As Foxes of Leicester reported, a Planet Football piece revealed the remarkable fact that seven out of the 10 top earners in the Championship – Jamie Vardy, Ricardo Pereira, Kelechi Iheanacho, Boubakary Soumare, Wilfred Ndidi, Dennis Praet, and Patson Daka – are Leicester City players.
At one level, assuming that the more a club pays a player the better he is, then this spells good news for the Foxes as they prepare to embark on a season in English football’s second tier. This is all a bit simplistic though. Indeed, there is a case for saying that Leicester’s high wage bill tells us a great deal about what has gone wrong at the club as well as pointing to the biggest challenge it faces in the immediate future.
Even by top-flight standards, the wage bill at the King Power outfit was large. The accountant Deloitte found that in the 2021-2 season, LCFC had the 7th highest wage bill in English football and, more importantly, wages constituted 85 per cent of the club’s revenue. Only Norwich City, Everton and Newcastle United had a higher ratio and none of those clubs spent as much on wages as the Foxes did.
The strategy of the east Midlands team was to offer lucrative contracts to players who might otherwise be tempted by more fashionable clubs. This was the price Leicester were prepared to pay to compete at the top end of the Premier League against clubs with much higher revenues.
What could possibly go wrong? Well, quite a lot. Above all, an outfit which spends such a high proportion of its revenue on wages, without any remedial action, is likely to fall foul of financial fair play. In the case of the EPL, clubs are forbidden to spend more than around £100 million over their revenue in any three-year cycle. At the end of the 2021-2 season, Leicester came dangerously close to breaching that rule. As a result, the squad refresh that Brendan Rodgers had promised failed to materialise, with devastating consequences.
The strategy of paying high wages only became a big problem for the Foxes because it was accompanied by two crucial mistakes. Between 2016 and 2020, Leicester sold one of their top players every season thereby bringing in vital revenue. Some of that money was then reinvested in bringing in promising, but untried and cheaper, young players. The first mistake was the decision – at the end of the 2020-21 season – to buck this trend. The obvious candidate to move on was Youri Tielemans who was a marketable asset and had made it very clear he had no intention of signing a new contract. Not only did his form plummet in his last 18 months with the club but he also then left on a free transfer.
The second mistake also occurred at the end of the that campaign. Not only did LCFC fail to recoup revenue on a major player sale, but they also embarked on a spending spree bringing in a number of players for a total of £50m on high wages: Daka, Soumare, Jannik Vestergaard and Ryan Bertrand. None of these purchases have worked out as expected. Buying the two defenders from Southampton, in particular, was little short of a disaster. The expenditure wouldn’t have mattered quite so much had the Foxes qualified for the Champions League in 2019 and 2020 but their 5th place finishes was, in retrospect, a huge missed opportunity.
So, the Leicestershire side now face a second tier term with a number of footballers on ridiculously large salaries in a division where financial restrictions are even more strict than the Premier League and where the club’s revenue has been decimated by relegation. As if that’s not bad enough, these players are not going to fetch big fees in the transfer market. What is for sure, Leicester simply cannot afford their current wage bill and we should expect more departures of players by the end of the transfer window in August.