Implications of relegation to league 1 (Mods can we condense all league 1 threads into one)

[BigGibbo]

Leicester Fosse FC.

 

Founded at the Leicester Road Stadium to start with, probably.

[Pliskin]

10 hours ago, STEVIE B said:

I hear this a lot. Surely, other clubs have been in far worse positions than we are & survived (not that l know our financial position, who does ?)

 

No club has ever gone into league one with our overheads….. the financial drop from the championship to league one is colossal, and we’re still operating as a premier league club. 
 

The amount of money we will be losing without the ability to replace it, plain and simply isn’t survivable. 

 

So, in short, no team has ever gone into league 1 in as much of a financial mess as we are. And worse still, our board room won’t even be considering it so no preparations for league 1 will happen until we’re there……

[Sly]

3 minutes ago, Sol thewall Bamba said:

There won't be decent crowds under King Power though. The culture is set by them and that's what people are getting sick of.

I still think we’d pull in 20k+ next season. We did during 08/09 in League 1. 
 

We have grown as a brand and people will still turn up out of habit and fly in from Asia to see Premier League Leicester City! 
 

You’re not convincing 5 year olds though that Leicester is the club to support though, now that football is everywhere. 

[STEVIE B]

1 hour ago, Pliskin said:

No club has ever gone into league one with our overheads….. the financial drop from the championship to league one is colossal, and we’re still operating as a premier league club. 
 

The amount of money we will be losing without the ability to replace it, plain and simply isn’t survivable. 

 

So, in short, no team has ever gone into league 1 in as much of a financial mess as we are. And worse still, our board room won’t even be considering it so no preparations for league 1 will happen until we’re there……

Very well put. I agree

However, l was replying to 'The club will fold'.......but didn't add their quote. 

Edited 15 March by STEVIE B

[Pliskin]

I’ve asked co pilot to draw together what it can from the internet to try and explain the potential risks of relegation. 
 

 

 

If Leicester City were relegated to League One (the third tier), the financial consequences would be extremely serious. The club isn’t on the brink of disappearing tomorrow, but it would force a major financial reset and could become dangerous if they stayed down for more than a season.

 

Here’s the situation broken down.

 

 

 

 

1. The biggest issue: Leicester’s costs were built for the Premier League

 

 

Leicester spent years operating like a top-half Premier League club:

 

Wage bill previously around £200m+ during their Premier League years.

They also built a £100m training complex and invested heavily in facilities and contracts.

 

 

When they were relegated, costs didn’t fall as fast as revenue, leaving them with a wage bill that was over 100% of revenue, which is extremely unhealthy financially.

 

That mismatch is the core reason they’ve had financial rule breaches and points deductions.

 

 

 

 

2. Revenue drop from Premier League → Championship → League One

 

 

The money difference between the leagues is enormous.

 

 

Premier League

 

 

Typical revenue:

 

£120m – £200m per year

 

 

 

Championship (with parachute payments)

 

 

Still relatively high:

 

£40m – £80m depending on parachutes and sponsorship.

 

 

Clubs relegated from the Premier League get parachute payments for up to three seasons:

 

Year 1: ~50% of Premier League TV share

Year 2: ~45%

Year 3: ~20%

 

 

This is what currently keeps Leicester afloat.

 

 

 

 

League One

 

 

If Leicester dropped again:

 

Typical revenue:

 

£8m – £15m total

 

 

Broadcast income alone can drop from £50m+ to under £2m.

 

That’s a 90%+ drop compared with Premier League money.

 

 

 

 

3. They would also lose the parachute advantage

 

 

Parachute payments are meant to help clubs adjust after Premier League relegation.

 

But if Leicester fall into League One:

 

Parachutes don’t increase

They still run down quickly

And the club must operate on League One income

 

 

So if they stayed down more than 1–2 years, the financial cushion disappears.

 

 

 

 

4. Their current financial breaches already show strain

 

 

Leicester have already:

 

Been deducted 6 points for breaking financial rules.

Lost over £200m in a three-year period.

Exceeded permitted losses by £20.8m.

 

 

That means the club is already overspending relative to its income, even before any drop to League One.

 

 

 

 

5. What would actually happen if they went down?

 

 

It wouldn’t mean instant bankruptcy, but several things would happen fast:

 

 

Massive squad sale

 

 

High earners would have to go immediately.

 

Typical League One wage budget:

 

£6m–£12m per year

 

 

Leicester’s current structure is far above that.

 

 

 

 

Cost cutting everywhere

 

 

Likely actions:

 

Sell top players

Slash wage bill

Reduce transfer spending

Possible staff layoffs

Depend more on academy players

 

 

 

 

 

Risk of long-term decline

 

 

The biggest danger isn’t one season in League One — it’s getting stuck there.

 

Examples in England show this clearly:

 

Sunderland A.F.C. fell from the Premier League to League One in two years.

Portsmouth F.C. collapsed financially and went into administration.

 

 

Large clubs can spiral quickly when revenue collapses.

 

 

 

 

6. Are Leicester close to going bust?

 

 

Right now:

 

Short term:

 

Probably safe because of parachute payments and owner backing.

 

 

Medium term (if League One + debts):

 

Serious risk if losses continue.

 

 

Their survival could depend heavily on owner funding from the King Power group, which has already injected large sums into the club historically.

 

 

 

✅ Simple summary

 

If Leicester drop to League One:

 

Revenue could fall £50m–£100m+

Wage bill would need massive cuts

Squad would likely be sold off

Club would need a full financial rebuild

 

 

They wouldn’t instantly go bust, but it would be the most dangerous financial situation in the club’s modern history

[Sly]

1 minute ago, Pliskin said:

No club has ever gone into league one with our overheads….. the financial drop from the championship to league one is colossal, and we’re still operating as a premier league club. 
 

The amount of money we will be losing without the ability to replace it, plain and simply isn’t survivable. 

 

So, in short, no team has ever gone into league 1 in as much of a financial mess as we are. And worse still, our board room won’t even be considering it so no preparations for league 1 will happen until we’re there……

Exactly.

 

We will cover our overheads in the first year with the impending fire sale that follows. 
 

All of our high earners will be gone by the end of next season. 
 

The club can reduce overheads further. It has just chosen not to. 
 

We will survive by player trading. 
 

The issue is when we run out of asset and end up just rolling along at a snails pace in League One I would Imagine. 

[Pliskin]

Our biggest issue is the costs won’t fall as quickly as the revenue would. As you can see the league 1 revenue is horrifically below our current output. 
 

The problem is, we will be going down with the biggest wage bill league one has ever seen, how are we going to shift these players on without making further monumental losses?

 

Theres no way we’re getting £15m for Fatawu, between £5-10 if we are lucky, one because he’s been poor this season, and two no one will be paying asking prices for players that have just nosedived two divisions. 
 

I’m not entirely sure how the transfer fee marries up, to the wages? So for example if we have to sell Daka for £5m how does that relate to his wages? 
 

I also can’t see there being a reduction in wages, doesn’t this have to be written into the contracts? Relegation to league 1? 
 

Either way, some drastic measures will be needed, king power aren’t investing directly int the club anymore so we will have no choice but to start selling off the stadium, and training facilities….. 

[Terraloon]

11 hours ago, Jonboy1999 said:

People need to stop jumping straight to the “administration” talk every time relegation is mentioned. Yes, dropping to League One would obviously be a massive financial hit, but clubs the size of us aren’t automatically on the brink of collapse because of it.

We’ve still got parachute payments, a big fanbase, Premier League infrastructure, and players who would likely be sold if needed to balance things. Plenty of big clubs have gone down to League One and recovered without going into administration.

The bigger issue isn’t just relegation itself – it’s how the ownership and recruitment have been handled over the last few years. That’s what’s put us in this mess. Relegation would hurt badly, but it doesn’t automatically mean the club is about to go bust.

 

10 hours ago, Jonboy1999 said:

Just to be clear — parachute payments do go to the club. Yes, some of that money might be used to service loans the owners put in place, but it’s still the club’s income. It’s not “skipping” Leicester entirely — it’s exactly what keeps a relegated club from collapsing overnight. People are exaggerating how useless parachute payments are.

Many of these points have already been discussed to exhaustion.

 

In accounting terms yes the parachute and indeed transfer instalments do indeed go to the club but my understanding is that the bank’s position is fully protected but the bulk, not all, of these arrangements aren’t loans they are factoring arrangements where in effect  the “ debt / debts” have been sold on  at a cost. For illustration only say £55 million was expected by way of 25/26 parachute payments around 10% would have been charged by way of fees / interest so the Aussie bank would only have paid £49.5 million to LC.

 

There is an arrangement in place which isn’t secured against parachute payments or indeed transfer fees still to be paid which is secured against club assets and it’s this arrangement that in default would likely be the most damaging.

 

The idea of parachute payments is indeed aimed at softening the impact of relegation but therein lies the problem at LC because all the money that should have eased the burden going into 26/27 almost certainly has been spent in 25/26. 
 

LC would be a big club in EFL 1 but you don’t get extra points or indeed concessions because you’ve got a top class  stadium and training ground the massive decline in income would be catastrophic. Yes catastrophic.

 

 

 

 

[Katy]

How utterly depressing all this is. This is our reality if we go down, how can anyone not be really concerned?

[Pliskin]

5 minutes ago, Sly said:

Exactly.

 

We will cover our overheads in the first year with the impending fire sale that follows. 
 

All of our high earners will be gone by the end of next season. 
 

The club can reduce overheads further. It has just chosen not to. 
 

We will survive by player trading. 
 

The issue is when we run out of asset and end up just rolling along at a snails pace in League One I would Imagine. 

Obviously this is a very black and white response, it doesn’t really cover any other issues that made appear out of the blue. Like, if we’ve breached FFP again when the accounts are reviewed in April.

 

My question is though, the transfer fees are going to be minuscule compared to the wages……. So we’re going to be making some colossal further losses surely? 

[when_you're_smiling]

12 minutes ago, Pliskin said:

I’m not entirely sure how the transfer fee marries up, to the wages? So for example if we have to sell Daka for £5m how does that relate to his wages?

I don’t understand what you mean. If you sell Daka or anyone then you won’t have to pay their wages anymore. There would have to be sales. I’m not sure anyone would care about losing any of them to be honest.

 

It should also be pointed out we were arguably in a worse position in 2008. At that point the wages to turnover ratio was 103% and it went down to 89% in League One because of the relegation clauses. That ratio is already lower than that now because of PSR. At the time we didn’t even own the stadium so didn’t have that asset as well and our income is much greater than it was then. 

[Corky]

There is no ideal scenario. Administration, then liquidation, is a hideous prospect but life under this regime will continue to be very grim.

[SheppyFox]

13 hours ago, Bob Weasel Fox said:

I genuinely think we will fold as a club if we go down

I think you’re worrying too much, Bob. The people running the show have demonstrated they’ve clearly got things under control. 

[Happy Fox]

1 minute ago, Corky said:

There is no ideal scenario. Administration, then liquidation, is a hideous prospect but life under this regime will continue to be very grim.

Hopefully, we can force the regime out it’s the only way we can reclaim our club.

[Claudio Fannieri]

18 minutes ago, Terraloon said:

 

Many of these points have already been discussed to exhaustion.

 

In accounting terms yes the parachute and indeed transfer instalments do indeed go to the club but my understanding is that the bank’s position is fully protected but the bulk, not all, of these arrangements aren’t loans they are factoring arrangements where in effect  the “ debt / debts” have been sold on  at a cost. For illustration only say £55 million was expected by way of 25/26 parachute payments around 10% would have been charged by way of fees / interest so the Aussie bank would only have paid £49.5 million to LC.

 

There is an arrangement in place which isn’t secured against parachute payments or indeed transfer fees still to be paid which is secured against club assets and it’s this arrangement that in default would likely be the most damaging.

 

The idea of parachute payments is indeed aimed at softening the impact of relegation but therein lies the problem at LC because all the money that should have eased the burden going into 26/27 almost certainly has been spent in 25/26. 
 

LC would be a big club in EFL 1 but you don’t get extra points or indeed concessions because you’ve got a top class  stadium and training ground the massive decline in income would be catastrophic. Yes catastrophic.

 

 

 

 

Top post, I am really concerned that with relegation we will be in administration within 12 months. People point to player trading to get us out of a hole, but in reality aside from Abdul who do we have that will bring in big money. 
 

Relegation will see an automatic reduction in player valuation, then given it will be a fire sale and players will be on big money relative to the clubs they will be joining etc etc and you can see a lot of derisory offers come in as clubs sniff around our rotting carcass for opportunities to stiff us good and proper. 
 

Honestly I would be shocked if we get anything north of £15m for Abdul, then we only really have Monga, Page, Aluko and Nelson that will gleam any interest and we would be lucky to get anything above £5m

for any of them based on circumstances, contracts and performances. 
 

The rest are massively underperforming and highly paid so most likely we have to take a bath or accept that at best we cover any outstanding book value, but players like Skipp we would likely take a big hit as i reckon we would do well to get anywhere near his book value which would be somewhere between £12-15m. 
 

This isn’t football manager it’s the real world, we are up to our necks in it and relegation would be an absolute disaster for the club on and off the pitch. 

[Vestan Pance]

4 hours ago, Terraloon said:

LC would be a big club in EFL 1 but you don’t get extra points or indeed concessions because you’ve got a top class  stadium and training ground the massive decline in income would be catastrophic. Yes catastrophic.

 

 

 

 

My experience of watching League One is that there are some incredibly efficiently run clubs in there, running on small budgets, but have it down to a fine art. 

 

If we end up in there it will be very difficult to compete with teams who are so well practiced at living off scraps. 

 

 

 

 

Edited 15 March by Vestan Pance

[Wsl]

2 hours ago, Oldblueyes said:

I really do have to chuckle about all this. We have a massive training ground complex built, plans for a ground expansion and a site regeneration  including a new swanky hotel. 

Meanwhile  here we stand waiting for the trapdoor to open into league1, havent two halfpenies to rub together and having no confidence in the upper tier management or squad, but other than that, everythings looks great.

 

All fur coat…..

[Pliskin]

1 hour ago, when_you're_smiling said:

I don’t understand what you mean. If you sell Daka or anyone then you won’t have to pay their wages anymore. There would have to be sales. I’m not sure anyone would care about losing any of them to be honest.

 

It should also be pointed out we were arguably in a worse position in 2008. At that point the wages to turnover ratio was 103% and it went down to 89% in League One because of the relegation clauses. That ratio is already lower than that now because of PSR. At the time we didn’t even own the stadium so didn’t have that asset as well and our income is much greater than it was then. 

In terms of value to wage ratio, so if for example Daka is sold for less than his remaining wage? 
 

It’s easy to say we can easily he rid of them, but let’s not forget they will still be on higher wages here, and it’s fairly clear from this lot that they’re happy to behalf arsed and collect a wage. 
 

Maybe it was, however the numbers are much greater…. It’s going to be far harder to get our books in order this time, The books may have looked worse in 2008, but in reality it isn’t, for example we lose £40m as a standard every year. The figures far surpass 2008, or may appear to be similar but it isn’t. 

Edited 15 March by Pliskin

[alanyoung]

13 hours ago, CPepFox said:

Can only sell if there is interest. This is a scary position to be in. And how big a loss can be had on Seagrave before it bankrupts the club? I don't know, so my question is genuine. 

Will be sold to an investment company at a cut price and we’ll have to rent it back…

[Happy Fox]

Aiyatwatt with more awe inspiring sound bites…

 

We promote next season!

 

We welcome Burton Albion to the King Power and they used to be managed by Nigel Clough a great man 

 

😂

[reynard]

Do we actually even totally own the stadium?  Taken from another thread. Anyone know how much if anything we owe KP for the stadium?

 

  On 28/12/2025 at 09:11, Terraloon said:

Read note 8 of the accounts. The stadium is subject to an HP agreement which has to be settled in June 26.

For those who want to know here is the relevant bit of note 8. Taken from the club's website and obviously not the most recent figures etc.

The stadium is the subject of a hire purchase contract with K Power Holdings Company Limited, a related company. The repayment terms of the contract were contingent on the turnover associated with the League the Club plays in during the duration of the contract during the year and the payment profile of the contract has been calculated based on the league status of the Club at the year end. All amounts owing under this agreement are repayable on 30 June 2026. Amounts payable under finance leases and hire purchase contracts are set out in note 16.

 

[Driver]

1 hour ago, Pliskin said:

I’ve asked co pilot to draw together what it can from the internet to try and explain the potential risks of relegation. 
 

 

 

If Leicester City were relegated to League One (the third tier), the financial consequences would be extremely serious. The club isn’t on the brink of disappearing tomorrow, but it would force a major financial reset and could become dangerous if they stayed down for more than a season.

 

Here’s the situation broken down.

 

 

 

 

1. The biggest issue: Leicester’s costs were built for the Premier League

 

 

Leicester spent years operating like a top-half Premier League club:

 

Wage bill previously around £200m+ during their Premier League years.

They also built a £100m training complex and invested heavily in facilities and contracts.

 

 

When they were relegated, costs didn’t fall as fast as revenue, leaving them with a wage bill that was over 100% of revenue, which is extremely unhealthy financially.

 

That mismatch is the core reason they’ve had financial rule breaches and points deductions.

 

 

 

 

2. Revenue drop from Premier League → Championship → League One

 

 

The money difference between the leagues is enormous.

 

 

Premier League

 

 

Typical revenue:

 

£120m – £200m per year

 

 

 

Championship (with parachute payments)

 

 

Still relatively high:

 

£40m – £80m depending on parachutes and sponsorship.

 

 

Clubs relegated from the Premier League get parachute payments for up to three seasons:

 

Year 1: ~50% of Premier League TV share

Year 2: ~45%

Year 3: ~20%

 

 

This is what currently keeps Leicester afloat.

 

 

 

 

League One

 

 

If Leicester dropped again:

 

Typical revenue:

 

£8m – £15m total

 

 

Broadcast income alone can drop from £50m+ to under £2m.

 

That’s a 90%+ drop compared with Premier League money.

 

 

 

 

3. They would also lose the parachute advantage

 

 

Parachute payments are meant to help clubs adjust after Premier League relegation.

 

But if Leicester fall into League One:

 

Parachutes don’t increase

They still run down quickly

And the club must operate on League One income

 

 

So if they stayed down more than 1–2 years, the financial cushion disappears.

 

 

 

 

4. Their current financial breaches already show strain

 

 

Leicester have already:

 

Been deducted 6 points for breaking financial rules.

Lost over £200m in a three-year period.

Exceeded permitted losses by £20.8m.

 

 

That means the club is already overspending relative to its income, even before any drop to League One.

 

 

 

 

5. What would actually happen if they went down?

 

 

It wouldn’t mean instant bankruptcy, but several things would happen fast:

 

 

Massive squad sale

 

 

High earners would have to go immediately.

 

Typical League One wage budget:

 

£6m–£12m per year

 

 

Leicester’s current structure is far above that.

 

 

 

 

Cost cutting everywhere

 

 

Likely actions:

 

Sell top players

Slash wage bill

Reduce transfer spending

Possible staff layoffs

Depend more on academy players

 

 

 

 

 

Risk of long-term decline

 

 

The biggest danger isn’t one season in League One — it’s getting stuck there.

 

Examples in England show this clearly:

 

Sunderland A.F.C. fell from the Premier League to League One in two years.

Portsmouth F.C. collapsed financially and went into administration.

 

 

Large clubs can spiral quickly when revenue collapses.

 

 

 

 

6. Are Leicester close to going bust?

 

 

Right now:

 

Short term:

 

Probably safe because of parachute payments and owner backing.

 

 

Medium term (if League One + debts):

 

Serious risk if losses continue.

 

 

Their survival could depend heavily on owner funding from the King Power group, which has already injected large sums into the club historically.

 

 

 

✅ Simple summary

 

If Leicester drop to League One:

 

Revenue could fall £50m–£100m+

Wage bill would need massive cuts

Squad would likely be sold off

Club would need a full financial rebuild

 

 

They wouldn’t instantly go bust, but it would be the most dangerous financial situation in the club’s modern history

If a team only does one season in the Premier League they only get two years of parachute payments.  Also, Business of Sport have said it is worse than they thought as Leicester have already taken out a loan from an Australian bank on next years parachute payments.

[reynard]

The worst consequences of relegation will, of course, be the redundancies that will be required among the non-playing staff throughout the club. People who can ill afford to lose their jobs in comparison to the overpaid wasters we have who call themselves professional footballers.

 

Add to that the loss of match day income for surrounding businesses which will inevitable come from the lower attendance levels.

 

And to add to our financial woes the number of sponsors and amount they pay will fall substantially too. 

Edited 15 March by reynard

[Pliskin]

9 minutes ago, Driver said:

If a team only does one season in the Premier League they only get two years of parachute payments.  Also, Business of Sport have said it is worse than they thought as Leicester have already taken out a loan from an Australian bank on next years parachute payments.

This is it. The club have gambled on instant returns to the EPL, and this isn’t happening and they will have to do something drastic to settle these debts. 

[when_you're_smiling]

25 minutes ago, Pliskin said:

In terms of value to wage ratio, so if for example Daka is sold for less than his remaining wage? 
 

It’s easy to say we can easily he rid of them, but let’s not forget they will still be on higher wages here, and it’s fairly clear from this lot that they’re happy to behalf arsed and collect a wage. 
 

Maybe it was, however the numbers are much greater…. It’s going to be far harder to get our books in order this time, Tommy have looked worse in 2008, but in reality it isn’t, for example we lose £40m as a standard every year. The figures far surpass 2008, or may appear to be similar but it isn’t. 

I might be wrong but I imagine it’s negligible and I don’t think it matters in Daka’s case. He won’t be sold anyway as he’s one of those out of contract. So he’ll disappear into the ether and we won’t have to pay the wages anymore. The likes of Skipp and those on longer contracts would, you’d like to think, have wage decrease written in for all relegations. Not just for the Prem. 

 

The numbers are greater partly because of inflation. It was a £14m loss when we went down to League One last time and, again, there’s more income this time around.