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EFL Analysis’ football finance expert Adam Williams has provided an update on the ongoing situation regarding Leicester City’s owners.
Last month it was revealed that Leicester owners King Power are struggling financially due to a dip in Thailand’s tourist market and that they could be facing a huge payout to keep afloat.
The Foxes also parted ways with Ruud van Nistelrooy and are now on the hunt for a new manager, with Danny Rohl in line to take the reins at Leicester.
Given the developments of recent weeks, the ongoing King Power saga could have a huge say on Leicester’s future as a whole.
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Will Leicester City go into administration?
King Power’s new CEO described the current situation as a case of ‘survival’, which tells you all you need to know about the severity of what has happened.
Williams has told EFL Analysis that he believes that the chance of administration is unlikely for the Foxes as he feels that King Power would’ve sold before then.
He said: “They have agreed to restructure their arrangement with AOT, with the minimum guarantee payments split into instalments and extended the payment date on each tranche by eight months or more.
“As I understand it, King Power still have to give their cut of revenue to AOT but they have delayed the minimum guarantee payment that tops up that figure. The new payment structure for the top-ups is between March and August next year.
“So immediate cash flow issues will be eased for King Power until then. But it’s only a temporary reprieve. They are still going to have to find that money from somewhere, plus they are paying interest on a monthly basis.
“But I suspect this story will rear its head again, along with the potential repercussions for Leicester, early next year. Instinctively, I don’t think it will get to the point of administration because I think King Power would sell up before that stage.”
Leicester would be one of King Power’s most sellable assets
As Leicester gear up for a season in the Championship, the outside noise isn’t going to help at all.
Williams’ belief that administration is unlikely will be relieving to hear but despite how important the club is to King Power, the £200m asset could be one of the first areas to be sold off should it become a real cause for concern.
“I suspect this story will rear its head again, along with the potential repercussions for Leicester, early next year,” Williams added. “Instinctively, I don’t think it will get to the point of administration because I think King Power would sell up before that stage.
“Leicester City are important to them, of course, but they are also probably a £200m-plus asset that is a drain on cash for them at a time when they need money. King Power aren’t hugely diversified, so I think Leicester would be one of the first businesses to be sold off.”