Financial implications of relegation?

[mikey_b]

9 minutes ago, gerblod said:

And bang goes the guts of the team.

every cloud and all that

[richardsfoxes]

13 minutes ago, gerblod said:

And bang goes the guts of the team.

This team doesn't have guts.

[gerblod]

Just now, richardsfoxes said:

This team doesn't have guts.

Oh, I see the play on words. Clever! It's easy to accuse the players of being gutless. The truth is far more complex.

[sacreblueits442]

On 09/05/2023 at 09:00, davieG said:

Apparently you don't get that if you get straight back up I read recently?

...I  find that hard to believe!!!

Is it not a percentage of money we have earned (being 55% for the first year) regarding our final position, of which we are entitled to?

[davieG]

24 minutes ago, sacreblueits442 said:

...I  find that hard to believe!!!

Is it not a percentage of money we have earned (being 55% for the first year) regarding our final position, of which we are entitled to?

You may be right that's why I said I'd read it, the internet is not renowned for it's accuracy.

[SafewayFox]

1 hour ago, gerblod said:

And bang goes the guts of the team.

You could argue they’re a gutless bunch anyway.

 

All Dad jokes aside, financially we’re in a bad place so what do you think we’ll do mate?

 

Shrew signings, loans and a couple promoted from the academy is a necessity.

[Rusko187]

2 hours 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.

Probably add Ricardo into that mix as well. Unless some of these players are prepared to take a drop in wages, we simply cannot afford to keep them about. 

[foxfanazer]

17 minutes ago, Rusko187 said:

Probably add Ricardo into that mix as well. Unless some of these players are prepared to take a drop in wages, we simply cannot afford to keep them about. 

What a sorry state of affairs. We can't afford to pay the shit players that have put us in the mess. I hope everyone involved is utterly ashamed. Of course they won't be 

[Grebfromgrebland]

We'll be ok if we sell Madison and Barnes but as far as the quality of the management team and playing squad goes it is most likely going to be bleak. 

[Babylon]

13 hours 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 

 

 

It's talking about over the course of the parachute payments. 55%, 45% and then about 15% I think... First two seasons isn't too bad, the third season is the real kicker, but by then all the big contracts will mostly be gone anyway. 

[foxfanazer]

1 minute ago, Grebfromgrebland said:

We'll be ok if we sell Madison and Barnes but as far as the quality of the management team and playing squad goes it is most likely going to be bleak. 

The thought of a rebuild and a new process doesn't worry me. It's the decision makers at the club and the people entrusted with recruitment that scares me

[Foxy-Lady]

21 minutes ago, Rusko187 said:

Probably add Ricardo into that mix as well. Unless some of these players are prepared to take a drop in wages, we simply cannot afford to keep them about. 

Might need be such a bad thing.....clear out all the over paid prima-donnas who dont want to play unless they get paid money they huge amounts of money their performances dont deserve and get in some hungrier players who would actually be thankful for the  opportunity to establish themselves and are prepared to earn their wages and play for the badge...! 

[davieG]

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

 

Leicester City would face 'brutal' impact and severe cutbacks as relegation finances explained

ByJordan Blackwell
07:00, 10 MAY 2023

Leicester City must be braced for a “brutal” dent to their finances if they are relegated to the Championship, an expert has warned.

City are now one of the favourites for the drop after a disastrous Bank Holiday Monday in which they were dismantled by Fulham before Everton and Nottingham Forest leaped above them in the table.

In the event of relegation, football finance lecturer and host of the Price of Football podcast Kieran Maguire predicts City would face severe cutbacks and significant staff redundancies, with player sales required to fill a heavy drop in revenue. However, Maguire does not believe the club’s outstanding debts would be of a major concern to their future.

 

Without Premier League TV money, City’s income could drop by two-thirds, and so immediately the club would have to reduce their wage bill and generate cash through player sales. The latter should not be an issue, with players like James Maddison and Harvey Barnes under contract and valuable in the market.

But cutting wages may be tough. City spent £182million on staff wages in 2021-22, the most recent accounts available show, which ranked as the seventh-highest figure in the Premier League. Problems will arise if City do not have relegation reduction clauses set into players’ contracts, and if they then struggle to find buyers in the transfer window.

A restructure of the club to cope with the loss of revenue is also likely to result in job losses behind the scenes, Maguire predicts, pointing out that 500 staff members were made redundant at Aston Villa when they were relegated in 2016, accounting for around a third of their workforce.

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.”

To help finance their spending in the Premier League, City have taken out loans with Australian bank Macquarie over the past few years, securing them against Premier League TV payments, and in the event of relegation, parachute payments.

City have at least £70m owed to Macquarie, but Maguire does not believe it is in the bank’s interest to call that in and put the club’s future at risk. In the event of administration, they could miss out on some of the money they’re owed.

Burnley, who have bounced back immediately to the Premier League under Vincent Kompany following relegation last season, also have loans with Macquarie.

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.”

[foxfanazer]

Time to find the next Danny Drinkwater's and Wes Morgan's etc

[Spudulike]

35 minutes ago, davieG said:

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

 

Leicester City would face 'brutal' impact and severe cutbacks as relegation finances explained

ByJordan Blackwell
07:00, 10 MAY 2023

Leicester City must be braced for a “brutal” dent to their finances if they are relegated to the Championship, an expert has warned.

City are now one of the favourites for the drop after a disastrous Bank Holiday Monday in which they were dismantled by Fulham before Everton and Nottingham Forest leaped above them in the table.

In the event of relegation, football finance lecturer and host of the Price of Football podcast Kieran Maguire predicts City would face severe cutbacks and significant staff redundancies, with player sales required to fill a heavy drop in revenue. However, Maguire does not believe the club’s outstanding debts would be of a major concern to their future.

 

Without Premier League TV money, City’s income could drop by two-thirds, and so immediately the club would have to reduce their wage bill and generate cash through player sales. The latter should not be an issue, with players like James Maddison and Harvey Barnes under contract and valuable in the market.

But cutting wages may be tough. City spent £182million on staff wages in 2021-22, the most recent accounts available show, which ranked as the seventh-highest figure in the Premier League. Problems will arise if City do not have relegation reduction clauses set into players’ contracts, and if they then struggle to find buyers in the transfer window.

A restructure of the club to cope with the loss of revenue is also likely to result in job losses behind the scenes, Maguire predicts, pointing out that 500 staff members were made redundant at Aston Villa when they were relegated in 2016, accounting for around a third of their workforce.

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.”

To help finance their spending in the Premier League, City have taken out loans with Australian bank Macquarie over the past few years, securing them against Premier League TV payments, and in the event of relegation, parachute payments.

City have at least £70m owed to Macquarie, but Maguire does not believe it is in the bank’s interest to call that in and put the club’s future at risk. In the event of administration, they could miss out on some of the money they’re owed.

Burnley, who have bounced back immediately to the Premier League under Vincent Kompany following relegation last season, also have loans with Macquarie.

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.”

No mention of the Fofana money? 

[Foxy-Lady]

A Question for the accounts among us....

 

 

According to the latest financial accounts, we had an operating loss of (£93m) last season and a loss of (£31m) the season before meaning consolidated operating losses of (£124m) over the past 2 seasons.

 

Part of the The income from the Fofana sale (£45m/) is deferred into this seasons accounts which provides some relief but as Turnover is very unlikely to have signficantly increased and Costs are unlikely to have significantly decreased, its quite likely that we will be looking at yet another sizeable operating loss again this year.

My understanding was that King Power had written off our debt to them but i dont think this includes Operating losses?

 

So my question is....how come no-one seems to be mentioning that we are carrying significant operating losses REGARDLESS of the outcome this season (ie PL or championship?)?

If we are relegated this season the situation will obviously become exponentially worse......but we are pretty much in the s*** either way if we are continuing to make such huge operating losses even before we get relegated and lose significant amounts of revenue from TV/Sponsorship deals.

 

Am i missing something here...?!?

 

(PS   Incidentally, King Power writing off our debt to them actually means it is now far easier for them to SELL the club to interested parties so im not totally convinced there wasn't an ulterior motive to the timing of this "gesture"......just a thought!) 

[Guest Mee-9]

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

[foxfanazer]

4 minutes ago, Mee-9 said:

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

Milan Mandaric?

[Foxy-Lady]

17 minutes ago, Mee-9 said:

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

They would maybe see us as a bargain if they want to sell our assets or leverage our assets as part of a debt to equity purchase agreement (ie The glazer family!) 

[st albans fox]

1 hour ago, Mee-9 said:

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

do the club own the ground?  I thought it was KP 

Our value as a purchase depends on the size of bath that king power are prepared to take 

 

the attendance of many family members at the last two home fixtures tells me that they want to look like they’re committed to the club 

 

I can’t see a sale in June but if we fail to bounce back then maybe that bath will be taken next summer 

[Babylon]

1 hour ago, Foxy-Lady said:

A Question for the accounts among us....

 

 

According to the latest financial accounts, we had an operating loss of (£93m) last season and a loss of (£31m) the season before meaning consolidated operating losses of (£124m) over the past 2 seasons.

 

Part of the The income from the Fofana sale (£45m/) is deferred into this seasons accounts which provides some relief but as Turnover is very unlikely to have signficantly increased and Costs are unlikely to have significantly decreased, its quite likely that we will be looking at yet another sizeable operating loss again this year.

My understanding was that King Power had written off our debt to them but i dont think this includes Operating losses?

 

So my question is....how come no-one seems to be mentioning that we are carrying significant operating losses REGARDLESS of the outcome this season (ie PL or championship?)?

If we are relegated this season the situation will obviously become exponentially worse......but we are pretty much in the s*** either way if we are continuing to make such huge operating losses even before we get relegated and lose significant amounts of revenue from TV/Sponsorship deals.

 

Am i missing something here...?!?

 

(PS   Incidentally, King Power writing off our debt to them actually means it is now far easier for them to SELL the club to interested parties so im not totally convinced there wasn't an ulterior motive to the timing of this "gesture"......just a thought!) 

Amortisation of players is large chunk of the losses I think (isn't it £70m+), with losing so many players a huge amount drops off the books. Tielemans alone would be £10m off the books each year, plus wages, let's say £5m. KP could forget interest charges on everything, there is another £5m+ gone if they decided to. 

 

So there's £20m off the losses, before we get into all the other players going, their amortisation and wages, the wage reductions of everyone, redundancies and cut backs.

 

A huge amount of work to do.

Edited 10 May 2023 by Babylon

[dannythefox]

1 hour ago, Mee-9 said:

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

He owes it to us to get us back up. His dad will be turning in his grave about the decisions too has made of late. No chance of him bailing out yet.

[Guest Mee-9]

2 minutes ago, dannythefox said:

He owes it to us to get us back up. His dad will be turning in his grave about the decisions too has made of late. No chance of him bailing out yet.

There's little loyalty in business. 

 

I think KP are still bleating from the pandemic and the issues around travel. I think he wants a sale so he can move on. 

[dannythefox]

30 minutes ago, Mee-9 said:

There's little loyalty in business. 

 

I think KP are still bleating from the pandemic and the issues around travel. I think he wants a sale so he can move on. 

If he wanted a sale it would be much more attractive in the best league in the world. Can’t see him putting us up for sale personally.

[davieG]

2 hours ago, Mee-9 said:

Do you think we would look a good prospect for a buyer if we went down?

 

Own the ground now, training facility, big fanbase.

 

Think anyone would see us a bargain? 

Unless it's a massive strain on the KP empire I don't see a financial reason for selling and there must be a monumental emotional attachment to the club with where his Dad died, the memorial garden and statue unless of course that is having a negative effect on him.