Administration for Leicester

JoBeck · Oct 21, 2002

The High Court ruled that Leicester must go under administration today. The club was negotiating an 11th-hour deal with its creditors but in the end there was nothing they can do. Gary Lineker is leading a consortium which will try to buy the club.

Here are some links I posted in the England: Other Divisions forum:

Club statement to the stock exchange: http://www.lcfc.com/today/view/breaking_news_detail/0,,10274~288808,00.html

Leicester City plc chairman Greg Clarke on administration: http://www.lcfc.com/today/view/breaking_news_detail/0,,10274~288807,00.html

Micky Adams on administration: http://www.lcfc.com/today/view/breaking_news_detail/0,,10274~289090,00.html

Soccernet on administration and Lineker: http://www.soccernet.com/england/news/2002/1021/20021021lcfclineker.html

BBC.com: Lineker lifeline for Leicester City | Cash crisis envelops British football | Which clubs are in crisis?"

JJ Mindset · Oct 27, 2002

I've been reading about the plight of LCFC ever since I received word of it. It seems that the board of directors assumed certain things and allowed expenses to be way more than what would be expected for a club of its size. I know that they had been in the Premiership before last season and that contracts had been negotiated during that time. Still, I have to wonder if anyone there had a clue on how to best manage risks, especially in a business model that's heavily dependent on labor such as a football club.

I don't know the intricate details of those business dealings but I have a good hunch that the board didn't seperate capital expenses(i.e. the new stadium) and operating expenses(the players, managers, training). One of the articles stated that they took out a huge loan to pay for the stadium. Of course, it didn't help that the overall market for players went on a downturn. Still, someone should've figure out that many of the players now playing professionally aren't worth the money they're being paid right now.

I can only count on one hand the number of players in all the leagues that, I would say, deserve the wages they're earning. It's not just a Leicester problem but of all the clubs in England. Even Man U should cut some wages back. Same for Arsenal and Liverpool. However, I will say that, as a comparison, the wages players receive over there don't come close to what players here in the U.S. receive on average.

JoBeck · Oct 27, 2002

Originally posted by JJ Mindset
I've been reading about the plight of LCFC ever since I received word of it. It seems that the board of directors assumed certain things and allowed expenses to be way more than what would be expected for a club of its size. I know that they had been in the Premiership before last season and that contracts had been negotiated during that time. Still, I have to wonder if anyone there had a clue on how to best manage risks, especially in a business model that's heavily dependent on labor such as a football club.

I don't know the intricate details of those business dealings but I have a good hunch that the board didn't seperate capital expenses(i.e. the new stadium) and operating expenses(the players, managers, training). One of the articles stated that they took out a huge loan to pay for the stadium. Of course, it didn't help that the overall market for players went on a downturn. Still, someone should've figure out that many of the players now playing professionally aren't worth the money they're being paid right now.

I can only count on one hand the number of players in all the leagues that, I would say, deserve the wages they're earning. It's not just a Leicester problem but of all the clubs in England. Even Man U should cut some wages back. Same for Arsenal and Liverpool. However, I will say that, as a comparison, the wages players receive over there don't come close to what players here in the U.S. receive on average.
Click to expand...

That's pretty much a history of Leicester's financial problems in a nutshell. There were a few other factors which contributed to Leicester's financial plight. One big reason is that Peter Taylor spent over #17 million only for the team to go from European challengers to being relegated in a little over a year. Martin O'Neill rarely broke the bank and became famous by buying players from the lower divisions for cheap.

Also, as you mentioned, Leicester did mismanage its stadium loan and that has had a devastating effect on the club's everyday finances. When Leicester City plc agreed to the loan, the repayment plan was based on the club earning Premiership-level revenues. I don't know if the board was delusional in believing that relegation was impossible (which isn't too far-flung of an idea, given the board's comments early last season), or if they knew they wouldn't get the deal done if they repaid relative to Division One revenues and lied to an American firm (US Teachers Association, I think) that really has no knowledge of how English football works.