Leeds United will be watching anxiously to see what judgement Leicester City receives as their well-documented financial plight becomes a major conversation point.
This season, the Whites are in the midst of a four-way battle for automatic promotion, with Ipswich Town currently leading by a slight margin, Leeds a point behind, and Leicester City another point back in third.
It’s a tribute to the Tractor Boys’ season that they’ve been able to compete despite the vast financial discrepancy between them and the three teams below them, particularly Leicester, who are clearly living past their means.
Leicester announces losses of £89.7 million for most of the fiscal year 22/23.
With April approaching, Leicester’s finances have been revealed, and the outlook for Enzo Maresca’s team appears bleak.
Their most recent released records indicate pre-tax losses of £89.7 million for the 22/23 fiscal year, which they have stretched to a 13-month period to incorporate major player sales, which lessen the blow slightly.
The Foxes’ problems stem mostly from their on-field spending failing to pay off, with their salary bill skyrocketing and results failing to follow, forcing them out of Europe and tumbling down the Premier League, while TV revenue plummets as well.
Two regulatory bodies have lately clamped down on Leicester, with the EFL imposing a player registration embargo and the Premier League charging them with PSR violations.
“Taken aback”: Kieran Maguire startled by Leicester events.
Kieran Maguire, a finance expert, has been startled by how bad Leicester’s finances have turned out since these accounts were published.
Speaking on the When You’re Smiling podcast, Maguire revealed his thoughts on Leicester’s situation, which Leeds will undoubtedly be watching closely:
“Like many others, I was caught aback. I knew it wasn’t going to be a good year, but the fact that the club had to extend its fiscal year to 13 months in order to increase sales and decrease losses to £90 million demonstrated how difficult it was. We expected revenue would be reduced, but I was surprised that the wage bill had risen so dramatically.
“For the first time in my Premier League experience, they were paying out more in wages than coming in through the door – in a non-Covid year. This is the only time it has happened in Premier League history. A devastating set of numbers.
“After winning the Premier League in 2016, Leicester City spent £100 million or more on signing players. That decreased in 2020/21, partly due to Covid, but the investment in new talent in 22/23 was only £53 million. This is the lowest since the first season back in the Premier League.
“It doesn’t look good. There is a catch-up on all the expenditure, some of which worked and some of which did not. The club planned to finish in the top half of the Premier League, but it did not. The revenue from television fell by roughly £35 million. The fact that the club did not compete in Europe also had an impact. All of these separate factors contributed to a bad season on the field and financial outcomes.
“It’s all about pay. The pay bill has more than doubled since the club won the Premier League in 2016. “That is simply not sustainable.”
The 49ers will be outraged if sanctions are not imposed right away.
Leicester did virtually nothing to lower their salary bill this season while in the EFL, therefore they will continue to lose a lot of money, which is unfair to the other teams who are operating within their means.
A sanction is unavoidable regardless of the division Leicester plays in next season, but the problem for Leeds is that the punishment may not effect them.
They’ve enjoyed a year of being at a distinct advantage in the Championship by keeping their top earners at the club, and they could be promoted before they’re properly punished.
