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Leicester City FC are up for sale. A brochure detailing the valuation of the club has reportedly been sent to potential investors. The Srivaddhanaprabha family, who own the club, are said to be looking for £222m for the entire portfolio, but a deal could be done for closer to £148m. An investor won’t approach this project with unrealistic expectations. Typically, a business valuation relies on its financial performance over the past five years. In Leicester City’s case, they have lost over £200 million in the last three years. The major question is not the valuation of the club, but how the depth issue at this football club will be handled. We do not have the full picture of the total depth. The key question is who carries the depth, and if you as a new owner take on that obligation, you will of course in no way be paying anything close to the valuation, and far below £148m. Another issue is the value calculations of OH Leuven. The Belgian sister club has accumulated a total recorded financial loss of approximately €87 million since being taken over by King Power, with subsequent annual deficits continuing to add to the overall negative balance. Taking OH Leuven into this calculation, makes it difficult to understand how this is valued. We do not have the full picture of the total depth amount, but that is of course major in this scenario. If you are to take over a massive amount of depth and also pay a fee for the club, looks difficult. The best to hope for is someone to take over the depth portfolio, as it looks challenging for the current owners to carry that out at this point. Beleive Leicester potentially could, if this selling process drags out, soon be under administration, as the bank now are the once looking for new investors. The sad story is that Leicester City FC has little or no financial value at this point. The investor must have a clear view on how to get this club back to Premier League, to get something out of this investment, and of course have to understand how PSR and FFP works in football. Another key question is why the owners of Leicester City believe they can value the club more than five times higher than Sheffield Wednesday’s sale price. The Owls were purchased for £43 million last year. When the Arise Capital Partners group, led by David Storch, took over Sheffield Wednesday from administration, they restructured the large debt of over £80 million from former owner Dejphon Chansiri rather than assuming it as a liability. How much depth Leicester City FC and OH Leuven have in their accounts is important for potential buyers. Assets at a football club aren’t really sellable. You need the ground and training facilities, and if you want to sell some of them, you need to restructure and have a plan for renting these premises back. We still believe Khun Top and his partners are eager to let Leicester City FC survive as a football club, but if they are looking for £145m or more, this club looks to be a challenging selling project. Looking at the Sunderland A.F.C. situation a few years back. Sold by Ellis Short to Stewart Donald in May 2018, the nominal agreed deal was valued at approximately £40 million. However, Short wrote off over £100 million of the club’s debt, and Donald initially contributed only around £5 million in upfront cash, utilizing subsequent club parachute payments to structure the rest. Leicester takeover update with former Premier League champions up for sale for just more than cost of Alexander Isak https://t.co/gbdmzU7C3I English football executive, adviser, and former journalist and PR consultant, Charlie Methven, has given some clear thoughts on how he values Leicester City as a club at this point. He is best known for his involvement in English football club ownership, including high-profile spells with Sunderland AFC and Charlton Athletic. Methven visited the Leicester fan podcast Big Strong Leicester Boys recently and provided an accurate financial analysis on the ownership’s high asking price, believed at that time to be £140m. However, Methven highlighted that this figure contradicts a more realistic valuation due to increasing debts, operational costs, and declining asset values. Methven suggested that a realistic selling price could be around £30 million, but considering additional factors, the total cost might reach £300 million or more, counting in the depth. Since the property assets are difficult to sell, a potential sale or transfer of this ownership property, would likely require the football club to pay rent for facilities such as the the stadium and training grounds. As we have seen this summer, a number of players are moved on. This is a group of established players and high valued talent. The new additions are either players coming in on a free transfer, or for nominal prices. This will for a future investor be a major question. The club owners are at this moment emptying the asset bank and reducing the valuation of the squad with a massive amount of millions. Looking at the value of the Leicester squad from a year ago to now, there has been a significant drop. In the past, finding talent and making smart signings for low fees worked, but it also makes sense to spend money on higher valued players. The total worth of the players in the Leicester squad has decreased substantially in this time. In the past clubs being in the same situation as Leicester, has been bought for £1. To take over the clubs depth will be a major issue, running these premisis with the fixed high cost the club carries at the moment, as well as trying to climb the divisions with investments in new players for next season looks a heavy challenge. This seems like a fairytale ending. This season might be good, but with fewer players to sell and potential low returns, the club will struggle to balance their yearly p & l. To avoid further PSR and FFP problems, will be a major problem, as the daily running cost of this football club premisies is major. A new owner can’t just spend money to solve the issues, without understanding and comply with the EFL’s rules and regulations. A new investor will of course understand and have control over alle these type of key issues. New people coming in needs a long term vision, but also being able to have a good eye on the running season by season. Fans will have to be patient as it could take time to fix this football club and return to Premier League football. The hope is that some soft arabic investment group can see some sort of a potential profit possibility in the future, but with the geographical positioning of Leicester, their history in football, as well as having a lot of negative financial baggage to carry, this needs an eye looking far into the future having a very long term perspective.