Leicester City have plummeted down the Premier League table.
This decline and fall has been made more dramatic by the fact that the club had enjoyed such a
startling ascent, winning the Premier League in 2016 and enjoying the riches that result from
appearing in the Champions League. What’s gone wrong?
Despite their recently-acquired nouveau riche status, Leicester
were careful to use the money from their successes wisely.
Primarily, this took the form of player investment. But rather than throwing huge amounts
at already-established players, they invested in young talent and offered them long and lucrative
contracts to avoid them being quickly hoovered up by teams higher up the food chain. This approach
saw them sign Kelechi Iheanacho for £25m, James Maddison for £20m, Youri Tielemans for £45m,
Wesley Fofana for £30m and Patson Daka for £23m in consecutive seasons from 2017 onwards.
To counter the risk involved with spending big on younger players,
Leicester developed an approach to player recruitment that was designed to offset
the potential risk. The “Leicester Model'' as it came to be known consisted of selling
one key asset every summer and reinvesting the proceeds wisely. Between 2016 and 2020,
the club were able to bring in £255m of revenue through the sales of N’Golo Kante,
Danny Drinkwater, Riyad Mahrez, Harry Maguire and Ben Chilwell. So successful did this approach
appear that a number of other clubs claimed to be introducing it into their own recruitment process.
The money wasn’t just spent on playing talent, though. Leicester also invested in their coach,
paying out to bring Brendan Rodgers and his staff from Celtic and installing him
in a new £100m training complex at Seagrave in North Leicestershire.
But then, disaster struck. In 2020, the Covid pandemic broke out in England.
Of course, all Premier League sides were impacted by the Covid restrictions. By the end, Leicester
estimated that they lost around £50m as a direct result. But the indirect cost was even greater.
Since 2010, Leicester City has been owned by King Power International, a travel retail group
based in Bangkok, Thailand. Being in the travel industry, King Power was severely affected by
the Covid-19 pandemic. Between 2019 and 2021, the company’s turnover dropped from £2.3bn to £448m.
Although more recently King Power has started to recover financially and its
chairman Aiyawatt “Top” Srivaddhanaprabha has promised an ongoing commitment to the club,
the timing of the pandemic left Leicester in a more vulnerable position than most other Premier
League clubs given their increased investment across the previous few years. When their 2021/22
accounts were released earlier this season, the club announced losses of around £92.5m.
On top of this, the “Leicester Model” was starting to come apart at the seams. Having
committed players to long, lucrative contracts, Leicester’s wage bill had grown from £122.4m per
year in 2019 to £182m per year in 2022. With the drop in revenues caused by the pandemic,
Leicester’s wage-to-revenue ratio spiked from 68.6% up to above 80%.
And whereas before, Leicester had been able to make up the financial difference
by selling their best players in the summer, these sorts of sales were starting to decrease
in frequency. Although they did manage to pick up £70m from Chelsea for Wesley Fofana,
the club has failed to capitalise on Youri Tielemans and James Maddison.
A subtle change in the recruitment approach also occurred after Brendan Rodgers joined
the club. Where previously the model had been investment in young talent, it now seemed like
the recruitment was straying towards bringing in more established players. In the summer of 2021,
Jannick Vestergaard and Ryan Bertrand were brought in cheaply but on good
contracts. Neither has proven to be a good signing and promises any real resale value.
Where the “Leicester Model” was set up to encourage a cycle of value generation
and re-investment, at the point where they needed to fall back on the model,
the club had ended-up losing their nerve. In fact,
so bad has some of the recruitment been that Leicester are soon set to lose a group of
players to free contracts who they spent over £110m to acquire in the first place.
Of course, player value is always linked to performances on the pitch and this is another
area where the failure of recruitment has come to hurt Leicester in recent seasons. The last few
seasons have seen so many misses that not only has the value of some of the players dropped,
but so have the performances of the team. And the result is a vicious cycle which has
seen Leicester drop down the table at the same rate that the value of the squad has dropped.
Given that Rodgers was in charge of the coaching and gradually took more control
over the recruitment, it’s worth raising the question of his role in the club’s decline.
As The Athletic’s Rob Tanner put it: "There have been great achievements during Rodgers’
four years and he will go down as one of the club’s most successful managers,
but there is no question Leicester are in a worse situation now than when he arrived.
That certainly isn’t down to just him, however much power he eventually had.”
In the end, the club decided that whoever was to blame, Rodgers wasn’t going to be
the solution to the problems and he left by mutual consent in April 2023.
With Rodgers gone and Dean Smith installed for the rest of the season, Leicester City are in real
danger of relegation, a drop that would see them lose around £100m a year in TV revenues according
to the estimate of football finance expert Kieran Maguire. This would compound their financial
woes even further, making the task of promotion back into the top division a daunting prospect.
There are few realities more brutal than those of modern football. Within a very short
space of time, Leicester City have gone from being the exemplar of good practice
within football clubs to becoming the next cautionary tale of how it can all go wrong.