Financial implications of relegation?

[Corky]

We will take a hit but there will be a tightening of belts and a significant reduction in the wage bill is not a bad thing. Reckon we'd look to create a squad from promising lower league players, loans from top clubs and our academy.

[desertfox2]

4 hours ago, StanSP said:

Absolute pie in the sky thinking but I do wonder how many of these players will be willing to stick around. 

 

Not everyone will actively seek a move, and it's probably in our best interests we have some players that do stick around to shoulder the responsibility to get back up - I'd willingly keep Iversen, Souttar, Pereira, Faes, Mendy, Kristiansen, Vardy, KDH, Daka. 

 

Other players I cba with or you just know they're getting transfers because they're too good for the Championship (Vardy is as well but the sentimental part of me wants him to stay and piss off away crowds each week...). Maddison, Barnes, Iheanacho, Tielemans, Soyuncu, Ndidi all leave to be at better clubs. Vestergaard, Bertrand, Ward, Soumare, Amartey I'm happy to believe they don't exist. 

 

I hope the youth players like Alves, Maswanhise, Madivadua, Brunt, Nelson, Hirst can step up? Maybe 1 or 2 of those prevent us from spending money on a first-team player. What's the situation with Opoku? Can he play for us or does work-permit prevent him from doing so? 

 

 

How many of them will get the same or more money elsewhere?  I'm sure they will be touted about by their agents but I think they all have some serious reality checks coming that they aren't as good as they think they are and need to work harder to have a chance of being successful.  

 

There will be players that unless we have a clause in the contract for relegation will probably prefer to play for more money in the Championship than go somewhere else on less money but a better standard. 

Edited 9 May 2023 by desertfox2
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[turlo]

26 minutes ago, moore_94 said:

The loan from Macquarie for the Fofana money was just over £46m - split over 2 payments that Chelsea still owed to be made in February 23 and August 23 - instead Chelsea will now just pay that straight to the bank

 

Leaving around £35m owed elsewhere

Ok so the most we owe for loans taken out against future TV money is £35 mill? Not so bad if thats the case

[Hitesh]

33 minutes ago, Corky said:

We will take a hit but there will be a tightening of belts and a significant reduction in the wage bill is not a bad thing. Reckon we'd look to create a squad from promising lower league players, loans from top clubs and our academy.

I like this idea but do wonder if we have the structure and culture to make this work. Throughout the first team and down to youth levels there is a distinct lack of style and vision along with fight / bottle which is very much needed in the championship. We will need some strong characters in the dressing room with a good coaching setup. Not sure if Dean Smith et all have that but it's probably a better option than most others on offer

[Paninistickers]

2 hours ago, Chrysalis said:

Of course it was, I expect what is closer to the truth is he couldnt get the family to provide more cash flow, so we had a lock on expenditure.

 

We only spent in Jan after borrowing more money.  Further fuelling the cash flow diagnosis.

 

Next season the parachute money is already tied up, Fofana money tied up.

 

We basically need to fund wages with outgoing fee's and/or further cash injection.

 

I expect we looking at loanees and youth players getting promoted next season.

I think there is a moderate chance he tries to sell, but I think he would struggle to sell, as KP negotiate extremely hard, they would probably want a few hundred million for a championship club with no revenue for the upcoming season.

Totally agree with this. The thing is, KP don't sell its gonna cost them an awful awful lot of money....both in drop in capital value plus ongoing financing a club with basically zero income.  No more Macquarie loans, as we have nothing to secure it against. 

[Babylon]

1 hour ago, turlo said:

According to Swiss Ramble we have 81 mill of external debt. Most of that will be owed to Macquarie bank for loans taken out against guaranteed TV money, although will also include the loans taken out against the Fofana sale money, which was due to be paid back soon when Chelsea made their next stage payments. 

 

 

They are just going off accounts, their first pic doesn’t even include the £200m written off by KP. 
 

Reality is we just don’t know how much exactly we owe as we’ve satisfied and taken out new ones numerous times. 
 

I doubt it even takes into account Fofana stuff.

[Twitcher]

What happened re. the listing of us as being one of the top ten most affluent clubs in Europe? Was that just paper talk/nonsense?

I can't accept covid made such a difference to King Power tgatvit completely changed everything for KP and the club.

I thought we were going to be financially sound, as long as King Power owned us. Clearly not from what people are saying.

[Babylon]

2 hours ago, Chrysalis said:

Of course it was, I expect what is closer to the truth is he couldnt get the family to provide more cash flow, so we had a lock on expenditure.

 

We only spent in Jan after borrowing more money.  Further fuelling the cash flow diagnosis.

 

Next season the parachute money is already tied up, Fofana money tied up.

 

We basically need to fund wages with outgoing fee's and/or further cash injection.

 

I expect we looking at loanees and youth players getting promoted next season.

I think there is a moderate chance he tries to sell, but I think he would struggle to sell, as KP negotiate extremely hard, they would probably want a few hundred million for a championship club with no revenue for the upcoming season.

Parachute payments are £40m+ for next season, on top of probably a turnover generated of £20-£25m. Plus sales of players, Maddison alone I’m sure is going to fetch at the very least £35m, but I’d be expecting more like £40-45m with a few interested clubs. So we’d be looking at an income of around £100m at least. Sell Praet, Castaneda, Vesty, Nacho and there has to be another £40m there at least in income. 
 

We don’t have to pay everything to the bank, it’s staged, it can be refinanced if we need to, KP could step in if they wanted to. We also have cash at hand in the bank and KP had cash facilities available to the club in the last accounts. 
 

So long as we have wage reductions for all players. I see no panic right now.

 

 

[Babylon]

3 minutes ago, Twitcher said:

What happened re. the listing of us as being one of the top ten most affluent clubs in Europe? Was that just paper talk/nonsense?

I can't accept covid made such a difference to King Power tgatvit completely changed everything for KP and the club.

I thought we were going to be financially sound, as long as King Power owned us. Clearly not from what people are saying.

That’s based on premier league income, without it we are just a run of the mill middle road club because of our ground size.

 

KP just wrote off £200m in loans and continue to state they will back the club. Nobody knows what they will do, but there have been no signs of them doing anything but.

[Phenom]

10 hours ago, StevieH said:

Very harsh I'm afraid with what he has done for the club over the last 10 years. Get a grip. Players not giving a shite doesn't help!

You mean his dad?

[jonthefox]

1 hour ago, Corky said:

We will take a hit but there will be a tightening of belts and a significant reduction in the wage bill is not a bad thing. Reckon we'd look to create a squad from promising lower league players, loans from top clubs and our academy.

What , the already relegated one?

[JonnyBoy]

Anyone know roughly the amount of people employed directly by the club excluding contractors? I imagine around 25/35% of these may be made redundant? You would think the players would show fight and aggression for this alone considering it is people’s livelihoods. 

[STUHILL]

'...Having been in the Premier League for so long, they would at least receive some healthy parachute payments if they were to drop down to the Championship: 55 per cent of the value of the broadcasting rights each Premier League club receives in the first year, 45 per cent in the second and 20 per cent by the third.

That currently means Leicester will get more than £100m extra in revenue compared to most of their Championship rivals, should the worst happen.' SSN

 

With player sales and 55% value of the Premier League broadcasting rights next season. We will take a big hit, but hopefully not critical. So important we get it right over the summer though, as if you don't come straight back up in those first two seasons, there is a huge drop off with much less parachute payments and of course, less valuable assets to sell. 

[st albans fox]

30 minutes ago, STUHILL said:

'...Having been in the Premier League for so long, they would at least receive some healthy parachute payments if they were to drop down to the Championship: 55 per cent of the value of the broadcasting rights each Premier League club receives in the first year, 45 per cent in the second and 20 per cent by the third.

That currently means Leicester will get more than £100m extra in revenue compared to most of their Championship rivals, should the worst happen.' SSN

 

With player sales and 55% value of the Premier League broadcasting rights next season. We will take a big hit, but hopefully not critical. So important we get it right over the summer though, as if you don't come straight back up in those first two seasons, there is a huge drop off with much less parachute payments and of course, less valuable assets to sell. 

I don’t understand how 55% of  PL revenue means we have £100m more than championship clubs ??

 

Our tv revenue (inc payment for tv games) last season was £134m 

 

 

[STUHILL]

26 minutes ago, st albans fox said:

I don’t understand how 55% of  PL revenue means we have £100m more than championship clubs ??

 

Our tv revenue (inc payment for tv games) last season was £134m 

 

 

Do we get a Championship TV payment too? I have no idea tbh. 

[Lcfc-1992]

2 minutes ago, STUHILL said:

Do we get a Championship TV payment too? I have no idea tbh. 

Googled it and the first one that comes up says 7-8 million

Edited 9 May 2023 by Lcfc-1992

[Guesty]

29 minutes ago, st albans fox said:

I don’t understand how 55% of  PL revenue means we have £100m more than championship clubs ??

 

Our tv revenue (inc payment for tv games) last season was £134m 

 

 

I think it's badly worded. Maybe he's adding up all 3 years in total if we don't get promoted (55, 45 and 20%) - hence should the worst happen at the end.

[STUHILL]

3 minutes ago, Lcfc-1992 said:

Googled it and the first one that comes up says 7-8 million

Sky have signed a new 5 year deal coming in from 24/25 season which increases payments to championship clubs by 50%

Shame that it isn't coming in this year! 

[Lcfc-1992]

6 minutes ago, STUHILL said:

Sky have signed a new 5 year deal coming in from 24/25 season which increases payments to championship clubs by 50%

Shame that it isn't coming in this year! 

It still might be useful to us 

[stu]

 

[turlo]

1 hour ago, stu said:

 

Summary of what Maquire had to say our the clubs finances was in the Mercury earlier:

 

https://www.leicestermercury.co.uk/sport/football/football-news/leicester-city-would-face-brutal-8427544

 

Maguire told LeicestershireLive: “There are two issues. First of all, have they got players they can sell? There’s a Maddison-shaped solution to Leicester’s financial issues, in my view.

“Secondly, do they have relegation clauses in contracts? They’re usually in the region of 20 to 25 per cent (wage reductions) for clubs at the bottom of the Premier League.

“Some of that will be automatic. But the pool they’ve been fishing in in recent years is such that they would struggle to get relegation clauses, because they’re constantly saying they want to get into European places and such.

“Their income, it was £215m in 2022, realistically, they’d be looking at around £130m to £140m decrease. So it will be brutal. The income’s going to go down by two-thirds. It will certainly be very challenging. There will have to be severe cutbacks.

“Then there’s the human cost which I think does go unreported. When Villa were relegated in 2016, I think there were 100 full-time staff and about 400 part-time staff or matchday staff ended up losing their positions.

“It’s the people who have been working at Leicester for 10, 20, 30 years who I would be most concerned about because without disrespect to the players, they will find somewhere else. It’s more difficult if you’re working in the back office.”

Maguire said: “Your parachute payments, if the worst happens, will be about £42m, of which I think quite a lot of that will be ring-fenced for Macquarie. How much Macquarie are due to be repaid we don’t know, but that’s always a cause for concern.

 

“It’s in Macquarie’s interest for Leicester City to still be around. That’s looking at it from a positive point of view. Macquarie were quite happy to take on Burnley’s parachute payment issues at the start of this season and they’ve come straight back. It’s not a nightmare but it’s going to require a lot of hard work at board level.

“Burnley had a deal originally with MSD Holdings who are one of the other big lenders. They transferred that to Macquarie. The fact that Macquarie were prepared to take on the finances of a Championship club is indicative that they’re reasonably fair."

"It’s not in their interest to call in the loan. It works out as being very expensive. If they go into administration, you’re not guaranteed to get all of your money back and it all starts to get very messy.”

 

 

[foxinsocks]

If you borrow £100,000 you can t repay then you have a problem 

If you borrow £100 million you can t repay then the bank has a problem.

 

In all seriousness... they need to negotiate a solution with the lender.  Buy I think  they will need to ship out a lot of players to get the club to wash its face

[SafewayFox]

Maddison, Barnes, Timmy, Daka, Faes, Kelechi, Ndidi would fetch us a nice chunk - obviously less than if we stayed up BUT also good to clear out some of the clique.

 

Could see Praet and a couple more going.

[gerblod]

23 hours ago, StevieH said:

Very harsh I'm afraid with what he has done for the club over the last 10 years. Get a grip. Players not giving a shite doesn't help!

Get your history right! Vichai was the prime mover in the consolidation of the Club's position in the Premier up until 2018. At the point where Puel was sacked and Rodgers was taken on, City had a damned fine squad - most of whom are still around. Maybe it's worth considering that the players have been inexorably dragged down by Rodgers' flawed management and that Top (and others) by their indecisiveness have allowed this to happen. Vichai, I suspect, would never have let it get to this point.

[gerblod]

32 minutes ago, SafewayFox said:

Maddison, Barnes, Timmy, Daka, Faes, Kelechi, Ndidi would fetch us a nice chunk - obviously less than if we stayed up BUT also good to clear out some of the clique.

 

Could see Praet and a couple more going.

And bang goes the guts of the team.