The financial impact of another relegationpublished at 11:32 BST
11:32 BST
Dale Johnson
Football issues correspondent
Leicester’s relegation comes with serious financial question marks.
After being deducted six points for exceeding the maximum loss threshold through to the 2023-24 season by £20.8m, last month the club reported another huge loss (£71.1m) for 2024-25.
And that second season was as a Premier League club.
Leicester had been operating a wages-to-turnover ratio of more than 100% for the two seasons to 2023-24, meaning they were paying out more just on salaries than they generated.
Wages dropped to 82% for the Premier League relegation season – largely due to television income – but they still had several big earners.
Those players had clauses that reduced their wages upon relegation, but Leicester have still had several of the highest-paid players in the Championship this season.
Many of the big earners – such as Patson Daka, Ricardo Pereira and Winks – will be out of contract in the summer.
But Oliver Skipp is contracted through to 2029 and Jannik Vestergaard remains under contract after being given a three-year deal just before his 31st birthday in 2024.
Finding new clubs for those players will not be easy.
Image source, Getty Images
And then there’s the issue with Leicester’s loan from Australian investment bank Macquarie.
In September, they went to Macquarie to bring forward instalments due from the transfers of Tom Cannon, Kasey McAteer and James Justin. In January, they rolled over another loan to take in their last remaining parachute payment to June 2027.
‘Top’ has previously written off hundreds of millions of pounds in loans.
But now it seems Macquarie has been providing lots of the advanced funding, spending future monies due.
With television revenues much lower in the League One, there will come a point when there is not much left to take out loans against.
From next season, clubs in League One will be restricted to spending 60% of their extra football income – such as prize money, cup earnings or transfer fees received – on player-related expenditure.
With many players still at the club on – in League One terms – astronomical wages, it will be tough for Leicester to operate within these parameters.