Leicester City’s £111m boost and parachute payments explained ahead of Championship cutbacks

Leicester City will pocket an estimated £111m for their Premier League relegation campaign, with further cash to come in the form of parachute payments.

With the season over, City are set to receive their split of the Premier League’s domestic and overseas TV rights money, shared equally between the 20 clubs, as well as merit payments for their finishing position and facility fees, which are based on how often a side’s games are broadcast on UK television.

While official figures have not yet been released, the Daily Mail are estimating that City will receive £111.2m for this season, which ended in relegation back to the Championship.

A fall into the second tier means City will also receive parachute payments to help them cope with the significant drop in revenue that comes with being outside of the Premier League. Those parachute payments last for three years, unless promotion is achieved, and reduce each year.

The first year’s parachute payment is expected to total between £40 and £45m, with that cash spread throughout the upcoming campaign.

Football finance expert Kieran Maguire told LeicestershireLive: “You get a big dollop towards the end of June as that will help clubs to pay wage bills in June and July and also do a bit of work in the transfer market. You tend to get a reasonable amount in January as well, and then there are smaller payments in the intervening months.”

The issue for City is that they have bank loans with Australian lenders Macquarie. In August 2021, City took out a loan that was secured against TV money and/or parachute payments they were due to receive up to July 2025.

The level of repayments required by Macquarie are unclear, but Maguire predicts that City will have to use their parachute payments to cover those costs.

He said: “It’s not a nightmare but it’s going to require a lot of hard work at board level. Your parachute payments, I think quite a lot of that will be ring-fenced for Macquarie. How much Macquarie are due to be repaid we don’t know, but that’s always a cause for concern.

“It’s in Macquarie’s interest for Leicester City to still be around. That’s looking at it from a positive point of view. It’s not in their interest to call in the loan. It works out as being very expensive. If the club go into administration, you’re not guaranteed to get all of your money back and it all starts to get very messy.”

City will need to make significant cuts across the club in order to cope with the drop in revenue. In their most recent set of finances, for the 21-22 campaign, they earned £215m. The highest figure in the Championship that season was at Fulham, whose revenue stood at £71m.

Last season, City’s wage expenditure stood at £182m, and so getting high earners off the bill will be a key task this summer. When Burnley went down last year, they only had a wage expenditure of £93m, but still moved on 13 of the 23 players registered in their Premier League squad.