Leicester City start to become a global brand

[davieG]

https://footballeconomyv2.blogspot.com/2020/03/leicester-city-start-to-become-global.html

 

Leading football finance expert, the tireless Swiss Ramble, turns his attention to the 2018/19 accounts of Leicester City. He notes, 'Despite the tragic loss of club chairman, Vichai Srivaddhanaprabha, in a helicopter accident in October 2018, Leicester City have made great progress since King Power International acquired the club in 2010 with “a renewed commitment to investing growing revenues back into the club"'.

The Foxes went from £2m profit before tax to a £20m loss, even though revenue rose £20m (12%) to £178m and profit on player sales was up £20m to £58m, as costs grew £61m, due to investment in the squad and the 'transfer fee' for Brendan Rodgers. After tax, club posted a £17m loss.

 

All three revenue streams were higher, but the majority of the £20m growth came from commercial, which rose £14m (65%) to £36m, due to sponsorship agreements. Broadcasting was up £4m (3%) to £128m, while gate receipts increased £2m (14%) to £15m. [WG: To me, making progress on commercial agreements shows that a club is starting to develop a global profile of the kind that is key to long-terms success].

The £20m loss is clearly not great, but to put this into perspective, half of the 12 Premier League clubs that have so far published 2018/19 accounts have lost money. In fact, Leicester’s loss is the smallest reported, significantly better than Everton and Chelsea (both above £100m).

 

The figures significantly benefited from profit on player sales increasing from £38m to £58m, mainly Riyad Mahrez to Manchester City and Ahmed Musa to Saudi Arabian side Al-Nassr. To date, in 2018/19 only Chelsea have a higher profit than Leicester with £60m. The club made hardly any money from player sales up to 2016, but profits have grown to an average of £45m in the past 3 years. Next year‘s accounts will benefit from Harry Maguire’s £80m sale to Manchester United. [Top clubs generally are relying more on player trading, but they are a volatile income stream.]

 

Following promotion to the Premier League, the Foxes delivered four years of profits, amounting to £137m, before the £20m loss in 2019. This was obviously boosted by the amazing £92m surplus in 2017, which is actually the third highest profit in Premier League history.

 

Since promotion to the Premier League, revenue has grown by an average of nearly 20% every year, adjusting for the extraordinary 2017 figure of £223m, which was inflated by £70m of money from the Champions League. Now £50m higher than 2016, when they were crowned champions. The club's £178m revenue is the 10th highest revenue in England, though the gap to the Big Six is enormous, as Leicester generate less than half of 6th placed Arsenal £395m, while they are £450m below Manchester United £627m.

 

Premier League TV money up £5m to £123m, due to more facility fees (broadcast live three more times) and higher overseas TV rights. They will see further growth in 2019/20, if they finish in top half, as increase in overseas rights increase will be split by league position.

 

The club hope to qualify for Europe, which would have a significant impact on revenue. As an illustration, in 2018/19 the English Champions League representatives received £80-100m TV money, while Chelsea and Arsenal got £41m and £34m respectively for reaching the Europa League final. Of course, they will be well aware of how much can be earned from Europe, as their solitary, albeit very lucrative, season in the Champions League means the Foxes have the 7th highest earnings from Europe of English clubs in last five years with €82m (£70m).

 

Owners King Power pay £16m sponsorship (shirt and stadium naming rights), which has probably driven most of the 2019 growth. Media reports have shirt deal as £4m. New deals in 18/19: Adidas replaced Puma as kit supplier, while Bia Saigon were the new sleeve sponsor.

 

The wage bill rose by £31m (26%) from £119m to £150m, due to further investment in the playing squad, including contract extensions. The wages to turnover ratio increased from 75% to 84%, which means that this is the 2nd highest (worst) in the Premier League of clubs that have reported to date, only “beaten” by Everton 85%. Much higher than 55% in 2015 and well above UEFA’s recommended 70% upper limit.

The club splashed out a club record £119m on player purchases (including Maddison, Pereira, Soyuncu, Benkovic, Ghezzal, Ward and Evans), which is the fourth highest in the Premier League in 2018/19 to date. Have spent over £300m in the last three seasons. The club have really ramped up player investment, spending £405m in the last five years, compared to just £47m in the preceding 5 years. Over the same periods, net spend tripled from £39m to £128m.

 

Gross debt rose by £66m to £91m, including new £55m bank loan with Macquarie Bank and £36m from the owners (up £11m in 2019): £20m loans and £15m finance leases from stadium purchase. Debt was significantly cut in 2014 by converting £103m of shareholder loans into equity. The £91m debt is mid-table in the Premier League, though will further increase to fund their infrastructure projects.

Since King Power acquired Leicester City in August 2010, the owners have put in £190m (£106m share capital and £84m loans), while £107m has been generated from operations.

The club's CEO Susan Whelan said: 'We aspire to challenge the Big Six. We remain a club of fierce ambition: striving to progress every season; giving ourselves every opportunity to compete more consistently at the elite level of the game. We’re very confident that the best is yet to come.'

 

WG: I went to university in Leicester and many of my tutors were keen supporters. I remember going to Filbert Street. I wish the club every success in their bid for Champions League qualification.

[ozleicester]

1 minute ago, davieG said:

We’re very confident that the best is yet to come.

hard to imagine

But then we all love some bsuiness speak

[Chrysalis]

Thanks for the figures, I expect the wages ratio is a key factor in our low net spending on transfers.

[Beechey]

When's the stadium naming rights deal up? Can't imagine £4m is anywhere close to where it should be valued.

[StanSP]

 

 

[fox_up_north]

Just looking a disparity between Champions and Europa League - surely it can't carry on as it is, from a prize money sense? The teams from less prestigious leagues benefit and the mid table teams who nick a place but can Arsenal, Chelsea, Man Utd really say they got something out of being in the smaller competition?

 

I hate the idea of a breakaway superleague but I'm also unsure of what the EL gives? Do Fulham fans hold their run with high regard?

[KIRBYFOX93]

i hope we don't become a global brand. our fan base is garbage enough. can't be doing with more plastics

[Nod.E]

12 minutes ago, KIRBYFOX93 said:

i hope we don't become a global brand. our fan base is garbage enough. can't be doing with more plastics

You better hope we start doing badly then.

[KIRBYFOX93]

Just now, Nod.E said:

You better hope we start doing badly then.

we have fel so far away from where we were. even the away ends in 90% of our games this season have been absolutely dire. the home support feels awkward and cringey now. bring back the proper fans

[Nod.E]

1 minute ago, KIRBYFOX93 said:

we have fel so far away from where we were. even the away ends in 90% of our games this season have been absolutely dire. the home support feels awkward and cringey now. bring back the proper fans

Part and parcel of success. 

If you want 'proper fans', go and support a Championship club.

[KIRBYFOX93]

Just now, Nod.E said:

Part and parcel of success. 

If you want 'proper fans', go and support a Championship club.

its not, look at all the other teams around us who all have decent support. the only other fans i see that are garbage in the league are Watford, Bournemouth and Brighton. 

[Nod.E]

1 minute ago, KIRBYFOX93 said:

its not, look at all the other teams around us who all have decent support. the only other fans i see that are garbage in the league are Watford, Bournemouth and Brighton. 

I'll bow down to your superior knowledge. 

I personally don't sit in different home ends each week, so I can't comment. 

You clearly must do, so I'll take your word for it. 

[KIRBYFOX93]

Just now, Nod.E said:

I'll bow down to your superior knowledge. 

I personally don't sit in different home ends each week, so I can't comment. 

You clearly must do, so I'll take your word for it. 

 superior knowledge.

 

no need to be condescending, i do i go every week have been for about 13 years now and currently im enjoying it the least out of every season i've had excluding the puel era.

 

i think the teams great just the whole *passion* behind the club has disappeared. thats the saddest part 

 

[Scanchez]

3 minutes ago, KIRBYFOX93 said:

its not, look at all the other teams around us who all have decent support. the only other fans i see that are garbage in the league are Watford, Bournemouth and Brighton. 

Maybe don't worry too much about our fans and if they're not good enough for you..

If you think you're a great fan and that's how other Leicester fans should be just be happy that in your eyes, you're a 'good one'.

If you go to a gig I'm guessing you don't look at around at other people in the crowd and think 'They shouldn't be here', 'They don't get it. They're not acting in the right way'.

I couldn't care less about our fans' background stories. If they're at the ground and they're supporting us who honestly gives a fuch? If they sing - even better.

Just because somebody wasn't in the rain away at Grimsby in 1986 doesn't mean they're not a 'proper fan'.

Maybe it's me showing my age but I just find all the 'our fans aren't good enough' stuff a bit weird. I prefer to focus on how the team's doing and not some dude two rows in front of me.

[ajthefox]

In some ways getting to the top and playing in Europe can be problematic because as soon as the money comes in, it gets spent again on upgrades. If you don't then get European football the year following, you're running largely the same expenses with a big whole in the income. 

The wages to turnover ratio concerns me a little. I wonder how much that would come down with the players who we don't really need and want to get rid of but are still paying their wages (Ghezzal, Mendy, Slimani, James, Amartey). 

[Leeds Fox]

16 minutes ago, KIRBYFOX93 said:

 superior knowledge.

 

no need to be condescending, i do i go every week have been for about 13 years now and currently im enjoying it the least out of every season i've had excluding the puel era.

 

i think the teams great just the whole *passion* behind the club has disappeared. thats the saddest part 

 

I used to think the same. Until I was about 23 (knocking on 30 now) I would always join in with the chants. Now, because I can’t get to every game I prefer to watch the football, watch the whole thing. Even when the balls dead it’s interesting to watch the players organise and see who’s doing what. This is after going to a fair few games as a neutral and taking the connection away, watching the whole game and what players are doing off the ball is fascinating and very enjoyable. 
 

Someone who doesn’t sing all game isn’t a worse fan than someone who does. IMO that’s a ridiculous view to have, some people go to watch football to watch football, some go to create an atmosphere and feel part of it. I (along with many others I assume) don’t feel like they need to sing to be part of it as they’ve already invested so much of their time to the club. 
 

This does have an effect of the atmosphere in general, but singing about the size of Cag’s kn0b for example, isn’t going to gee the boys up. I don’t sit there as a mute and do make some noise but some chants I just feel like I’d rather pass and watch the game. No less passion than anyone else, just personal preference.  

[KingsX]

A perspective from a member of the original Cleveland Browns Dawg Pound.  I was an STH, lived for the pre-game with my buds, and we all lived and died with the final score.  We were easily the loudest thing in the NFL and I was sure we were the 12th man and affected those results.

 

Exiting my 20s, the usual priorities came in (house, wife, job).  Then the owner moved the Browns and I was hit in the face with the reality it was never “my” club.  So priorities and perspectives change, it’s normal.  Fair play to those who keep going every week through their adulthood.  But few will see it exactly as they did in their careless youth.

 

I shredded my vocal cords over a few decades of three sports teams and too many concerts.  What they used to be able to keep up for hours, now I’ve got about five minutes worth to parcel out before I’m done.  If and when I make my Bucket List visit to the KP, I’ll sing the Vichai song but other than that, will mostly have to keep my powder dry.  I won’t be apathetic about a minute of it though.

[urban.spaceman]

Epic tweet thread by the brilliant SwissRamble:

 

 

[jayfox26]

4 hours ago, KIRBYFOX93 said:

i hope we don't become a global brand. our fan base is garbage enough. can't be doing with more plastics

Really dont see why people get so arsy about this. As long as we are filling the stadium and we are growing our fan base and worldwide appeal, who cares? I'd much rather be where we are, being successful and 3rd in the prem with a few "plastic fans' that may choose not to sing at games than be Leeds or Millwall who have loads of "proper fans" but are lingering in the championship. If you want us to continue to be successful in the premier league then you have to accept we will get a bigger fan base and not every one them people will go to every game home and away and not every one of them will sing at the games. Just because someone has a season ticket doesn't make them a bigger or better fan than someone who doesn't. The snobbery of some of our fans is staggering! 

[Larry_LCFC]

Still find the need to charge loyal fans 30 quid for an FA Cup match though dont they 

[Fox of WA]

12 hours ago, KIRBYFOX93 said:

i hope we don't become a global brand. our fan base is garbage enough. can't be doing with more plastics

Hopefully this isn’t too antagonistic because I have no desire to squabble about this. I am a Leicester fan who is from the United States, I have never been able to be in the stadium for a live game, I have not yet been able to even see the stadium in person, but I follow every detail that I can online and watch every match on TV or my phone, waking up at 4 AM with my bowl of lucky charms and my LCFC scarf to watch and cheer on the team. If I were physically seated in front of you, would you call my support garbage? I support my local Seattle Sounders too, but my real sporting heart is in Leicester. Don’t be a troll, let people enjoy what they want to enjoy and just be glad our team gets more and more recognition. 

[CanadianFan]

I’ll join the chorus of people who say “just because you don’t get to every game, that doesn’t automatically make you a plastic fan”.  Unlike the previous poster above, I have had the great fortune to go to the stadia (Filbert Street and King Power) many times. By the way, I have also been to Bristol in the rain on Tuesday night, along with many other cities and towns. The end of season Leyton Orient,  FA Cup Harlow and Notts County friendly games being my favourites of all time. 

 

However, these days it is a rare occasion, despite my total devotion to Leicester City. In my case I live in Canada, but I’m sure that many people have other very valid reasons for not watching every game, or not singing through every game. I’m like the bloke above; I now lose my voice after about 15 minutes of singing, but I still love every minute of every game.....(except when Ndidi or Gray line up to take a shot from outside the box....then I just burst out laughing. Mind you, it still isn’t as much fun as watching Schlupp shoot one 30 yards over. Hahaha)

 

Personally, I don’t much like the sight of the Man City tourists taking selfies and looking at their cellphones during games, but I think that we will likely see more and more of it if we manage to sustain ourselves near the top of the Premiership. I’ll console myself with the fact that I’m pleased that people think “Glory Hunting” means supporting Leicester City now, rather than Man United. 

[Sly]

As cringey as it might be, next (this) season would be the best time to do an “All or Nothing” type documentary on the club.

 

If we want to increase the commercial status of the club, we’ve got to push ourselves out of the comfort zone and rely on things that aren’t traditionally “Leicester”. 

 

It would give the rest of the world a look at the world class facilities and get eyes on a club in rebuild mode.

 

My concern would be that this is completely off the table, as the club currently struggles to communicate, so the thought of having cameras undertaking interviews throughout a season, would terrify them. 

 

 

 

 

[Stadt]

59 minutes ago, Sly said:

As cringey as it might be, next (this) season would be the best time to do an “All or Nothing” type documentary on the club.

 

If we want to increase the commercial status of the club, we’ve got to push ourselves out of the comfort zone and rely on things that aren’t traditionally “Leicester”. 

 

It would give the rest of the world a look at the world class facilities and get eyes on a club in rebuild mode.

 

My concern would be that this is completely off the table, as the club currently struggles to communicate, so the thought of having cameras undertaking interviews throughout a season, would terrify them. 

 

 

 

 

It’d also expose the incomplete behind the scenes. No way would they allow that to happen