Leicester’s current predicament, part 1: The financial realities | OneFootball

Foxes’ fans are unhappy. The main target is not, as is usually the case, the manager – although patience with Ruud van Nistelrooy is wearing thin – but the club’s hierarchy, the Director of Football John Rudkin, the Chief Executive Susan Whelan and even the owner Khun Top. Writing for The Fosse Way web site, Dave Bevan speaks for many Leicester fans when he opines that ‘sadly, this is a terrible football team representing a terribly run football club.

In this two-part post, we start by defending Leicester’s bosses, a little. Tomorrow, we list 15 mistakes that have been made in recent years.

The damaging effect of the profit and sustainability rules

Mistakes by the board there have been yes, and they have been extremely damaging to the club’s prospects. These will be detailed in the second part of this post. But not all of the club’s problems can be attributed to them. One of the key challenges faced has been football’s financial regulations. I suspect if Leicester’s hierarchy ever did communicate with the fans they would focus on this issue.

I have written about this before in detail. Very briefly, the Profit and Sustainability rules (PSR) benefit those clubs with the highest football revenues and penalise those, such as Leicester, whose football income is much smaller. This system forces clubs in the Foxes’ position to sell their best players and limits their ability to fund adequate replacements.

Leicester were charged, in April last year, with breaching PSR for the three-year cycle ending in 2022/3. As is well known, the club won a legal case against the Premier League by claiming that they had no jurisdiction over the club whilst it was in the Championship. Nevertheless, the Premier League is still appealing over this ruling and, even more significantly, City know they have to exercise financial prudence in order to avoid a similar charge at the end of the 2024/5 season.

All in all, it is important to reiterate that it is not the unwillingness to shell out huge amounts on transfer fees and wages that is the problem. The King Power Group have always been willing to bankroll the club in any way they can. The fact is that they are restricted from doing so by PSR. Even Newcastle, effectively owned by a nation state with limitless funds, have the same predicament. Arguably, too, the only way that Manchester City were able to break into the traditional top six in the Premier League was by breaking the financial regulations.

That may be so, critics would respond, but other clubs in a similar or worse financial position – Brentford, Brighton, Bournemouth and so on – seem to have done alright. In answer to this, I would suggest that these smaller Premier League clubs are one or two poor transfer windows away from being in trouble. In addition, Leicester faced unique circumstances. In particular, in aiming for the stars they got too close to the sun. That is, following the title win in 2016 they sought to challenge the traditional big six and had to spend, on transfers and wages, an appropriate amount. By 2023, the wage bill had risen from £182 million to almost £206 million, constituting a staggering 116 per cent of revenue. What City’s hierarchy couldn’t bargain for was the plummet down the table – from eighth in 2022 to 18th in 2023.

Relegation was a financial disaster for Leicester from which the club hasn’t yet recovered. Not only was the Premier League prize money significantly reduced from the previous three seasons, as well as the bounty that comes from playing in European competitions, but a year in the Championship cost the club tens of millions of pounds.

I can hear many fans replying that it was mistakes that led to the fall. They are, in some ways, right as we will show in the second part of this post. But, hand on heart, should a Leicester team - containing players such as James Maddison, Youri Tielemans, Harvey Barnes, Wilfred Ndidi, Jamie Vardy and Jonny Evans – have been anywhere near the bottom of the table? The Foxes had the most expensively assembled squad and the highest wage bill of any club relegated from the Premier League, ever. The club had spent excessively and was, ultimately, let down by the players.