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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