By David Butler
Last week the media reported that Leicester City are due to report annual loses of approximately £120m. Given the magnitude of EPL revenues it really begs the questions - what has gone wrong at Leicester? For a time, they were touted as one of the best run clubs in the UK.
While the club is making major infrastructural investments in training facilities, one part of the problem is poor decisions on player recruitment and the payment of inflated wages. At times over the past seasons, Leicester wage budget has been on a par with clubs that have major global appeal (which Leicester do not). Like many big clubs today the lions share of revenues are spent on players wages. The recent Leicester-style wage bill however is typically matched with Champions league revenues – it has been over 5 years since the club appeared at this level in Europe. Also, I’m led to believe the owners primary business interests are linked to airports, which suffered clear damage during COVID.
In a nutshell, I think this could be a case study in wage costs spiraling out of control. Below shows estimates of the clubs annual wage budget over the last 9 seasons – they have reined it in somewhat this season, but it is probably too late.
Clubs don’t usually mind spending big on wages if they are getting bang for their buck on the pitch, so maybe Vardy and Maddison could well be worth it for Leicester at ~£140,000 and ~£110,000 a week (gross). Others are more questionable: Jonny Evans (100k), Boubakary Soumaré (100k), Ryan Bertrand (80k), Dennis Praet (75k), Jannik Vestergaard (70k) are some examples of debatable contracts.
All due credit to Leicester, they tried (and nearly succeeded) to break into the big six – but to do so would mean they would have to almost get everything correct (without blatantly breaching FFP). That’s almost impossible in football. They seem to have gotten their recruitment wrong for a period, with several players being awarded far too long and expensive a contract. With the revenues at the disposal of the Big-6, this type of error will be punished.
Last week the media reported that Leicester City are due to report annual loses of approximately £120m. Given the magnitude of EPL revenues it really begs the questions - what has gone wrong at Leicester? For a time, they were touted as one of the best run clubs in the UK.
While the club is making major infrastructural investments in training facilities, one part of the problem is poor decisions on player recruitment and the payment of inflated wages. At times over the past seasons, Leicester wage budget has been on a par with clubs that have major global appeal (which Leicester do not). Like many big clubs today the lions share of revenues are spent on players wages. The recent Leicester-style wage bill however is typically matched with Champions league revenues – it has been over 5 years since the club appeared at this level in Europe. Also, I’m led to believe the owners primary business interests are linked to airports, which suffered clear damage during COVID.
In a nutshell, I think this could be a case study in wage costs spiraling out of control. Below shows estimates of the clubs annual wage budget over the last 9 seasons – they have reined it in somewhat this season, but it is probably too late.
Clubs don’t usually mind spending big on wages if they are getting bang for their buck on the pitch, so maybe Vardy and Maddison could well be worth it for Leicester at ~£140,000 and ~£110,000 a week (gross). Others are more questionable: Jonny Evans (100k), Boubakary Soumaré (100k), Ryan Bertrand (80k), Dennis Praet (75k), Jannik Vestergaard (70k) are some examples of debatable contracts.
All due credit to Leicester, they tried (and nearly succeeded) to break into the big six – but to do so would mean they would have to almost get everything correct (without blatantly breaching FFP). That’s almost impossible in football. They seem to have gotten their recruitment wrong for a period, with several players being awarded far too long and expensive a contract. With the revenues at the disposal of the Big-6, this type of error will be punished.
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