Leicester to reveal estimated annual losses of £119.5MILLION - the highest in the Premier League

[harpendenfox]

This may have been posted earlier in the thread. Our annual results to May 21 were released in February of this year. Presumably our results to May 22 will be released in Feb 23. Fofana money will be in this year's accounts which would not be released until February 2024. I doubt we will make a financial announcement for six months 

[st albans fox]

12 minutes ago, harpendenfox said:

This may have been posted earlier in the thread. Our annual results to May 21 were released in February of this year. Presumably our results to May 22 will be released in Feb 23. Fofana money will be in this year's accounts which would not be released until February 2024. I doubt we will make a financial announcement for six months 

You would think that this is on the back of what has gone on this summer. A sports editor somewhere has asked his people to do some digging and forecasts. The club saying that they are skint has resonated.  There could be some erroneous assumptions in these numbers. One thing is for certain - it won’t have leaked from inside the club.  the accounts will be published as per usual early in the following year. 

[splinterdream]

3 hours ago, volpeazzurro said:

In Iverson we had a player, albeit in the Championship, had just played a full season and gained experience. He'd won player of the year and players player. He had a full pre-season with us.

 

Ward hardly made an appearance last or previous seasons and was injured pre-season. Ward gets thrown in on the first day, go figure. 

Spot on, ward look like he has no confidence where as iverson has been in the thick of it, another nonsense decision 

[Ian S]

15 hours ago, 5waller5 said:

FFS do you never get bored of stating your view on Amartey in every single thread?? 

Careful he will complain you are an aggressive poster like he did with myself when I dared challenge a post.

[filbertway]

13 hours ago, Larry_LCFC said:

Scrap this pointless stadium expansion, music arena and all the other crap that is proposed and focus on actually sorting the team out. No point adding another 10000 seats for the Championship is there.

Jesus christ

 

The team is fine and more than good enough to be competing in the top half. The "expansion, music arena and all other crap" is literally the only thing that will help the club compete in the top half in the long term.

 

Reading short-sighted opinions like this actually hurts my brain.

[Terraloon]

3 hours ago, FoxesTez said:

We've been treading a dangerous path for a long time. Paying wages as if we were a Top 6 team without the commercial revenues to match it. Add in the fact we now own the Women's team, we have the costs of running both Belvoir Drive and the ridiculous costs of running Seagrave - both of which offer no return. The warning signs have been there in the last few sets of accounts, some truly horrible underlying operational results masked by significant profits on player trading.

 

Missing out on the Champions League in the fashion we did (twice) was so so costly. We need a huge reset of the wage structure and I imagine there are some tricky times ahead, especially with the number of players out of contract at the end of this season and the threat of relegation. We are not far from all of the hard work in establishing ourselves in the Premier League being undone in my opinion. 

This is very much the point.

 

People need to ignore did the owners, could the owners have put in money this is all about revenue against expenditure.

 

You cant look at the supposed big six when it comes to what they spend because they generate significantly more indeed Chelsea , Man City and Utd are paid more for shirt sleeve sponsorship than most clubs in the PL receive for all their sponsorship deals. 
 

The 21/22 accounts were always going to be showing a significant loss the simple fact was no real player trading profit hurts the bottom line far more than other clubs who don’t have the % wage spend nor was their FA cup prise money and of course the PL finishing position will have reduced TV money .

The 22/23 numbers will be helped by WF fee although the numbers once you factor in the % due to others and the balance still to be amortised will not be far north of £35 million but when you realise that there isn’t EL monies then unless there is a fee or two generated I. January then my guess is at best it’s going to be another loss in excess of £50 million

[LCFC_Iceland]

And people wonder why the press continues to write clickbait doomsday articles but here we are…

[Ely fox]

😯 😯 

[jayfox26]

4 hours ago, Babylon said:

Two totally different sets of accounts, the Fofana fee will go in the next set.

 

But yes, they are being misleading. 

Yeh thats what I thought. So we have lost £119m but that doesn't include the Fofana money like the article seems to suggest 

[Spudulike]

Seems odd that Top would write in the programme about the club being totally committed to the stadium development and hope to have some good news soon. Doesn't sound like a club in financial difficulties. 

[FoxinNotts]

If the debt is serviceable, then regardless of it's size, we are not in financial difficulties.

[Reg Vardy]

If you pay an average of £75k per week and you have 27 players....you do the maths.....Vardy alone £6,25m per annum.....new training ground, new stand, air travel on its backside for three years and likely to carry on, its no surprise.....likewise gate receipts lets go 32,000 @ £40 £1.28m a FORTNIGHT....that said dozens of clubs are in a similar boat, unless owned by a country....gonna be a long season....

[cruzFOX]

I feel Top made the statement in the program as there was growing Unrest (rightly so) regarding the uncertainty of our league position/ Brendan’s comments, chelsea taking foffana and the media sharing their opinions. An official declaration on what is really going on behind the scenes at the club was needed and so Top spoke. He did mention that ‘a’ option that is open to him is bringing in outside investment. Whether this means he relinquished mum’s some controlling share is open to debate but I’m sure Top is mulling this over. It’s now obvious the club needs to generate far more revenue to compete going forwards. More sponsorship deals, advertising, merchandising, ticket sales  etc etc whatever it takes.

We won’t see more money to buy players until the next transfer window. Will Rogers still be here by then to spend it? 
certainly our new head of recruitment will be

[eblair]

As simple calc. Looking at financial statements if we look split difference of last two years (covid meant weird timing differences on revenue)

 

Club average 75m gross moss. Assume last year we had virtually no significant income from sales. We sold no one. Add on another 12m on interest costs 

 

Look another 87m without including any new amortisation costs and wages. 120m seems pretty poor management though

 

Think we were proper stupid as fans not to have raised more concerns at astronomical losses club running at

[Babylon]

1 hour ago, Spudulike said:

Seems odd that Top would write in the programme about the club being totally committed to the stadium development and hope to have some good news soon. Doesn't sound like a club in financial difficulties. 

We can lose reasonably whatever we want if inside ffp. So long as KP cover the losses and pay for the infrastructure etc.

 

That is the great unknown, but they’ve continually supported the club and have said nothing but they are committed. 

[CosbehFox]

Surely selling Belvoir Drive is a very simple solution to making some money back or is there a planning covenant on it? 

[st albans fox]

1 minute ago, Cardiff_Fox said:

Surely selling Belvoir Drive is a very simple solution to making some money back or is there a planning covenant on it? 

 Chelsea women train at cobham, arsenal ladies train at london Conley 

 

we should definitely be bringing it all under one umbrella to save costs 

[drew]

If you look at the potential fine PSG are going to get if they fail to balance the books this next financial period I can see why its a huge issue for LCFC.

 

 

[18to18]

5 hours ago, eblair said:

Look another 87m without including any new amortisation costs and wages. 120m seems pretty poor management though

 

I still don't understand how we're at nearly £200 million in yearly wages.

[Golden Fox]

You can download the report the Mail article is based on for free at offthepitch.com.

 

Is is actually an estimate of the year to May 2022 by extrapolating the May 2021 accounts and not actually for the 2021/22 season.

 

It is based on:

A loss for 2021 of £33m. (But if you adjust for timings of income relating to Covid, would get you to £40.3m).

A reduction in turnover of £29.5m due to a cut in broadcasting revenue.

An increase in wages of £22m due to player additions and extensions

A decrease in transfer fees received to only £5.4m - (lowest in previous 5 years had been £38m). (Not stated, but this is a net movement from py of around £29m)

An increase in interest payable of £2.1m.

So adding these up, you can see how the report gets to the £119.5m.

 

However, it is clearly something produced as a desktop exercise by someone without access to any inside information - yes there has been some logic applied, but to turn this into the language in the article that "The Foxes are set to announce a £119.5m loss" is factually incorrect, and the press should not be allowed to get away with headlines that are clearly not true.  

 

However, the information used to pull together the report is all based on estimates, so can be sense-checked:

 

Turnover

8th place in 2022 got us £134.1m. 5th place in 2021 got us £141.3m. That is a reduction of £7.2m.

The FBS income is not clearly visible. This was actually signed towards the end of May 2021. I think it must be apportioned according to the periods worn on the shirts, so I think this would be a significant uplift - potentially £10-£20m a year at least, but might be more?

The 2022 run to European semi final is something in the region of £20m, compared to £13.6m in 2021.

Therefore, I think turnover will have increased - not decreased by £29.5m

 

Wages

The report is based on wages of £193m increasing to £213m due to new contracts + extensions.

Don't have much info on this, but 2021 stated that there were management bonuses paid in that year relating to the previous year due to the extension of the season due to Covid.

This does not appear to have been a factor in the report, so might not be that much, although I wouldn't feel the 10% increase is too far out.

(Bear in mind, this is total wages for the club, including management, staff, coaches etc & pensions, NI etc, and not just player wages). 

 

Transfers

We had a net outflow in 2021 of £28m. Based on reported figures for 2022, this is a net outflow of £57m, so £29m worse.

It does make you want to cry when you realise this massive sum in the context of our finances was only actually Daka, Soumare & Vestergaard.

 

Interest

Given we are funding Seagrave through loans, the increase in interest feels a bit light, but wouldn't disagree completely.

 

Overall view

Our loss of £119.5m is purely a desktop estimate by someone with no inside knowledge (and who lists a player sale as Chezzel) 

A lot of the high level numbers don't seem unreasonable, apart from turnover, which I really can't understand. I wouldn't have thought an increase of £10m to £20m from 2021 would be unreasonable depending on how the FBS income is reported.

That would take our loss to something in the region of £70m-£80m for the year. Not a great result, but not difficult to comprehend with a net transfer outflow of £57m and certainly a far cry from the headlines of being close to the biggest loss in Premier League history. 

 

Are we in trouble?

- If you divorce the transfer fees from the rest of the business, then we may be making £20m-£30m loss. With wages estimated to be at £213m - considering they were at £112m when we won the Premier League, its not difficult to reach the conclusion that we need to shed salary. Schmeichel makes a lot of sense from this perspective. Other sources of income are also needed, and the replacing of King Power by FBS also makes sense.

- If you bring transfer fees into it, the big sale a year has kept us financially healthy. (£273m profit from 2016 to 2021). The estimated losses are simply a result of not selling anyone, but buying 3 players for a combined £60m as a gamble to break into the top 4. That gamble didn't pay off, but we can get back to an even keel by a couple of big sales. Fofana makes a lot of sense from this perspective, and will almost single handedly cover the revised estimate of the loss.

 

So, no I don't think we are in trouble. Yes, we overstretched after winning the FA Cup, and to restore balance needed to cut wages and recoup some transfer fees - which is exactly what we did this Summer. To quote Top from Thursday's programme: "Leicester City's overall financial position is entirely secure" and "making difficult short term decisions that protect the Club's long term interests".  These comments tie in with the analysis and give me comfort on the financial position, and also that the headline in the Daily Mail is absolute nonsense.

[BluethroughtheMiddle]

How much did the new training ground cost again?

[Golden Fox]

1 minute ago, BluethroughtheMiddle said:

How much did the new training ground cost again?

Estimates are around £100m.

 

This won't show as a £100m cost in the 2022 accounts though.

 

It will be financed by a loan, so will result in increase interest payments. (Which probably started throughout the build so were likely in 2021).

Then the cost will be depreciated over the number of years each bit of the complex is expected to be used. (Land probably not depreciated, buildings probably over 50 years, fixtures and fittings over 10 years etc.) so it will feed into the accounts over a long period. Although a big outlay from a cash point of view, its not actually a massive spend from a financial accounts point of view. Not saying it can be discounted from the analysis, but in terms of £200m turnover and £200m wages a year, there is so much money sloshing around Premier League football, its not as big a factor as it would seem. 

[STUHILL]

9 minutes ago, BluethroughtheMiddle said:

How much did the new training ground cost again?

x1

[Stadt]

Excellent work from Golden Fox.

 

I tried it download that report earlier but it wasn’t working.

[Nicolo Barella]

1 hour ago, Golden Fox said:

You can download the report the Mail article is based on for free at offthepitch.com.

 

Is is actually an estimate of the year to May 2022 by extrapolating the May 2021 accounts and not actually for the 2021/22 season.

 

It is based on:

A loss for 2021 of £33m. (But if you adjust for timings of income relating to Covid, would get you to £40.3m).

A reduction in turnover of £29.5m due to a cut in broadcasting revenue.

An increase in wages of £22m due to player additions and extensions

A decrease in transfer fees received to only £5.4m - (lowest in previous 5 years had been £38m). (Not stated, but this is a net movement from py of around £29m)

An increase in interest payable of £2.1m.

So adding these up, you can see how the report gets to the £119.5m.

 

However, it is clearly something produced as a desktop exercise by someone without access to any inside information - yes there has been some logic applied, but to turn this into the language in the article that "The Foxes are set to announce a £119.5m loss" is factually incorrect, and the press should not be allowed to get away with headlines that are clearly not true.  

 

However, the information used to pull together the report is all based on estimates, so can be sense-checked:

 

Turnover

8th place in 2022 got us £134.1m. 5th place in 2021 got us £141.3m. That is a reduction of £7.2m.

The FBS income is not clearly visible. This was actually signed towards the end of May 2021. I think it must be apportioned according to the periods worn on the shirts, so I think this would be a significant uplift - potentially £10-£20m a year at least, but might be more?

The 2022 run to European semi final is something in the region of £20m, compared to £13.6m in 2021.

Therefore, I think turnover will have increased - not decreased by £29.5m

 

Wages

The report is based on wages of £193m increasing to £213m due to new contracts + extensions.

Don't have much info on this, but 2021 stated that there were management bonuses paid in that year relating to the previous year due to the extension of the season due to Covid.

This does not appear to have been a factor in the report, so might not be that much, although I wouldn't feel the 10% increase is too far out.

(Bear in mind, this is total wages for the club, including management, staff, coaches etc & pensions, NI etc, and not just player wages). 

 

Transfers

We had a net outflow in 2021 of £28m. Based on reported figures for 2022, this is a net outflow of £57m, so £29m worse.

It does make you want to cry when you realise this massive sum in the context of our finances was only actually Daka, Soumare & Vestergaard.

 

Interest

Given we are funding Seagrave through loans, the increase in interest feels a bit light, but wouldn't disagree completely.

 

Overall view

Our loss of £119.5m is purely a desktop estimate by someone with no inside knowledge (and who lists a player sale as Chezzel) 

A lot of the high level numbers don't seem unreasonable, apart from turnover, which I really can't understand. I wouldn't have thought an increase of £10m to £20m from 2021 would be unreasonable depending on how the FBS income is reported.

That would take our loss to something in the region of £70m-£80m for the year. Not a great result, but not difficult to comprehend with a net transfer outflow of £57m and certainly a far cry from the headlines of being close to the biggest loss in Premier League history. 

 

Are we in trouble?

- If you divorce the transfer fees from the rest of the business, then we may be making £20m-£30m loss. With wages estimated to be at £213m - considering they were at £112m when we won the Premier League, its not difficult to reach the conclusion that we need to shed salary. Schmeichel makes a lot of sense from this perspective. Other sources of income are also needed, and the replacing of King Power by FBS also makes sense.

- If you bring transfer fees into it, the big sale a year has kept us financially healthy. (£273m profit from 2016 to 2021). The estimated losses are simply a result of not selling anyone, but buying 3 players for a combined £60m as a gamble to break into the top 4. That gamble didn't pay off, but we can get back to an even keel by a couple of big sales. Fofana makes a lot of sense from this perspective, and will almost single handedly cover the revised estimate of the loss.

 

So, no I don't think we are in trouble. Yes, we overstretched after winning the FA Cup, and to restore balance needed to cut wages and recoup some transfer fees - which is exactly what we did this Summer. To quote Top from Thursday's programme: "Leicester City's overall financial position is entirely secure" and "making difficult short term decisions that protect the Club's long term interests".  These comments tie in with the analysis and give me comfort on the financial position, and also that the headline in the Daily Mail is absolute nonsense.

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