Relegation, League 1, financial implications

[Tommy G]

7 hours ago, Terraloon said:

In the latest accounts, bear in mind they are up to 30/6/25 so close to a year out of date.

In the creditors due within one year the sum was £53, 156m and after one year £28.232m so £81,388,000

Two things the first number will almost certainly have been reduced but we know another chunk will have been added following transfers in.

Who have we signed since 1st July 2025 of any significant value?

[The Year Of The Fox]

5 minutes ago, Tommy G said:

Who have we signed since 1st July 2025 of any significant value?

That Alisha 👀 

[Tommy G]

7 hours ago, Merchant_Banker said:

If Seagrave is owned outright then can we not borrow against that asset, i.e. remortgage it? I know this is only kicking the can down the road and would depend on the current cashflow situation, but might be a short-term option.

They could do a sale and leaseback but you’d typically do that in a business where the commercial property is revenue generating and the investor can easily flip that property later down the line. 
 

There is no way anyone would buy the thing and lease it back given the specific nature and single use aspect, and also given how precarious the financial situation is. 
 

You could probably borrow against it but with risk factor it would be close to double digit interest, could get cheaper money elsewhere.

[Terraloon]

53 minutes ago, Tommy G said:

Who have we signed since 1st July 2025 of any significant value?

Based on known fees none but the suggestion in the post accounting period suggests that there is some , that said it may they just used a standard phrase

[em9999]

8 hours ago, 1972 Fox said:

It looks like one of those what if the nazis had won the war clips on YouTube 

 

Of course that's just a example.   Not suggesting anything about forest fans or club in general 

[Sly]

I honestly think that we are more likely to face a winding up order in the longer term, leading to liquidation, rather than self appointing administrators.

 

Football clubs are money pits and maybe Aiyawatt either doesn’t want to put money in, or is struggling to. 
 

I could see us selling the training ground to K Power Holdings Limited, so should that happen, it’s basically untouchable. It’s asset stripping the shell of a company though and it’ll topple eventually if it continues on this trajectory. 

[Pliskin]

8 hours ago, Gamble92 said:

I can't imagine that he won't do this. I know everyone is saying he won't, but why would he hold onto the club and not fund it? There's no saving face in keeping it and being the owner as it goes bankrupt. 

I think he will if he’s got the available cash to do so. Perhaps this may act as a bit of a wake up call….. I mean this should have come 5 years ago….

[Terraloon]

1 hour ago, Tommy G said:

They could do a sale and leaseback but you’d typically do that in a business where the commercial property is revenue generating and the investor can easily flip that property later down the line. 
 

There is no way anyone would buy the thing and lease it back given the specific nature and single use aspect, and also given how precarious the financial situation is. 
 

You could probably borrow against it but with risk factor it would be close to double digit interest, could get cheaper money elsewhere.

I pointed out a while ago that a red flag, well one of many red flags, was the sum appearing in the accounts in respect of interest and indeed it is sizeable and will continue to be there as long as there are borrowings of the size and nature we see at LC.

 

There is absolutely no simple answer to the conundrum that is Seagrave. Ok some wet themselves at the project and ambition that it signalled but the reality is that someone in authority should have spent attention to the  risks many since relegation from the PL seem obvious 

[Pliskin]

I think the only answer is Top plows money into the club, creating revenue… 

 

My understanding is he can do this, but our wage bill needs to be absolutely slashed. Essentially our situation resolved this was because of the unique financial rules of L1 it’s there to be exploited. As Birmingham and Wrexham did. 
 

But, can he afford to do this? 

[Terraloon]

18 minutes ago, Pliskin said:

I think the only answer is Top plows money into the club, creating revenue… 

 

My understanding is he can do this, but our wage bill needs to be absolutely slashed. Essentially our situation resolved this was because of the unique financial rules of L1 it’s there to be exploited. As Birmingham and Wrexham did. 
 

But, can he afford to do this? 

Do you know the biggest worry was when Top didn’t commit to spending he said something about trying.

 

 

[beepee1984]

25 minutes ago, Pliskin said:

I think the only answer is Top plows money into the club, creating revenue… 

 

My understanding is he can do this, but our wage bill needs to be absolutely slashed. Essentially our situation resolved this was because of the unique financial rules of L1 it’s there to be exploited. As Birmingham and Wrexham did. 
 

But, can he afford to do this? 

Did they not change the rules to prevent owners doing this?

 

We were one of the clubs previously who had our owners sponser us as severely inflated prices and now owners can only sponsor clubs at Market Value which is why we started using unethical betting companies instead to exaggerate interest and increase the sponsorship allowed 

Owners can invest in the club to avoid administration, but that does not count towards any FFP rules
(or so I believe)

[Jakemoore]

Everyone keeps talking about selling Seagrave or at least leasing it whilst we’re in L1. I get it. It’s an obvious revenue stream but there are two key factors that people are overlooking. 
 

One - Seagrave counts as club infrastructure. The £15m per annum to run it is within the allowance of PSR as it’s an investment into the club. In real terms, the cost of running it will outweigh the tv revenue for a L1 club. That’s how clubs go bust. I don’t know the way around that other than to say that surely the King Power group just need to stump up the £15m per year until they get us out of this mess. If they can’t do that then they need to sell to someone who can. They wanted this training ground. They funded it. They should have planned for a potential future outside of the top flight. We’re Leicester City. We’re not exactly strangers to relegation. 
 

Two - Belvoir Drive is sitting there as an asset that could and should be sold. It’s now exclusively honing the women’s team. That to me is a total waste of a sellable asset. The women don’t need their own training ground. Seagrave has over 20 pitches. It’s absolutely huge. I would be more in favour of us selling the land at Belvoir Drive and moving the women across to Seagrave. That would then also add to positive PSR as you’re then running one training ground between the men’s, women’s and youth teams. 
 

Only (and it is major) issue with my second point is the land value of Belvoir Drive will be pretty low. No one is going to buy an old run down training ground in its current state. A business may buy it for land but land isn’t overly valuable as an asset. Furthermore, it’s probably not big enough for a lot of potential proprietors.

 

King Power got us into this mess. They built a state of the art training ground which as a top 6 club (at the time), was a good idea. But with just one year of parachute payments left and I fail to see how the club can afford it. Therefore KP has to just fund it directly. 

[Pliskin]

3 minutes ago, beepee1984 said:

Did they not change the rules to prevent owners doing this?

 

We were one of the clubs previously who had our owners sponser us as severely inflated prices and now owners can only sponsor clubs at Market Value which is why we started using unethical betting companies instead to exaggerate interest and increase the sponsorship allowed 

Owners can invest in the club to avoid administration, but that does not count towards any FFP rules
(or so I believe)

 

As per the EFL website, 

 

League One clubs operate under the EFL Salary Cost Management Protocol (SCMP), which dictates that player-related expenditure must not exceed 60% of a club’s turnover. These rules ensure financial sustainability by restricting spending to a percentage of revenue, including match day income, commercial sponsorships, and TV revenue.

Key Financial Rules & Controls

60% Rule: Player wages must not exceed 60% of revenue.

Relevant Turnover: Includes TV revenue, sponsorship, and gate receipts.

Owner Investment: From 2025/26, owner investment (£1m+) is restricted to 60% of player expenditure.

Relegated Clubs: Clubs relegated from the Championship are allowed a 75% wage-to-turnover ratio in their first season.

Monitoring: The EFL monitors compliance, with potential for transfer embargos or points deductions for breaches.

Transfer Fees: While there is no direct cap on transfer fees, they are often implicitly controlled by the need to stay within the 60% wage-turnover threshold. 

 

 

So, in essence it is there to be exploited.

Edited 23 April by Pliskin

[FoxesWalk]

Anyone been able to find odds yet on us being relegated to league 2 next season? Hoping to get in early 🤣

[HankMarvin]

Some of the players wages will be exempt if they meet the below criteria, in which case it would be better to have those players exempt rather that sell and replace and increase the percentage pot. 

 

The "Legacy Contract" Exemption

If a club is relegated from the Championship, the wages of certain players are entirely excluded from the % spending calculation if they meet these criteria

Contract Timing The player must have signed their contract before a specific cutoff date (typically September of the season prior to relegation).

Duration: The contract must have been for three years or more.

Purpose: This rule prevents clubs from being forced to sell entire squads at a loss just to meet the lower League One turnover caps.

[Kalacs_Orthopedic_Shoe]

[Globalfox]

10 hours ago, HankMarvin said:

If they got some dodgy £50m sponsorship over 5/10 year deal could they get all the money straight away and then the 75 percent revenue is a lot bigger.

is there any guidance about maximum sponsorship.

 

edit 

must be FMV

Yes must be assessed as FMV and you can take the cash but you cannot account for it in one year they would divide by five. 

[ClaphamFox]

1 hour ago, Pliskin said:

 

As per the EFL website, 

 

League One clubs operate under the EFL Salary Cost Management Protocol (SCMP), which dictates that player-related expenditure must not exceed 60% of a club’s turnover. These rules ensure financial sustainability by restricting spending to a percentage of revenue, including match day income, commercial sponsorships, and TV revenue.

Key Financial Rules & Controls

60% Rule: Player wages must not exceed 60% of revenue.

Relevant Turnover: Includes TV revenue, sponsorship, and gate receipts.

Owner Investment: From 2025/26, owner investment (£1m+) is restricted to 60% of player expenditure.

Relegated Clubs: Clubs relegated from the Championship are allowed a 75% wage-to-turnover ratio in their first season.

Monitoring: The EFL monitors compliance, with potential for transfer embargos or points deductions for breaches.

Transfer Fees: While there is no direct cap on transfer fees, they are often implicitly controlled by the need to stay within the 60% wage-turnover threshold. 

 

 

So, in essence it is there to be exploited.

The combination of being allowed a 75% wage-to-turnover ratio and being in receipt of a final PL parachute payments will give us a major advantage next season that will not be repeated thereafter. It is imperative we promote next season.

[lcfc sheff]

It would seem we won’t be as financially screwed as first believed, but we certainly will need Top to personally invest again to help the cause.

 

I think that would be the simple and correct answer from what I’ve read?

[Tielemans63]

2 hours ago, Terraloon said:

Do you know the biggest worry was when Top didn’t commit to spending he said something about trying.

 

 

Yep. "I'll try" isn't very promising is it? He hasn't got that money personally has he? The King Power board aren't going to give it to him either are they, as he's rightly been identified as an absolute liability.

[Happy Fox]

11 minutes ago, Tielemans63 said:

Yep. "I'll try" isn't very promising is it? He hasn't got that money personally has he? The King Power board aren't going to give it to him either are they, as he's rightly been identified as an absolute liability.

Can the King Power board veto and sell the club? KPFC have had their day , time to sell up.

[Lionator]

16 minutes ago, lcfc sheff said:

It would seem we won’t be as financially screwed as first believed, but we certainly will need Top to personally invest again to help the cause.

 

I think that would be the simple and correct answer from what I’ve read?

Probably not initially but ultimately the people that make the ‘football’ and ‘financial’ decisions that HE trusts and employs are incompetent so the chances are we will be an onfield and off field mess still, and the risk of not getting promoted straight away raises risk masssively. And if he doesn’t invest because the global economy is a mess (aviation sector will again be affected by Iran war which will impact King Powers revenue), then we are screwed. 

[lcfc sheff]

15 minutes ago, Lionator said:

Probably not initially but ultimately the people that make the ‘football’ and ‘financial’ decisions that HE trusts and employs are incompetent so the chances are we will be an onfield and off field mess still, and the risk of not getting promoted straight away raises risk masssively. And if he doesn’t invest because the global economy is a mess (aviation sector will again be affected by Iran war which will impact King Powers revenue), then we are screwed. 

Here’s hoping he’s hired the right people for once 

[Pliskin]

7 minutes ago, ClaphamFox said:

The combination of being allowed a 75% wage-to-turnover ratio and being in receipt of a final PL parachute payments will give us a major advantage next season that will not be repeated thereafter. It is imperative we promote next season.

This is it isn’t it. 
 

In a way, financially if IF we play our cards right we can have a bit of a reset, and there’s no reason we can’t significantly improve the books, as well as rebuild the team. 
 

Rather than wallowing in self pity, if Top and King power genuinely want to turn this around, he’s got no choice but to gather his legal and finance teams and figure out how to get around the SCMP. 

[EastAnglianFox]

49 minutes ago, ClaphamFox said:

The combination of being allowed a 75% wage-to-turnover ratio and being in receipt of a final PL parachute payments will give us a major advantage next season that will not be repeated thereafter. It is imperative we promote next season.

 

We won't see a penny of the parachute payment, we've already taken a loan against it so it'll be heading straight to Macquarie bank unfortunately