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.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to depl

The Political Economy of Football V2

Search This Blog