Relegation, League 1, financial implications

[OntarioFox]

11 hours ago, Mike Oxlong said:

 

 

 

Number two is a dead ringer for Jordan Ayew. 

[Stadt]

I'm assuming transfer income counts as revenue in L1? We absolutely have to maximise our sale values, which should be self-evident. The BEK deal was disastrous 

[Nods]

54 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.

It all makes sense now. We are intentionally getting relegated. It's the only explanation for a lot of what we've done, so maybe we're actually run by geniuses. We just can't see it yet. 

[HankMarvin]

1 minute ago, Stadt said:

I'm assuming transfer income counts as revenue in L1? We absolutely have to maximise our sale values, which should be self-evident. The BEK deal was disastrous 

They will probably need to add more players at the end of this financial year to make ends meet, like we saw previously expect we have a lower threshold to meet this time.

[Stadt]

4 minutes ago, HankMarvin said:

They will probably need to add more players at the end of this financial year to make ends meet, like we saw previously expect we have a lower threshold to meet this time.

Losses shouldn't be too bad this year. Lots of sales, no permanent incomings, wage bill reduced somewhat and if EBK is included in this financial year about £65m in outgoings. Ballpark loss would be about £15-20m.

 

We lost £20m last time in the championship, should come in a bit below that.

[LCFCJohn]

3 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.

Contrary to the narrative peddled that anyone criticising the ownership must have only been around since 2016, the truth is that many of those of us who stuck by the club and attended week in week out during those 2004-2009 years are the ones that have stopped going out of anger at the running of the club.

 

Therefore a lot of the support from back then they will have lost. If we assume many of the match going fans now are the ones who came out the woodwork when we started doing well, the question is how they react in terms of commitment to continuing to attend.

[HankMarvin]

Just now, Stadt said:

Losses shouldn't be too bad this year. Lots of sales, no permanent incomings, wage bill reduced somewhat and if EBK is included in this financial year about £65m in outgoings. Ballpark loss would be about £15-20m.

 

We lost £20m last time in the championship, should come in a bit below that.

But we made £72m from player sales, I guess it will depend on if the reduced wage is substantially less than the £104m from 23/24

[Spanner73]

Let’s hope for everyone’s sake that it’s the worst possible outcome EVER !!! 
 

And hopefully this clown 🤡 will look to sell us on or maybe we head into administration as this club couldn’t be in worst hands OFF the pitch than it currently is !!
 

Worst I’ve ever seen OFF the pitch it makes Terry Shipman look good !!! 

A bunch of clueless, non interested, careless ramshackled amateurs that refuse to acknowledge the club’s demise Couldn’t run a bath !!! 
 

 

[HankMarvin]

6 minutes ago, LCFCJohn said:

Contrary to the narrative peddled that anyone criticising the ownership must have only been around since 2016, the truth is that many of those of us who stuck by the club and attended week in week out during those 2004-2009 years are the ones that have stopped going out of anger at the running of the club.

 

Therefore a lot of the support from back then they will have lost. If we assume many of the match going fans now are the ones who came out the woodwork when we started doing well, the question is how they react in terms of commitment to continuing to attend.

Also the interest is subjective, last time we had a good few years at the tail end of the championship and to be doing well in league one was refreshing for many, how many people will be relishing Tuesdays at home to Mansfield and Exeter on the back of recent success and the failings of the owner.

[LCFCJohn]

2 minutes ago, HankMarvin said:

Also the interest is subjective, last time we had a good few years at the tail end of the championship and to be doing well in league one was refreshing for many, how many people will be relishing Tuesdays at home to Mansfield and Exeter on the back of recent success and the failings of the owner.

Agreed. 
 

It will also depend on what happens over the summer and how the season starts. 
 

If we start well and had a team together behind (doubtful on both counts), after 2 years of not being able to compete with anyone expect Derby County, some people might come back to just see us win again. Not those staying away out of real principle of course. 
 

But more of the same which is more likely and attendances will continue to fall as the more casual supporters lose interest. Or more people who do care, take a stand and stop.

[Stadt]

42 minutes ago, HankMarvin said:

But we made £72m from player sales, I guess it will depend on if the reduced wage is substantially less than the £104m from 23/24

I think the wage bill should be smaller, even just by the crude size of the squad - it'll be lower. Cifuentes' payout shouldn't be too big either.

 

Say the playing wage bill was £130m excluding managerial pay outs last season, we'll have dropped 20m (?) in wages with Hermansen, Justin, Ndidi, Vardy, Coady, Ward and co leaving. Then there's the relegation clauses slated to be anywhere between 30-50%. There's no guarantees with these clowns though, £140m last season was insane.

[VG Fox]

9 hours ago, Cincinnati Fox said:

I’m not sure that’s possible 

agree, it's not possible to get lower than a snakes belly

[Pliskin]

1 hour ago, Sol thewall Bamba said:

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

The consequences are more severe I think because there’s no real limit to the deductions they can implement. 

[Pliskin]

It’s okay us trying to compare us to Wrexham and Birmingham thinking we can spend what we want. But you’ve got to remember neither of those clubs are losing the type of money we’re losing. 
 

Financially, we’re still operating with an output of a top half premier league team. We can’t just change that, we cant just sell Seagrave, offload any players Willy nilly.

 

Everything depends of what Top is personally prepared to do, can he afford to essentially pump money into the club as “revenue” so we can essentially do what we want? Or is he willing. 
 

 

[davieG]

3 hours ago, Jakemoore said:

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 😳

 

Assuming LCFC own Seagrave we could sell it to KP and lease it back with KP paying all maintenance costs.

[brookfox]

I’m sure we’ll be fine, BC Game are probably writing up a £60m sponsorship deal as we speak.

[TonyN11]

2 hours ago, lcfc278 said:

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

If that is a suggested League 1 final table, then I suggest we are in an unrealistically high position 😀 

[Pita]

7 minutes ago, TonyN11 said:

If that is a suggested League 1 final table, then I suggest we are in an unrealistically high position 😀 

🤣🤣🤣

[wurmer]

3 hours ago, Sol thewall Bamba said:

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

There is no chance we will meet that.

[Les-TA-Jon]

6 minutes ago, wurmer said:

There is no chance we will meet that.

That's not the limit. 

 

The rule is 'player costs' can't exceed the total of:

• Player trading income
• ‘Allowable’ Equity injection income
• 75% of turnover

So we've got 75% of turnover + 60% of whatever equity injection + player sale profit to play with. 

Obviously, how well we do that who knows, but its not as simple as the 75% of turnover rule. 

[Terraloon]

2 hours ago, Stadt said:

I'm assuming transfer income counts as revenue in L1? We absolutely have to maximise our sale values, which should be self-evident. The BEK deal was disastrous 

I have to put out there that I haven’t had time to read  for a second time the SCMP rules but on my first read I am far more concerned than I was just thinking that spending 75% of income was going to be a challenge.

 

I posted earlier an extract from the SCMP rules around Parachute Payments. I might be, and hope I am wrong, but the way I read it if LCFC have in effect drawn down and used in 25/26 all the 26/27 parachute monies then that sum doesn’t count as income for SCMP purposes in 26/27

 

Then you have transfer income. If all proceeds are paid in one instalment than all that income can be included but if say it’s payable over 4 years then the payment only counts when it’s made.I haven’t fully worked things through but in the 24/25 accounts there were significant sums due to be paid by the club in respect of historical transfers in. Similarly there are payments due re historical transfers out but as we know these payments are the subject  of draw downs from that Aussie Bank.

 

Pages 217 on Appendix 5.

 

https://images.gc.eflservices.co.uk/526ac020-67b3-11f0-9ba4-015464ec39cd.pdf

 

Would appreciate others thoughts

[damolcfc]

3 hours ago, lcfc278 said:

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

That's the most Midlands ish league ever from a Leicester point of View 😊

Decent.

Can't wait now 🤣

[damolcfc]

Oxford 

Sheffield Weds 

Luton all favourites for promotion 🤔😉😉

[wurmer]

25 minutes ago, Les-TA-Jon said:

That's not the limit. 

 

The rule is 'player costs' can't exceed the total of:

• Player trading income
• ‘Allowable’ Equity injection income
• 75% of turnover

So we've got 75% of turnover + 60% of whatever equity injection + player sale profit to play with. 

Obviously, how well we do that who knows, but its not as simple as the 75% of turnover rule. 

You are spot on with the EFL rulebook formula, but you’re it's not as simple: i.e. allowance vs actual cash-in-the-bank/cashflow.

 

Yes, that is exactly how the SCMP limit is calculated. But having a high spending limit doesn't matter if our bank accounts are empty. Here is the brutal reality of how those three pillars actually look for us right now:

 

1. 75% of Turnover (The Parachute Trap) Because we get a Year 2 Parachute Payment, our "turnover" on paper looks okay. But we’ve already spent it. We took out massive commercial loans (like the ones from Macquarie Bank) to survive the Championship, and those loans are secured against our future parachute payments. So yes, the EFL might say "your turnover gives you a £30m wage allowance," but the actual cash from that parachute payment goes straight to the bank to service our debt, not to paying League One wages. You can’t pay a striker with an SCMP allowance; you need cash.

 

2. ‘Allowable’ Equity Injection You’re assuming Top can and will just pump in "whatever equity" to boost the budget. That ignores what’s happening in the real world. King Power’s duty-free empire has been battered post-pandemic, and they’ve been going through a massive restructure in Thailand. The days of Top writing £50m-£100m blank cheques to bail us out are most likely over. Even if he wanted to, the EFL recently tightened the rules (2024) on how much owner equity can actually be counted to stop financial doping.

 

3. Player Trading Income (The Fire Sale) You are right that selling players boosts our allowance. But to get that "player sale profit," we have to absolutely gut the squad. We will have to fire-sale Hermansen, Fatawu, Ndidi, and anyone else with a pulse just to legally balance the books.

 

TLDR: The SCMP formula doesn't save us. It just outlines the exact mathematical parameters of the fire sale we are about to endure. The EFL gives us a credit limit, but Macquarie Bank has already taken the credit card.

[Foxmeister]

 

6 minutes ago, wurmer said:

You are spot on with the EFL rulebook formula, but you’re it's not as simple: i.e. allowance vs actual cash-in-the-bank/cashflow.

 

Yes, that is exactly how the SCMP limit is calculated. But having a high spending limit doesn't matter if our bank accounts are empty. Here is the brutal reality of how those three pillars actually look for us right now:

 

1. 75% of Turnover (The Parachute Trap) Because we get a Year 2 Parachute Payment, our "turnover" on paper looks okay. But we’ve already spent it. We took out massive commercial loans (like the ones from Macquarie Bank) to survive the Championship, and those loans are secured against our future parachute payments. So yes, the EFL might say "your turnover gives you a £30m wage allowance," but the actual cash from that parachute payment goes straight to the bank to service our debt, not to paying League One wages. You can’t pay a striker with an SCMP allowance; you need cash.

 

2. ‘Allowable’ Equity Injection You’re assuming Top can and will just pump in "whatever equity" to boost the budget. That ignores what’s happening in the real world. King Power’s duty-free empire has been battered post-pandemic, and they’ve been going through a massive restructure in Thailand. The days of Top writing £50m-£100m blank cheques to bail us out are most likely over. Even if he wanted to, the EFL recently tightened the rules (2024) on how much owner equity can actually be counted to stop financial doping.

 

3. Player Trading Income (The Fire Sale) You are right that selling players boosts our allowance. But to get that "player sale profit," we have to absolutely gut the squad. We will have to fire-sale Hermansen, Fatawu, Ndidi, and anyone else with a pulse just to legally balance the books.

 

TLDR: The SCMP formula doesn't save us. It just outlines the exact mathematical parameters of the fire sale we are about to endure. The EFL gives us a credit limit, but Macquarie Bank has already taken the credit card.

Hermansen and Ndidi?