m (41%) from £29m to £41m. These offset £13m (96%) reduction in match day to just £552k. Following the growth, the £226m revenue is 7th highest in England, though still a long way below the Big Six, e.g. less than half of Manchester City £570m & Manchester United £494m.

The figures benefited from £44m profit on player sales, almost entirely due to Ben Chilwell’s big money move to Chelsea, though this was down from prior year £63m. Second highest in 2020/21 Premier League to date. The club made very little from player sales up to 2016, but profits have surged since then. Indeed, have the 5th highest profits in the Premier League in the four years up to 2020. However, this year’s gain will be much lower with the highest sale only being Ghezzal to Besiktas £3m.

Leicester earned £14m for reaching the Europa League last 32 (€17m per my model), though this was significantly lower than the Champions League representatives, e.g. Chelsea and Manchester City received €120m for reaching the final (around seven times as much as Leicester). Thanks to their solitary, albeit very lucrative, season in the Champions League exploits in 2017, Leucester have earned just under €100m from Europe in the last five years, the 7th highest in England, though a lot less than Manchester City €422m.

They have announced plans to expand the King Power stadium, increasing the capacity to around 40,000 by adding 8,000 seats to the East Stand. The clubs said this was “a key part of the club’s long-term strategy for growth” with completion targeted for summer 2024.

The wage bill rose £35m (22%) from £157m to £192m, partly due to further investment in the playing squad, including contract extensions, but mostly because 20% of player & management bonuses was deferred from 2019/20. Wages were up from only £57m in first season in Premier League. Following the growth, the £192m wage bill is 7th highest in the Premier League, just behind Spurs £205m. That said, it’s around £150m below the highest-spending clubs to date in 2020/21, namely Manchester City £355m and Chelsea £333m.

As a result of the revenue increase, the wages to turnover ratio decreased (improved) from 105% to 85%, though this is still the worst in Premier League to date in 2020/21 with the next highest being Chelsea 77%. Others are likely to be worse when they publish COVID impacted accounts.

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The Political Economy of Football V2

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