LCFC Announce 2011/12 Financial Results

[Foxes_Trust]

From clubs website

Leicester City has today announced its financial results for the year ending 31 May, 2012 – a period of further on-going, strategic investment designed to ensure the long-term prosperity of the Football Club.
Today’s announcement highlights the Srivaddhanaprabha family’s commitment to deliver sustainable success for the Football Club, and the continued support of KPI which will underpin the realisation of this vision. This whole-hearted commitment has been shown through the following actions.
• In September 2012, the Srivaddhanaprabha family placed Leicester City at the heart of their business operations under the direct ownership of King Power International (KPI) - the parent and holding company of King Power Group, whose turnover (US$1.5 billion in 2011) is consistently ranked within the top 10 Duty Free Retailers globally.
• Further investment of £36 million from the shareholders during the 2011/12 season.
• The Srivaddhanaprabha family’s purchase, through its K Power Holdings company, of the Club’s home, King Power Stadium, in February 2013.
• Since purchasing the Club, the owners have undertaken a restructuring of Leicester City’s balance sheet to pay off external third party debt. At the time of purchasing the club in 2010, third party debts owed by the club, amounted to £23.2 million.
• The start of a process ensuring compliance with Financial Fair Play regulations which will come into place in season 2013-14 for Clubs competing in the Football League Championship.
Continued long-term investment

The Club recorded losses in the year to 31 May, 2012 of £29.7m (2011: £15.2m) – an increase of £14.5m on the previous year. Today’s announced results relate to the 2011/12 season, in which the Club was playing in the Football League Championship.
The majority of the increase is as a direct consequence of the significant investment made in the playing squad as part of the Club’s on-going efforts to build a talented squad capable of winning promotion to the Premier League. This has led to increased first team player wage costs and amortisation. Total salary costs increased accordingly to £27.7m in 2011/12 from £16.6 million (2010/11). The Club has also invested £4 million into long-term capital and infrastructure improvements to its training ground, match day and stadium facilities, the benefits of which will be felt for years to come.
This investment in the team and the facilities of the Club was funded by the shareholders advancing loans of a further £36 million during the year. £31.6 million of this funding was provided by K Power Sports Investment (“KPSI”) and a further £4.4 million by King Power International (“KPI”).
A process is also ongoing to review the capital structure of the Club so that this debt can be restructured into equity, further strengthening the balance sheet.
Turnover increased by £4million to £21.4million (2011: £17.4m), primarily a result of increases in commercial revenue, including that generated from a pre-season friendly against Real Madrid in July 2011 and partnership renewals with globally-recognised brands such as Singha Beer and Air Asia. The increase in turnover is also helped by the Club’s progress to the Sixth Round of the FA Cup.
Match receipts remained relatively consistent despite the challenging climate faced by clubs of comparable size and league position; with average attendances subject to a slight decrease to 23,036 (2011: 23,709). Season Ticket sales for the current 2012-13 campaign remain stable in comparison with recent seasons.

Purchase of the King Power Stadium: ‘Our home back in our hands’
The Club’s financial and operational position has also been strengthened after the year end thanks to the purchase by the Srivaddhanaprabha family, through its K Power Holdings Co Ltd, of King Power Stadium, the Club’s home for nearly 11 years. The stadium was purchased from its previous owner, an American pension fund manager who had owned the stadium, since the Club’s period in administration.

Under the ultimate ownership of Vichai Srivaddhanaprabha, the Leicester City Chairman, and Aiyawatt Srivaddhanaprabha, the Club’s Vice Chairman, King Power Stadium joins the Football Club as an integral part of the family’s major business and sporting interests. The purchase also concludes the restructuring of the Club’s balance sheet, to remove all significant third party debt.

Financial Fair Play compliance
From the start of the 2012/13 season, the Football League introduced a framework for Financial Fair Play regulations, which requires Championship clubs to stay within pre-defined limits on losses and shareholder equity investment. Sanctions for non-compliance will only be imposed in the January transfer window of the 2014/15 season, in relation to the results of the 2013/14 season.

Leicester City Football Club has already initiated a series of processes that will help to ensure that the Club is compliant with Financial Fair Play before sanctions become active. As part of these measures, the Club is in discussions to convert its debt, into equity.

Leicester City Chairman Vichai Srivaddhanaprabha said:“My vision for Leicester City Football Club remains unchanged since purchasing the Club in August 2010. My vision is for Leicester City Football Club to take its place as a highly respected and successful Premier League club. As a Club, we should centre around the lives of the fans and the community of Leicester. We will hold the Club’s heritage in trust, and develop the Club to ensure sustainability for future generations. My commitment to Leicester City has been gratifyingly reciprocated by the Club’s loyal fans and partners, whose support continues to be valuable in helping the Club achieve its long-term objectives. My thanks go to every one of them for their support from the time of our arrival at Leicester City, and for the support I am sure we will receive throughout 2013 and beyond.”
Leicester City Chief Executive Officer Susan Whelan added:“We continue to strive for excellence in every area of the club, with the overall ambition of becoming an established, sustainable Premier League club. This is reflected in the long-term investments we have made in our playing, management and administrative staff and our capital assets, with the on-going support of King Power International.
“We remain entirely committed to safeguarding the Club’s future and will ensure Financial Fair Play compliance ahead of 2013/14, regardless of our divisional status.
“Considerable increases in turnover brought about by improved commercial performance in challenging economic times are encouraging, and the restructuring of the Club’s balance sheet is a further example of our ambition to develop a sustainable business model that will keep the Club on a sound financial footing in the long term.”

 

[Miles Away]

Yowzers.

Premier League or bust then?

 

[Durham Fox]

Yowzers.

Premier League or bust then?

quite the opposite. The owners are converting their loans in to equity.

 

[homer]

Total player salaries £27.7m
Total turnover £21.4million


What a complete feckin shambles

 

[Brown Nose]

quite the opposite. The owners are converting their loans in to equity.

Is this effectively writing off a proportion of their loan amount?

As they own 100% of the club, converting a loan into equity achieves nothing doesn't it?

Mind-blowingly bad figures. Thank feck we appear to have owners that can afford it and are prepared to do it.

 

[OldGit]

Is this effectively writing off a proportion of their loan amount?

As they own 100% of the club, converting a loan into equity achieves nothing doesn't it?

Mind-blowingly bad figures. Thank feck we appear to have owners that can afford it and are prepared to do it.

Loans are secured. Equity is not
Loans have a real value. Equity is worth what someone will pay
Loans need to have corresponding assets on the balance sheet. Equity appears only at its nominal value
I suspect a number of owners will do this over the coming period (Chairman Mo at Fulham already has) to get the balance sheet healthy for Financial Fair Play

 

[FOX Franks]

Total player salaries £27.7m
Total turnover £21.4million

What a complete feckin shambles

Svennis really didn't negotiate salaries much did he?

Sven: how much do you want beckford?
Breakfast: I dunno, 40k?
Sven: well, yes.


Breakfast: I was kidding....

 

[spionfox]

Total player salaries £27.7m
Total turnover £21.4million


What a complete feckin shambles

The legacy of Svennis?

 

[Durham Fox]

Total player salaries £27.7m
Total turnover £21.4million


What a complete feckin shambles

We have so much to show for it too. Beckfords goals, Danns wonderful forward runs, the skill and grace of Paintsil, the unrivalled value for money that Michael Ball and Gelson Fernandes were. Not to mention the goalscoring prowess of Vassell and the glorious box to box runs from Michael Johnson.

Nice one Sven.

 

[Micky]

We have so much to show for it too. Beckfords goals, Danns wonderful forward runs, the skill and grace of Paintsil, the unrivalled value for money that Michael Ball and Gelson Fernandes were. Not to mention the goalscoring prowess of Vassell and the glorious box to box runs from Michael Johnson.

Nice one Sven.

You forgot Matt Mills and his resemblance to Franco Baresi.

 

[Lako42]

Total player salaries £27.7m
Total turnover £21.4million


What a complete feckin shambles

This stuck out like a sore thumb when reading it, sustainable future was also used in the same story

 

[Matt_B]

This stuck out like a sore thumb when reading it, sustainable future was also used in the same story

This was for a year or so ago though, I would hope our salaries are marginally more sustainable now. Out of interest, does that salary figure include all the payoffs to managers and players?

 

[Miles Away]

quite the opposite. The owners are converting their loans in to equity.

Which I do understand. But any organization running losses that large for any considerable amount is ****ed.

Those salary numbers are staggering. Sven was worse than I thought. I shudder to think how much money is being spent on people who are doing absolutely nothing to advance the club.

 

[SJN-Fox]

RL saying we are losing £89,000 per day 7 days a week.

 

[fitz]

This was for a year or so ago though, I would hope our salaries are marginally more sustainable now. Out of interest, does that salary figure include all the payoffs to managers and players?

It should do, though as clubs do accounts differently I'm not sure. Could class it as a loss on assets?

 

[Matt_B]

RL saying we are losing £89,000 per day 7 days a week.

That puts the figure at 32m a year so not entirely accurate. I make it closer to 81k though of course JFK you just divide the total figure by 365 you will work it out for 7 days a week. I prefer to think of us losing 2.9m per day for 10 days a year.

 

[Hazzman]

This was for a year or so ago though, I would hope our salaries are marginally more sustainable now. Out of interest, does that salary figure include all the payoffs to managers and players?

Probably will. Even with a wage structure now in place, I bet we have a few employees bking it from Sven's eram.

Gives more evidence that keeping a manager for a decent period would be worthwhile.

 

[Redditch Fox]

Probably will. Even with a wage structure now in place, I bet we have a few employees bking it from Sven's eram.

Gives more evidence that keeping a manager for a decent period would be worthwhile.

Not in my book. It depends if the manager is any good or not. Basically we need promotion real fast so revenue can catch up with expenditure - or the club needs to downsize its expectations and rein in spending and hope that promotion can be achieved on more of a shoe string.

Frankly I think that we are a bubble that is going to burst.

 

[Matt_B]

Not in my book. It depends if the manager is any good or not. Basically we need promotion real fast so revenue can catch up with expenditure - or the club needs to downsize its expectations and rein in spending and hope that promotion can be achieved on more of a shoe string.

Frankly I think that we are a bubble that is going to burst.

As Boc has mentioned before, history proves that promotion just results in increased revenue to catch up with.

 

[Hazzman]

Not in my book. It depends if the manager is any good or not. Basically we need promotion real fast so revenue can catch up with expenditure - or the club needs to downsize its expectations and rein in spending and hope that promotion can be achieved on more of a shoe string.

Frankly I think that we are a bubble that is going to burst.

I see a division where the quality between all 24 sides is minimal. The Premier League pays it's bench men far too well for a Championship side to be capable of building a side of these players which is nailed on for promotion. There is no correct formula to promotion, the division is far too detachted from the Premier League and competitive to achieve that.

The players you recruit can be categorised in three groups: a) players' whose career has surpassed their best - the risk is that their motivation is minimal b) you pay players Premier League wages - motivation a risk again or c) you try and build a side on prospects/foreign gambles - consistency the risk. There is no get quick fix to promotion.

In constantly seeking that quick fix, you are only incurring further and further debt. So give a manager time allow him to build that formula. Whether it's Pearson or otherwise. Cardiff are a good example in Mackay, how they built from a learning curve last year and then just added to the work in progress.