This article analyses Leicester City FC finances in respect of the 2020/21 season.
Season review
The 2020/21 season marked the Foxes first ever FA Cup win as the club narrowly missed out on UEFA Champions League (UCL) football for the second season in a row, finishing in 5th placed in the Premier League.
The club halved its losses to a still high £31.2m as the club recognised deferred 2019/20 broadcast revenue. COVID-19 did however have a significant impact on finances, with Leicester City stating £36.2m of revenue was lost in 2020/21 due to the pandemic, which would have offset the loss incurred.
The club continue to invest however and celebrated the opening of its new Seagrave Training ground.
Leicester City FC Finances – Revenue
Total Revenue posted for the year was £226.2m (2020: £150m), a 51% increase. While the club’s FA Cup success and return to Europe were important, the increase was driven by revenue deferrals (20% of the club’s 2019/20 revenue was recognised in 2020/21).
Matchday
Matchday Revenue for the year was £0.6m an 96% fall in revenue due to the lockdown restrictions.
The King Power Stadium was left deserted as the stadium only hosted 8,000 fans all season compared to a usual average attendance of 32,000 fans each game.
The Foxes can look forward to the return of matchday revenue as the club welcomes fans back to the KingPower. The club should see matchday revenue rise towards £15m in 2022.
Broadcast
Broadcast revenue was posted at £184.5m compared to £107.6m from the previous year, a 71% rise.
The recognition of revenue from 19/20 relating to the premier league and extended runs in the Europa League and a victorious FA Cup finish resulted in a significant increase in Broadcast Income.
The absence of such deferrals of revenue for the upcoming season, plus a much poorer Premier League season will result in a significant broadcast reduction in 2022. The club’s participation in the newly formed UEFA Conference League (UECL) will be nowhere near enough to plug this gap, irrespective of progress.
Commercial
Commercial Income for the year was posted at £41.1m rising from £29.3m in 2020 (41% increase).
The most significant increase in commercial income could be attributed to the timing differences in recognising sponsorship revenue from 19/20.
Leicester City FC Finances – Revenue summary
Leicester City had a strong 2021 season both on and off the pitch as revenue rose significantly. However, the club’s 2021/22 campaign has been disappointing and this, combined with the absence of revenue deferrals will see revenue fall significantly in 2022, and further in 2023 should the club fail to qualify for Europe. is a club that has been run sustainably in its past and they will continue to do so. The club has solid backing from the owners and have a sustainable revenue model.
Leicester City FC Finances – Operating costs
Operating Costs for the year was £221.6m rising by 14% from the previous year (£194.6m). The vast majority of these costs pertain to wages.
Wages
The club’s wages have risen from £157.5m to £192.1m, a 22% increase. The Foxes’ wages to revenue ratio now stands at 85% compared to 105% from the previous year. The reason for the decrease in ratio is due to the greater rise in revenue than wages. This will be reversed in 2022, although reduced performance may result in wages falling.
The Foxes have been ambitious and have been able to sign talent from across the world’s top leagues. If they are to continue on a path to sign some of the world’s best talent, wages could be inflated for the foreseeable future.
Other costs
Other Operating costs were stated at £29.5m, a 20% reduction in this component due to games behind closed doors.
Leicester City FC Finances – Operating costs summary
Overall, operating costs have risen and could continue to rise as the club continues to invest in its playing squad. With performance and revenue dipping, the club will be hoping to avoid significant cost increases.
Leicester City FC Finances – Transfers
Leicester City brought in two major signings in the form of Wesley Fofana and Timothy Castagne. This resulted in The Foxes having a net spend of £4.3m for the transfer window.
Amortisation
Player amortisation was stated at £72.8m (2020: £77.8m), falling by £5m owing to the departure of eight first-team players. This included club captain Wes Morgan who retired from professional football.
Profit on player sales
Profit on player sales fell from £63.1m to £43.9m, dropping by 30%. Harry Maguire comprised the majority of the transfer fees earned from the 19/20 season and the club saw another star player depart in the form of Ben Chilwell.
Leicester City did not have any such sales in 2021/22 and therefore profit on player sales will be minimal, a £40m+ hole in the club’s finances. However, the club continues to have a rich pool of young talent that could potentially be offloaded for big money transfers should revenue fall further, and losses rise.
Transfer debtors / creditors
Leicester City is owed £19.5m in transfer fees and owes £63.2m in transfer fees for their additions to the squad. This creditor position did not halt further investment in the 2021/22 season as the club purchased over £50m worth of new talent.
Leicester City FC Finances – Transfers summary
Leicester City have been in transition and are clearly targeting top young talent across Europe to replace aging players in the squad. This has led to the club spending significantly on transfer incomings. The club has balanced their net spend by offloading some of their most admired players for big money transfers in past seasons and could continue to do so. The 2022 season however saw limited sales which will significantly impact losses.
Leicester City FC Finances – Profitability
The foxes reported a loss for a third consecutive season, suffering from the effects of COVID-19.
Operating profit / loss before player trading
Before player trading, operating profit stood at £7.1m compared to £44.6m loss. This was due to the bumper revenue recorded due to broadcast revenue deferrals. This will however reverse in 2022 in their absence and worsened performance.
Operating profit / loss after player trading
After player trading, operating losses fell from £59.3m to £21.8m, a 63% reduction. Despite lower player sales, the increased revenue captured above drove the reduction. Losses will however rise considerably in 2022 due to limited player sales.
Profit / loss before tax
Loss before Tax for the year was stated at £33.1m (2020: £67.3m).
Leicester City FC Finances – Profitability summary
The Foxes are likely to see a significant loss in 2022 as the club’s revenue falls considerably without broadcast revenue deferrals, in addition to worsened league performance. Leicester City will be hoping this season has been a blip on the pitch, while the club will be hopeful of plugging any gap with player sales from its talented squad.
Leicester City FC Finances – Assets / Liabilities
The Foxes have made significant capital expenditure with the opening of the state-of-the-art Seagrave training ground. This resulted in a significant rise in debt levels.
Cash flow
Cash and Cash equivalents increased from £41.2m to £50.9m. Cash outflow in player transfers and capital expenditure (£59.7m) were completely absorbed by Cash flow from financing activities (£52.5m) and operating activities (£17.1m).
Leicester City has spent over £100m on its training ground across 2020 and 2021.
Debt
The club owes £218.4m in owner debt rising from £154.4m in the previous year. The club has received significant backing from the owners and have been able to carry out obligations.
Since the end of the financial year (31 May 2021), the club repaid £69.2m of debt and took out a new £80m loan with the same bank over four years. In addition, the club entered a £42.5m 5-year loan with King Power International, Highlighting the cost of its continued investment in the squad and facilities.
Net debt
Net Debt has also risen from £178m to £236.8m, adding third party debt and bank loans to the component of owner debt.
Separately, the club is also under investigation from the Competitions and Markets Authority. This was due to suspected Competition law breaches which were not disclosed. No further information was provided.
Leicester City FC Finances – Final Remarks
The foxes had a bittersweet end to the 20/21 season with the club narrowly missing out on a top 4 spot, followed by a triumph in the FA cup. However, the club has seen its form diminish this season as it has now crashed out of the Europa League and their chances of qualifying for Europe this season seem bleak.
This will have financial ramifications and may put pressure on player sales to balance the books. However, the club’s owners continue to invest in the future of the club as it explores expanding the stadium and further investment in the playing squad provides room for optimism.
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