Relegation, League 1, financial implications

[Les-TA-Jon]

For those talking about League One spending rules...

 

But also note that Leicester would be under PSR upon promotion - so the club effectively have to work to both sets of rules simultaneously, for when/if we get promoted back to Championship. 

[FoxesTalker]

The average attendance in League One in 2008/09 was 20,254. So it will probably be close to that again if not lower, given the context of the situation this time round.

[stevostadium]

9 hours ago, Foxin_Mad said:

Who is going to buy seagrave and for what?

 

From what I can work out the only restrictions in League 1 seem to be 75% falling to 60% of investment spent on playing staff but there doesn’t seem to be restrictions on how much you can lose from what I can tell? It also doesn’t seem to limit spending on infrastructure. 

I personally dont think that they will sell Seagrave.

The only suitors would be Forest and the FA.

Better facility than St Georges Park which could be then used for the women.

When England left Bisham Abbey, i believe England Rugby Union took over.

[Pliskin]

https://www.efl.com/governance/financial-regulation/
 

 

 

I mean there is already a thread open about this. 
 

 

In essence, if Top is willing to plow money into the club, to cover the natural losses, and we can successfully get rid of all of the high earners, then we won’t necessarily be at threat. And we could do some form of rebuild. 
 

 

But it all hinges if Top is willing to plow money into the club.

Edited 15 April by Pliskin

[Jakemoore]

Seagrave won’t get sold. By many accounts, we pay £15m per season in upkeep for Seagrave. Payments for stadium and training facilities are outside of the restrictions on PSR. The issue will be, the fact that our revenue won’t allow for a £15m payment per annum on a training ground. Well KP wanted Seagrave so KP will have to stump up the funds. 
 

What needs to happen and what should have already happened is the women’s team need to come across to Seagrave and the old training ground needs to be sold. Why we think as little old Leicester, our £100m training complex with its 15-20 pitches isn’t big enough for both the men’s and women’s team as well as our youth academy, I do not know. 
 

We’re not in the position of giving the women’s team their own training ground. They don’t generate anywhere near enough money to justify it.

Only issue I can foresee is that the players (men’s team) are already shit enough as it is. Imagine how distracted they’re going to be when Alisha Lehman’s legs and arse turn up several times a week 😳

 

[Claudio Fannieri]

It isn’t just about PSR, the far bigger risk with relegation and the massive drop in revenue will be cash flow and our ability to stay solvent without very very significant cash support from Aiyawatt/KP 

[Manley Farrington-Brown]

10 hours ago, foxtillidrop said:

This is terrible...last time we were in league 1 we bounced back straight away but to think we could be down in league 1 for several seasons is just unfathomable from where we started...mental

Well, we started by finishing 11th in the Midland League in 1891-92, so if you're going by where we started, just being in the Football League is an improvement, and we have at least two more seasons of that (assuming we don't fold completely in that time, or get kicked out of the league for something...).

[Officer Doofy]

8 hours ago, South Shire Fox said:

To who? Who wants a 100 million pound training complex in Leicestershire? I doubt Forest would

Absolutely nobody. 

 

Laughable to think we could sell it. 

 

 

 

[Officer Doofy]

1 hour ago, Pliskin said:

https://www.efl.com/governance/financial-regulation/
 

 

 

I mean there is already a thread open about this. 
 

 

In essence, if Top is willing to plow money into the club, to cover the natural losses, and we can successfully get rid of all of the high earners, then we won’t necessarily be at threat. And we could do some form of rebuild. 
 

 

But it all hinges if Top is willing to plow money into the club.

Not willing, able. 

 

He isn't wealthy enough to sustain this. 

[Globalfox]

6 hours ago, Cincinnati Fox said:

I’m not sure that’s possible 

Actually we have used the parachute payments as security for a cash facility. How much of that has been consumed is the unknown. Given what the new CFO alluded to in recent conversation with the FAB I would suggest that much if not most is used. If relegated things become clear we can only spend 70% of revenue. Revenue will fall substantially so sever cost cutting will take place at many levels. We will need a savvy recruitment and manager to find bargains. Spending breaches to get back up will not now work. Selling Seagrave is not a simple option.

[drew]

4 minutes ago, Globalfox said:

 We will need a savvy recruitment and manager to find bargains.

Never in a month of Sundays will that happen with the clowns in charge of this circus.

[Qwerty]

6 hours ago, Pliskin said:

They do have financial rules, and it’s based on wages, betwee 60-75% of revenue can be spent on wages, which we exceed.

 

But that’s not the issue, the issue is the club will no longer be making enough money to cover bills, which is ready evident as many people on here with experience working with the club has suggested they’re not settling bills already. 
 

The club loses £40-50m a year without a wage being paid, there’s no way they reduce this in the space of a few months. 
 

Essentially, Top will need to personally bankroll the club for a season, excessively to survive and get back up, which he won’t do. 
 
 

My understanding of finance in League 1 is that only 60% of revenue can be spent on wages, players etc, but that  "revenue" doesn't necessarily have to be generated by the club.  It can be put into the club by the owner, which is how then likes of Wrexham have done so well recently.  So essentially, a club can generate very little income on ticket sales etc, but if it has a rich owner, it can spend plenty of money.

As you say, it'll all depend on how much Top is prepared to put in himself.

From his point of view, it's a gamble.  Does he put money in, in the hope of having a decent season and getting promoted, but risking losing his money if we do badly.  Or does he not put money in, but then risk administration/bankruptcy, and risk walking away with nothing.  Or does he try and sell straight away....

[drew]

1 minute ago, Qwerty said:

My understanding of finance in League 1 is that only 60% of revenue can be spent on wages, players etc, but that  "revenue" doesn't necessarily have to be generated by the club.  It can be put into the club by the owner, which is how then likes of Wrexham have done so well recently.  So essentially, a club can generate very little income on ticket sales etc, but if it has a rich owner, it can spend plenty of money.

As you say, it'll all depend on how much Top is prepared to put in himself.

From his point of view, it's a gamble.  Does he put money in, in the hope of having a decent season and getting promoted, but risking losing his money if we do badly.  Or does he not put money in, but then risk administration/bankruptcy, and risk walking away with nothing.  Or does he try and sell straight away....

So hypothetically a super wealthy person could write a cheque for 500m investment whilst in L1 and use that funding in the Championship and EPL.
In essence a L1 club with infrastructure is more attractive than a Championship one that is limited by PSR rules.

I need that Matt le Tissier meme, makes you think.

[Les-TA-Jon]

3 minutes ago, Qwerty said:

My understanding of finance in League 1 is that only 60% of revenue can be spent on wages, players etc, but that  "revenue" doesn't necessarily have to be generated by the club.  It can be put into the club by the owner, which is how then likes of Wrexham have done so well recently.  So essentially, a club can generate very little income on ticket sales etc, but if it has a rich owner, it can spend plenty of money.

As you say, it'll all depend on how much Top is prepared to put in himself.

From his point of view, it's a gamble.  Does he put money in, in the hope of having a decent season and getting promoted, but risking losing his money if we do badly.  Or does he not put money in, but then risk administration/bankruptcy, and risk walking away with nothing.  Or does he try and sell straight away....

 

2 hours ago, Les-TA-Jon said:

For those talking about League One spending rules...

 

But also note that Leicester would be under PSR upon promotion - so the club effectively have to work to both sets of rules simultaneously, for when/if we get promoted back to Championship. 

My breakdown of League 1 spending rules here - it's 75% for the first year, for newly relegated clubs. Equity injection income is counted, but only 'allowable' levels - You can use 100% of the first £500,000; 75% of the next £250,000; 60% of the next £250,000 and 60% of anything else

 

So for example, Top wants to inject £10,000,000 into the club, we can only count £6,237,500 of it as allowable income.

[Qwerty]

1 hour ago, Pliskin said:

https://www.efl.com/governance/financial-regulation/
 

 

 

I mean there is already a thread open about this. 
 

 

In essence, if Top is willing to plow money into the club, to cover the natural losses, and we can successfully get rid of all of the high earners, then we won’t necessarily be at threat. And we could do some form of rebuild. 
 

 

But it all hinges if Top is willing to plow money into the club.

Exactly.  That's the bottom line.  We can spend whatever we want really, as long as he bankrolls it himself.  The 60% limit is no issue, because we can easily find things other than players to spend 40% on.  All we can hope is that his pride forces him to pump money in, rather than shuffle away like a total failure!

[LCFCCKEANO]

Think our sales will cover player expenditure and will leave us a little to spend, I’m less worried about that and more so about who they will waste our money on this time. Those rules do not include expenditure on things like our training ground which I would imagine alongside relegation clauses and players going on a free will leave enough room to at least function as a club. Hopefully bleed in the likes of Braybrooke and Joseph who both seem to have had good L2 seasons performance wise

[Blue ROI]

2 hours ago, FoxesTalker said:

The average attendance in League One in 2008/09 was 20,254. So it will probably be close to that again if not lower, given the context of the situation this time round.

 16,000 won't be far off.

 

And it may get even lower unless meaningful change is made.

[Qwerty]

20 minutes ago, drew said:

So hypothetically a super wealthy person could write a cheque for 500m investment whilst in L1 and use that funding in the Championship and EPL.
In essence a L1 club with infrastructure is more attractive than a Championship one that is limited by PSR rules.

I need that Matt le Tissier meme, makes you think.

That's exactly what Wrexham have done

[drew]

5 minutes ago, Qwerty said:

That's exactly what Wrexham have done

So this could be a master plan to off load the club in L1 or sheer incompetence..... i know which one i'm choosing

 

[Pliskin]

17 minutes ago, Qwerty said:

Exactly.  That's the bottom line.  We can spend whatever we want really, as long as he bankrolls it himself.  The 60% limit is no issue, because we can easily find things other than players to spend 40% on.  All we can hope is that his pride forces him to pump money in, rather than shuffle away like a total failure!

Simply put, yes. 
 

There are two huge questions though.

 

How is he going to offset the £40-50m natural losses V the lost revenue. 

Can he actually afford to bankroll the club personally, as Ling Power as a business won’t. 

 

[SemperEadem]

I think we will get around 25k if winning. Dip to 20k if not.

Edited 15 April by SemperEadem

[Foxes1]

11 hours ago, Mike Oxlong said:

 

 

 

Our back 4 for next season, couldn't be no worse than who we have had this season.

[lcfc278]

Out of interest I asked AI to predict the teams that will make up League One next season based on the current table standings and fixtures left and as you can guess, we're basically down. 

 

An absolute joke that this is actually what is happening to us but the writing has been on the wall that we were going to be in trouble this season as soon as the first ball was kicked - I just thought we'd have enough competence to right the ship at the right times but on and off the pitch we've been woeful.

 

To try and put some sort of positivity to it, there's some nice day trips out for the Coach 1 lot ;
 

AFC Wimbledon

Barnsley

Blackpool

Bradford City

Bromley

Burton

Cambridge United

Doncaster

Huddersfield

Leicester City

Leyton Orient

Luton Town

Mansfield Town

MK Dons

Notts County

Oxford United

Peterborough

Plymouth

Reading

Sheffield Wednesday

Stevenage

Stockport

Wigan Athletic

Wycombe

[Terraloon]

12 hours ago, splinterdream said:

What are we thinking will happen when the inevitable happens.

 

Will we try to offload seagrave?

Will we be able to comply with league 1 financial rules? 

What do we think their plan will be to get out of this mess amd will they communicate that with the fans?

What will be the likely attendance figures at the KP next season? 

I need to play with some numbers and thoughts but would suggest that the following rule we parachute payments and how possibly LC may well have yet more problems
 

Forward Financing:

1.16.1 Distributions - If Premier League Distributions which are relevant to the Reporting Period (a

Parachute Payment for example) have been received by the Club in Cash in a prior Reporting

Period as a result of ‘forward financing’’, the amounts received in the earlier period may not be

included in the calculation of Relevant Turnover.

Guidance:

If a Club is relegated from the Premier League at the end of Season;

Competes in the Championship is Season 2024/25 but is relegated to League One at the end of that

Season; and

Forward finances 100% of its Year 1 Parachute Payment from the Premier League and 70% of its Year 2

Parachute Payment, receiving those amounts during Season 2025/26

IT FOLLOWS THAT

The Club will only be able to include 30% of the Year 2 Parachute Payment within the calculation for

Relevant Turnover for Season 2026/27, its first in League One.

Edited 15 April by Terraloon

[Sol thewall Bamba]

What is the implication of not meeting that 75% wages/turnover ratio? Because there is absolutely no chance we meet it.