Leicester City’s financial troubles have worsened, with losses of £89.7 million for the 2022/23 season. The club is already facing pressure to avoid harsher sanctions next year. Following their relegation from the Premier League last season, Leicester are raising new concerns about their capacity to comply with Profitability and Sustainability Rules [PSR] after suffering considerable losses for the second consecutive fiscal year.
Last year, Leicester recorded unprecedented losses of £92.5 million, and the most recent set of finances was disclosed shortly after the Premier League charged them with a breach of PSR. With top-flight clubs limited to losses of £105 million over a rolling three-year period, Leicester will undoubtedly need to generate funds through player sales by June 30 to avoid violating for the 23/24 season. Leicester have already been placed under a transfer embargo by the EFL, raising suspicions that they are already in breach for this year in the Championship.
Leicester, who are now third in the Championship, might face a points deduction next season, regardless of the level they play in, following last month’s charge. The club’s owners, King Power, believe they are firmly committed to Leicester and that their financial situation is “secure”. This year’s reports are ascribed to numerous circumstances, including relegation, the “unplanned expenditure” of sacking £8 million-a-year manager Brendan Rodgers, and an estimated £30 million shortfall from finishing 18th in the table, which was lower than expected. Crucially, Leicester claim that last season they had the highest combined personnel costs and player amortisation in the Premier League outside of the traditional ‘Big-Six’.
The accounts reflect the sales of Wesley Fofana (£70 million to Chelsea) and James Maddison (£40 million to Tottenham). Maddison, an England international, sold on June 28 of last year to be included in this reporting period. Leicester have stated that the numbers are not a definitive PSR figure, but rather a calculation, and that they are still in discussions with the Premier League and EFL. Permitted add-backs, or costs recognized to be in the club’s general interest, include expenditures on women’s football, community development, and the academy. Following relegation, Leicester released several high-earners, while the remaining players received wage cuts ranging from 35 to 50 percent.
The club’s chairman, Aiyawatt Srivaddhanaprabha, stated, “I want fans to be assured that the club’s financial position is entirely secure and that my personal support for Leicester City, as well as that of King Power, remains as strong as it has ever been.” Srivaddhanaprabha has also converted £194 million in loans and interest owing to King Power into shares, relieving Leicester of significant debt to its parent business. Championship clubs have demanded sanctions for Leicester. However, these latest data raise questions about the club’s capacity to comply with laws both this fiscal year and the next. The overall losses over the last three years was £215.3 million.
The Football League’s financial reporting unit has already expressed reservations about the material presented last year for this season. Though the EFL failed to put a business plan on the club, it has now imposed a player registration restriction. Many Championship clubs are calling for punishment, claiming Leicester’s promotion bid was launched with an unfair sporting edge. The Premier League charged Leicester with a breach of PSR on March 21, and they have stated that their defence will be based on mitigating circumstances.
With top sports lawyer Nick De Marco KC on board, the club is anticipated to claim that the £89.7 million deficit before and after tax was caused by a unique set of circumstances. They believe that last season’s finish was “a disappointing and unanticipated decline in sporting achievement” after finishing fifth [twice] and eighth in the preceding three seasons. Susan Whelan, Leicester’s chief executive, stated: “After a sustained period of growth and success for the club over the last decade, the 2022/23 season was a significant setback, the consequences of which will be felt for some time.”
“We must now focus on rebuilding and returning to the Premier League. Our aims and budgets for 2022/23 were quite acceptable, given that we had finished fifth, sixth, and eighth in the Premier League the previous three seasons.
