[size=x-large]What's really going on at Leicester City?[/size]
By Jeremy Wilson, Chief Sports Reporter and John Percy
Leicester City are the only club this summer to not complete a single incoming outfield transfer, despite a record summer of spending by Premier League clubs.
Despite the departure of long-serving goalkeeper Kasper Schmeichel and sending midfielder Hamza Choudhury on loan to Watford, Leicester squad feels very familiar to the one that ended last season in eighth place that missed out on Europe.
Their inactivity has fuelled fears that the club are on the cliff of a financial crisis, with Brendan Rodgers making it crystal clear the club are in a position where they have to sell in order to buy despite not spending a penny, so what’s really going on at the King Power Stadium?
What’s happening at Leicester City this summer?
Manager Brendan Rodgers referred earlier this summer to the club “putting the brakes on” but the transfer window has so far felt more like an emergency stop. There have been no outfield signings and moving players on has also become problematic in the context of significant existing contracts and an unwillingness of buying clubs to meet some of Leicester’s valuations.
Those tensions - and the desire of some players to leave - appear to have influenced performances and a club that has won both the Premier League and the FA Cup over the past seven years has taken just one point from its opening three games. That tally has included what were hardly daunting home fixtures against Brentford and Southampton.
The wider backdrop is of record-breaking spending this summer across the Premier League even with seven days still remaining until the transfer window closes. Leicester, whose only new arrival is goalkeeper Alex Smithies on a free transfer from Cardiff City, are the only club to have not added a penny to the Premier League’s gross £1.5 billion spend.
Are the owners still committed?
The clear and repeated message is that the Srivaddhanaprabha family retain their long-term commitment and vision “for sustainable success”, even if Covid has clearly had a significant impact on their wider financial interests. The family’s King Power International Group is both Leicester’s majority shareholder and Thailand’s leading operator of airport duty-free stores. Financial analysts Forbes reported that the pandemic “resulted in a steep fall in revenue as tourism froze”. Forbes put Vichai Srivaddhanaprabha’s wealth at $5.2bn shortly before his death in 2018 but there has since been a major post-pandemic dip in estimates for his son Aiyawatt Srivaddhanaprabha (Leicester’s chairman) and the wider family, to $3.7bn in 2020 and then down to $1.7bn earlier this summer. A yearly 50 per cent dip in sales was being forecast in July 2020 and, according to the analysts Statista, revenues fell between 2019 and 2020 from €2.67bn to €907 million.
King Power still provided a further loan last year to finance Leicester’s working capital requirements, contributing to the club’s overall borrowings of £287m, which comes with ongoing interest repayments. There is also £63m in outstanding transfer instalments, against just under £20m due in. “[Leicester] needs money in before it can fund acquisitions unless the owners are willing to put in more cash themselves,” says Kieran Maguire, host of the Price of Football podcast.
What else could be restricting them?
Although there is no immediate threat of any infringement, the Premier League’s financial regulations loom over the club’s planning. There is a pre-tax loss limit over three years of £105m. Covid-related losses and investments to the academy and infrastructure mean that Leicester can adjust their cumulative £120m loss (to June 2021) to well below £105m, but the longer-term challenge is evident.
The wage bill reached a record £192m in the most recent accounts and financial losses for next year alone could be over £90m. At 86.63 per cent, analysis by Vysyble shows that Leicester’s wage to revenue ratio has been the highest in the Premier League during the four seasons from 2017-18 to 2020-21. “Like all football clubs, it has suffered from the financial effects of Covid but the high staff costs to revenue ratio had already exceeded 80 per cent,” says Vysyble’s John Purcell. Maguire stressed that cutting costs would be “critical” and it is clear that Rodgers currently has a squad with too many well-paid players who are not contributing on a matchday. The Srivaddhanaprabha family’s recent investment is also not solely related to wages or transfer fees and, as well as opening a £100m new training ground last year, Leicester unveiled plans to expand the King Power Stadium.
Is Brendan Rodgers happy?
Though Rodgers understands Leicester's financial position, he is clearly frustrated that he has not been able to "regenerate" his squad. He has already missed out on targets this summer including Chelsea defender Levi Colwill (who joined Brighton on loan), Ademola Lookman (who joined Atalanta) and Nottingham Forest's Brennan Johnson (who signed a new contract).
Leicester have rejected bids for Wesley Fofana and James Maddison from Chelsea and Newcastle respectively, while snubbing Atletico Madrid's inquiries for Timothy Castagne.
There have been no offers for Belgium international Youri Tielemans, who has under a year left on his deal, and that has been a huge issue behind Rodgers's lack of signings. Arsenal could yet move for Tielemans in the next week, though wage demands are said to be a major hurdle.
What's the transfer strategy over the next week?
Leicester have to sell at least two players before Sep 1 in order to provide Rodgers with funds, to lower the number of their bloated squad. Rodgers has admitted that he has targets in mind but recognises that time is ticking away in the window.
The situation is also complicated further as there are no guarantees Rodgers will be given significant funds to spend - indeed, it is understood that if Leicester do agree an £80m deal for Fofana, less than half of that fee will be made available.
According to sources in Germany, Borussia Dortmund's Manuel Akanji is Leicester's No 1 target if Fofana is sold. A Switzerland international, Akanji has been identified as a high-quality replacement by Leicester's recruitment team.
Rodgers said on Thursday: “There’s a valuation on players and if none of them go out we won’t be able to do any business.
"Behind the scenes there's a lot of hard work going on with our recruitment team. We hope we can still bring in new players and have the possibility to do that."
