Leicester City has announced a deficit of £89.7m for the 2022-23 season, bringing their cumulative losses for the past three Premier League seasons to over £215m.
Last month, Leicester City faced charges for purportedly violating profit and sustainability regulations (PSR) in connection with the recently disclosed financial figures.
Premier League regulations allow clubs to incur losses of up to £105m over a rolling three-year period.
This development comes despite Leicester City, who were relegated at the conclusion of the previous season, generating a profit of £74.8m from player sales.
In their financial accounts, the club characterized relegation as a “disappointing and unforeseen downturn,” having achieved eighth, fifth, and fifth place finishes in the Premier League in the three preceding seasons.
The Championship club’s chief executive Susan Whelan said: “After a sustained period of growth and success for the club during the last decade, the 2022-23 season was a significant setback, the consequences of which will be felt for some time.
“We must now focus on rebuilding and seeking to return to and re-establishing ourselves in the Premier League.
“Having achieved finishing positions in the Premier League of fifth, fifth and eighth in the three preceding seasons, our targets and associated budgets for 2022-23 were entirely reasonable.
“However, for a club such as ours, whose sustained sporting achievements have justified the levels of investment required to compete with the most established clubs and pursue our ambition, a season of such significant under-performance on the pitch presents financial challenges, particularly from the perspective of the game’s current Profitability and Sustainability rules.”
Leicester City raised approximately £70m through the sale of French center-back Wesley Fofana to Chelsea in August 2022, while England midfielder James Maddison completed a £40m transfer to Tottenham last summer.
However, these earnings were offset by the dismissal of Brendan Rodgers and his coaching staff, including assistant manager Chris Davies, in April 2023, as well as a lower-than-expected league position.
The financial accounts do not specify the exact cost of terminating Rodgers’ contract, but costs of sales increased by £26m to £301.8m, with the club attributing part of this increase to the managerial change.
Rodgers expressed his frustration at Leicester’s inability to invest in the summer transfer window of 2022. At the start of the season, he had predicted that Leicester would struggle and needed to aim for 40 points to avoid relegation. However, they finished 18th in the league with 34 points, resulting in relegation.
Turnover decreased to £177.3m, down from £214.6m the previous year. However, chairman Aiyawatt Srivaddhanaprabha settled the club’s outstanding £194m debt to the parent company, King Power International, last February.
Leicester City had owed this amount in loans to KPI, which is owned by the Srivaddhanaprabha family. Nonetheless, a debt-to-equity transfer was successfully executed.
“The long-term and ongoing financial security and commitment provided by Khun Aiyawatt, the Srivaddhanaprabha family and King Power International, enables the club to rebuild with certainty and confidence,” added Whelan.
Leicester’s financial accounts were released 12 days after the Premier League charged them for alleged breaches of Profit and Sustainability Rules (PSR) and for failing to submit audited finances.
Leicester will have “add backs,” including expenditures on its women’s team and academy, which will reduce their losses in the Premier League’s calculations. Additionally, they are reporting for 13 months instead of 12, aligning their accounting with the rest of the business in a long-term club decision.
The £215.3m loss over three years encompasses a £33.1m pre-tax loss from the 2020-21 season, during which they won the FA Cup, and a club-record loss of £92.5m the following year.
If found guilty of violating spending rules, which permit clubs to average losses of £35m per season in the Premier League, Leicester could face a points deduction. However, as the case, including any appeals, is likely to extend beyond the current season, potential sanctions would be enforced in the next season.
This season, top-flight clubs Everton and Nottingham Forest have already faced points deductions for rule violations.
Furthermore, Leicester is under a separate financial investigation by the English Football League (EFL), which imposed a registration embargo on the club from the East Midlands following the Premier League’s charge. In response, the Foxes initiated legal action against both the EFL and Premier League.