Leicester City's financial move 'good' for club Published duration 23 December 2013

image caption Leicester City's chairman Vichai Srivaddhanaprabha has a duty-free shop empire

A financial expert has said reports that Leicester City's owners have wiped out the club's £103m deficit by turning its debt into shares is a good move.

The Thai owners have invested heavily in the team since taking over in 2010, but the debt has increased by about £7m per season in interest alone.

Andy Howard, a chartered accountant, said the measures would help the club comply with Financial Fair Play rules.

The Foxes currently lie third in the Championship, one point from the top.

The Leicester Mercury reported the steps by the Srivaddhanaprabha family on Saturday, and said the club is now debt free for the first time in about 20 years.

'Shows commitment'

Mr Howard said converting the debt into shares meant the family could not ask for the £103m to be repaid back at any point, and potentially destabilize the club.

Instead it becomes part of the value of the club.

Mr Howard said: "From a fan's point of view it's a very good thing in that all the money they pumped into the club since they took over ownership has been converted into shares.

"It helps on a number of levels, it shows commitment and helps them achieve financial targets."

Uefa's Financial Fair Play rules mean European clubs have to balance their books from next season.

Last March, Leicester City reported a loss of nearly £30m for the previous financial year, blaming increases in wages, lower ticket sales and restructuring costs.

The Srivaddhanaprabha family, who make their fortune through international duty-free shops, also bought the club's stadium for £17m.

In April, the team failed to reach the Premier League, missing out on a reported £100m windfall.

The club has valued itself at £118m, according to Companies House records.