Who is going to get done by the Profit and Sustainabilty Rules? Here’s our first nomination Here’s the first nomination.

 

 

• Day 1 Aftermath: what have we learned so far?
• When life gives problems, Arsenal can be a solution

by Tony Attwood

There is a school of thought that says that Arsenal’s number 1 David Raya was only signed on loan last season because Arsenal were not confident about his ability and so didn’t want to sign him on a long contract.   The other more established train of thought was that the loan deal was done to allow Arsenal to survive the rigours of Financial Fair Play and its successor, Profit and Sustainability Rules.   The figures to me suggest the latter is right, and Arsenal were boxing clever, and have helped themselves further by selling off youngsters.  Although the process did cost them.  The loan deal itself was quite a high price to pay for a year.

But the fact that two explanations exist shows just how much debate swirls around the issue of club finances, and so when the sentence, “There appears a serious possibility of at least four clubs being docked points this season” appears as it has today we take note, not only of the four clubs listed but of the word “possibility”.

The fact that the two clubs so far to have had hearings completed got their sentences reduced on appeal shows there is a lot of leeway for argument.   And the fact that the charges against Manchester City date back to 2018 and still have not been resolved shows either how complex the issues are, or how easy it is for clever lawyers to delay, delay and then delay some more, in the hope the other side either gives up the fight our of weariness or indeed gives up because it is running out of money to pay the lawyers.

What we do certainly know (although it appears that a lot of Leicester City supporters are not too sure about) is that, “Leicester’s title came two seasons after they had won the Championship while breaching financial fair play regulations, something for which they were fined £3.1m in 2018.”    That fine now seems utterly laughable.  But thee is also the problem that when a smaller club starts believing their own history, that issues a warning about their own future. 

In this case it seems that they kept spending, believing their own hype, and knowing how long they got away with games in which they committed many more tackles but got far fewer fouls and cards than other clubs.

Indeed, it is largely forgotten by commentators that the season before winning the league (2014/15) Leicester came 14th.  Having won the league in 2015/16, the following season they came 12th.  Such a disparity of 14th, 1st, 12th is not impossible, but it makes some of us look in a little more detail.

Of course I am not making any allegation about anything being wrong, but rather pointing out that a lot about Leicester City has looked very odd over recent years.  And it is possible that because of the way they have been able to take a different course from others, and win the league while doing so, and not get any media publicity about their strange tackles / fouls / cards ratios, they started to believe in their own mythology.  Particularly a mythology that it was possible to spend big and rise up the league.   2021 was when they did this but unfortunately for them, the players bought were either only occasionally good enough – or at least not good enough at first. 

Obviously, Leciester’s PR machine set to work explaining the lack of funding being related to a downturn in profits by the company that funds the club (King Power) and that Leicester’s subsequent attempt to counter any thought of any other cause were simply a case of putting the record straight.

But actually, the rest of the League were concerned about how much Leicester had been spending on transfers and salaries, just as they were about how they could get away with some many more tackles, yet so few fouls and cards, compared to other clubs.   

In fact it did not take long  to see what was amiss.  Year after year Leicester were spending far far more money on transfers than they were receiving on sales.  Which would not matter if the club had masses of other sources of money – but it simply didn’t.  The income from matches, from owned property, from player sales, from sponsors, was all modest compared to many other clubs.

They last made a profit on players in 2013/14 – a profit of  just over half a million Euros.  Since then it has been a loss-making machine.  As Google’s overview says, “Leicester City FC’s average attendance has been low since 2012 when some fans expressed dissatisfaction with the owners and ticket prices. Before the takeover, the average attendance was around 25,000, and sometimes as high as 30,000 when playing Manchester United.”  Capacity is 32,000.

So if we look at the transfer costs, with all figures taken from, Transfermarkt we can see that year after year from 2014/15 onward the club was losing money on transfers  For example in 2015/16 they spent €49,90 on transfer fees and brought in €9.45m on sales.   So around about a €40m loss – not mega by today’s standards but such expenditure must be considered in relation to the club’s income, and Leicester has never had the infrastructure nor size of stadium to bring in that sort of money to cover such losses on a regular basis.

Even though by 2018/19 their income from sales had risen to €95.80m their expenditure also rose – by that time it was €114.60m .

Now because I live in the East Midlands I do come across a few Leicester supporters and some have questioned those figures, although I find Transfermarkt’s figures (which are of course given in detail – I am just giving the total of amount paid out minus amount received on sales) generally seem to accord with everything we know.

And this is not the first time we have spotted something strange at Leicester.  If you are a long time reader you might recall…

• Leicester heading for all-time record number of penalties
• Leicester’s curious tackles/fouls/yellow card figures

It all began with a simple statistical table which showed Arsenal committing far fewer tackles but getting far more fouls awarded against them and many more yellow cards, than other clubs.   Then looking deeper we found Leicester was getting far fewer free kicks and penalties against them despite committing many more tackles.   Then after we pointed that out, the number of tackles perceived as fouls rose dramatically.   PGMO reading Untold Arsenal?  It seemed unlikely.

But then when that issue calmed down and Leicester tackle to foul ratio moved more in line with everyone else, we found they were getting massively more penalties awarded in their favour than any other club.

As our research started to perculate through football, not only did the number of fouls and yellow cards given against Leicester change so did the number of penalties awarded in their favour suddenly drop.  

Maybe it was all a set of coincidences but we do like to keep a look out for Leicester, and it is just possible that our research (which really was unique) did help raise the alarm about other aspects of their approach to football – in this case transfers.

For it turns out there was another issue lurking below the surface which we didn’t spot.   All those transfers meant that the club’s salaries shot up until Leicester ended up spending all of their income plus another 16% of their income (ie 16% more money than they actually earned), just on salaries.

And I stress we have no proof that our revelations on this site led to referees and the League taking a closer look at Leicester.

But now with, as the Guardian said, “The wages-to-turnover ratio [has been] running at 116%, far higher than the two teams who have been punished with points deductions for PSR breaches, Nottingham Forest (94%) and Everton (92%).”   Swiss Ramble agreed too on salaries.  Leicester has a problem – not just on salaries, but in terms of the way they were getting away with many, many more tackles without fouls being awarded against them.  There is a resentment brewing and revenge is sought.

So Leicester should be getting at least a six-point penalty this season and is facing a situation where it can’t spend.  So far this summer Leicester have spent  €36.90m and brought in €35.40m in sales.

What’s more, with the club back in the Premier League we will be reporting their tackles / fouls / card figures and making a fuss if they stray way outside the norm.

If I was a gambling man, which I am not, I would be putting money on Leicester to go down. If the weakness of their team doesn’t get them, then PGMO awareness of their previous ability to con referees, and the League’s rules on spending, surely will.