Impact of Relegation from the Premier League 2022/23

When The Sun Goes Down

Now that nerves have settled down after all the drama on the last day of the season, football executives will be turning their attention towards the resulting financial impact, none more so than those at clubs that have suffered relegation, as they will have to cut their cloth accordingly.

This is particularly the case for clubs relegated from the English top flight, as they will be dropping down from the richest domestic competition in football, causing uncertainty and concern for the fans of Leicester City, Leeds United and Southampton.

As Crystal Palace chairman Steve Parish said, “Relegation from the Premier League is probably the biggest financial jeopardy in world football.”

Overview for clubs relegated in 2022/23

Looking at the most recent accounts from the 2021/22, on the face of it Leicester City have the most to fear, because they had by far the largest operating loss of £83m, the highest wage bill of £182m, the highest wages to turnover ratio of 85%, the highest debt of £346m and the highest interest payable of £19m.

However, the picture was not exactly rosy at the other two relegated clubs with Southampton and Leeds United posting large operating losses of £37m and £34m respectively.

Of course, a single season does not necessarily tell us everything about a club’s financial strength, but if we look at net profitability over the last five years, it is clear that Leicester have posted the highest losses of the relegated clubs.

All three lost money over this period, which included two seasons adversely impacted by the COVID pandemic (2019/20 and 2020/21), but Leicester’s aggregate loss of £212m was significantly worse than Leeds £137m and Southampton £120m (boosted by £35m profit in 2017/18).