Guardian article - Leicester City's owners did not invest £53m for FA Cup days

[FryattFox]

Interesting(ish) article:

Leicester City will hope for FA Cup glory against Chelsea on Sunday just as the real tale emerges of the extraordinary investment by their Thai owner, Vichai Raksriaksorn. He has spent £53m in a quest to achieve Premier League football, which again appears distant this season.

Like a lower-league Roman Abramovich, Raksriaksorn has showered money on his project since buying the club in the summer of 2010. Sven-Goran Eriksson was hired in October of that year, then fired 12 months later for failing to achieve promotion, while £11m has been spent on the salaries of a band of players that includes Darius Vassell, Jermaine Beckford and Kasper Schmeichel, not all of whom have impressed.

The Foxes are 11th in the Championship, 16 points from the automatic promotion places. Nigel Pearson, who succeeded Eriksson as manager, speaks of attaining a place in the play-offs – currently two wins away – in guarded tones. "Its still mathematically a possibility," he says. "We're not a million miles away but of course our inconsistencies this season have made it very difficult for us to make any inroads into the league. There'll be twists and turns between now and the end of the season, there's no doubt about that."

The latest £26m of the £53m injected by Raksriaksorn, who owns Leicester through the holding company Asian Football Investments, is a loan at 8% and not interest-free as, say, Abramovich has done with Chelsea. Asked about this dependence, Pearson says: "We are fortunate that we have very wealthy benefactors who have invested an awful lot of money not only in the squad but in the infrastructure of the club. I think that's important to recognise.

"But certainly [as] financial fair play is looming, its something I'm sure the club will address. But in terms of the stability of our club we're fortunate to have owners who have made a long-term commitment.

"There are an awful lot of football clubs in the country whose finances are not probably what they would like. But I think we have the stability here in terms of the business infrastructure to be able to deal with those sorts of figures. And it's not just a case of writing them off, it's managing it and I think the club will have a very sensible business plan moving forward."

Clubs who rely on benefactors can be precarious. The model relies on an Abramovich or a Raksriaksorn not walking away and demanding their equity back instantly. And Chelsea's Russian and Leicester's Thai have proved heavy investment's price is impatience. The latest accounts, published at the start of the month, state of Eriksson: "The club fell frustratingly short of the play-offs and an inconsistent start to the season has led to Sven leaving the club," when the Foxes were only two points from a play-off place, four better off than now.

For Raksriaksorn, £53m should have bought instant promotion and after Eriksson left by "mutual consent" Pearson may not be too confident of what the summer could bring.

He is calm, though, about how failure to achieve promotion this season may affect the club's approach. Pearson says: "Well financial fair play is not implemented this year but I think with any club there's got to be different strategies moving forward. So it's important to plan for the future with an eye on different scenarios and that's something that the club has done."

Regarding Leicester's financial ethos following a record £15.2m loss last season, the chief executive, Susan Whelan, says: "The club's strategy of investing in a strong squad to fight for a promotion place has led to increases in staff costs. We continue to invest in both the playing squad and the capital assets of the club, but we are also working hard to increase our commercial revenue."

Rangers, Portsmouth, and Port Vale all offer the latest lesson in what financial infirmity can do to proud clubs. So far £53m has achieved only Sunday's FA Cup quarter-final with Chelsea – which Leicester are favourites to lose – and not much else apart from a loan they will have to repay one day.

As Schmeichel, who was at Notts County when the club was threatened with being wound up, says: "It's not just about the money, consistency is what we need here. The gaffer's got his ideas and I think with a full pre-season he's going to get what he wants out of us. It's still a work in progress for him.

"I'm not going to get too involved in that type of conversation [on finances]. I'm not really qualified to, but obviously you've seen a lot of things going on with debt in football at the moment, with Rangers and Portsmouth, so things like that are a worry. I don't know the ins and outs of everything but I'm confident that the club know what they're doing."

http://www.guardian.co.uk/football/2012/mar/16/leicester-city-fa-cup-chelsea?fb=native

 

[Graz]

Oooh ooh, I wanna be first.

"Where did they get this £53m figure from? Lazy journalism, just plucking figures out the air. The transfer fees were never as much as reported, yadda yadda".

It is actually a pretty decent article though, and they do seem to have looked a bit more into it.

 

[Matt_B]

It is just rearranging old words in a new order really.

 

[Shents]

Speaking of lazy Journalism, the same paper puts Mills in the starting line up and Fernandes, Abe and Mousa on the bench in the match preview.

 

[Scodger Cubs]

Speaking of lazy Journalism, the same paper puts Mills in the starting line up and Fernandes, Abe and Mousa on the bench in the match preview.

A shame they couldn't spell his name right as well!!:icon_wink

 

[doolochfox]

It's just padding. It's strange that a paper would choose this type of article when so much sport could be heralded this week.

 

[FOX Franks]

This just seems like a really odd and seemingly pointless article to me… if we didn't have Chelsea this weekend I dont see it would even have been written. Feels like a hopeful insight to city from a journalist who knows nothing about the club. Forgive me if I'm wrong. That's just how I think it reads

 

[camberwell fox]

Ok you're forgiven :icon_razz

 

[Dour]

This just seems like a really odd and seemingly pointless article to me… if we didn't have Chelsea this weekend I dont see it would even have been written. Feels like a hopeful insight to city from a journalist who knows nothing about the club. Forgive me if I'm wrong. That's just how I think it reads

The Guardian have done a lot of work on football finances over the years - they're one of the few papers that bothers to investigate properly. And since we are probably the most indebted club in the championship, it's not surprising they've turned their gaze on us.

 

[Mawsley]

... it's not surprising they've turned their gaze on us.

Fantastic. First I was worried about the debt, but now you've made it sound like the fourth book in the LOTR trilogy I'm excited as ****.

I always knew The Grauniad was evil.

 

[Siouxsie]

...."Kasper Schmeichel, not all of whom have impressed."

He's impressed me

 

[Chrysalis]

the only way his investment would have come close to that figure is if he also paid of all the previous debts owed to MM, as that kind of money hasnt been spent on the playing squad.

 

[Matt_B]

And where does the article include the quote used for the headline? Or have I missed it?

 

[Dour]

the only way his investment would have come close to that figure is if he also paid of all the previous debts owed to MM, as that kind of money hasnt been spent on the playing squad.

Indeed, he has taken over Mandaric's loans, and then loaned another £40 million.

 

[Mawsley]

It's what comes when you keep paying managers millions everyone you sack them rather than having some bollocks to see out a rough spot.

 

[consty]

I'm interested to know how the fair play rules, looming omminously on the horizon as the article alludes to, are going to affect the club. It looks like unless the Thai's turn loans into gifts that they will not be allowed to keep throwing money at the club. I'm sure that currently wages - let alone any future transfer fees - exceed the clubs income so we are in an unsustainable position. I rather fear that we have been putting our heads in the sand & not looking at this matter if this is the case.
The Thai owners to date have only given loans to the club, which is fair enough & to be expected I suppose. Clearly as indicated in the newspaper article the fair play rules will severely restrict this state of affairs in future - though I do not know by how much and by when. Anyone the wiser?

Interesting to see that our investor's are no mugs - the article refers to the loans being at 8% (in contrast to Roman A at Chelsea who bankrolls his team with interest free loans ).

 

[indierich06]

I'm interested to know how the fair play rules, looming omminously on the horizon as the article alludes to, are going to affect the club. It looks like unless the Thai's turn loans into gifts that they will not be allowed to keep throwing money at the club. I'm sure that currently wages - let alone any future transfer fees - exceed the clubs income so we are in an unsustainable position. I rather fear that we have been putting our heads in the sand & not looking at this matter if this is the case.
The Thai owners to date have only given loans to the club, which is fair enough & to be expected I suppose. Clearly as indicated in the newspaper article the fair play rules will severely restrict this state of affairs in future - though I do not know by how much and by when. Anyone the wiser?

Interesting to see that our investor's are no mugs - the article refers to the loans being at 8% (in contrast to Roman A at Chelsea who bankrolls his team with interest free loans ).

I don't think FFP rules will affect money that has already been spent i.e. player contracts. The club is bound to honour those contracts until they expire. However, I believe it will put limits on what we are able to offer in terms of contracts to new players, or contract renewals to existing players.

I'm still unsure as to how the rules will actually affect the game or how they will be enforced. We've already seen Man City exploiting loopholes by selling the naming rights to their stadium etc. As all of our naming rights are owned by our owners and sold to their own company, surely they can decide how much or how little they would like to pay for them?

 

[Real Sharapova]

I don't think FFP rules will affect money that has already been spent i.e. player contracts. The club is bound to honour those contracts until they expire. However, I believe it will put limits on what we are able to offer in terms of contracts to new players, or contract renewals to existing players.

I'm still unsure as to how the rules will actually affect the game or how they will be enforced. We've already seen Man City exploiting loopholes by selling the naming rights to their stadium etc. As all of our naming rights are owned by our owners and sold to their own company, surely they can decide how much or how little they would like to pay for them?

I think that re the Man City stadium and " football village " income is concerned, UEFA say they will substitute what they consider to be a proper commercial amount if they think it is being inflated to get around the rules. How you do that is another matter, it's very much a matter of opinion, not fact. There will still be a lot of clubs trying to wriggle around the rules, but overall it will affect the way our club is run, which is that expenses have got to bear more relation to income, which in the long run is best for all concerned IMO.

 

[indierich06]

I think that re the Man City stadium and " football village " income is concerned, UEFA say they will substitute what they consider to be a proper commercial amount if they think it is being inflated to get around the rules. How you do that is another matter, it's very much a matter of opinion, not fact. There will still be a lot of clubs trying to wriggle around the rules, but overall it will affect the way our club is run, which is that expenses have got to bear more relation to income, which in the long run is best for all concerned IMO.

I think the only way to see how it will work is to put it into practice and see what happens, I'm certain it will need honing and fine tuning along the way as issues are bound to come up upon its implementation. I'm sure it will affect the leagues outside of the Prem differently as I would have thought that most clubs in the Championship have the capacity to generate a similar level of income, I suppose it will all depend on fanbase, infrastructure and sponsorship etc. Having a good fanbase ad a presence in the far east will certainly be of benefit to us, which the owners seem to be cultivating and encouraging at the moment.

I think if the implementation of the FFP rules work well, then it could be a very interesting time for football personally, perhaps the game might get back to something resembling what it used to be.

 

[Matt_B]

I think the only way to see how it will work is to put it into practice and see what happens, I'm certain it will need honing and fine tuning along the way as issues are bound to come up upon its implementation. I'm sure it will affect the leagues outside of the Prem differently as I would have thought that most clubs in the Championship have the capacity to generate a similar level of income, I suppose it will all depend on fanbase, infrastructure and sponsorship etc. Having a good fanbase ad a presence in the far east will certainly be of benefit to us, which the owners seem to be cultivating and encouraging at the moment.

I think if the implementation of the FFP rules work well, then it could be a very interesting time for football personally, perhaps the game might get back to something resembling what it used to be.

What will be more interesting is how fans react to their club cutting back.