'Astounding' figure in Leeds United accounts raises eyebrows for expert as Andrea Radrizzani's ownership is analysed
Losses of £64m show Leeds United went ‘all in’ for promotion last year, but with high value assets, ‘astounding’ merchandise revenue and a long-term strategy, football finance lecturer Kieran Maguire believes fans should not be concerned.
The club’s accounts lay bare the heavy financial cost of not only earning promotion from the Championship but staying in the Premier League.
Having shelled out £20m in promotion bonuses that took their wage bill up to £78m for the accounting period, the club will now have to pay what Maguire describes as an ‘eye watering’ sum of £35m in payments to players and staff for retaining top-flight status.
His summation of Leeds United’s financial situation is that the club did what they had to, financially, to escape the second tier in a year when they had to, in order to avoid selling off star players.
“Leeds effectively went all in,” he said.
“They knew that within the three years of Financial Fair Play this was probably their last opportunity before having to cut back, so they backed the manager and they did spend significant amounts on players.
“The wage bill is the issue that will get the most attention. You knock £20m off for promotion bonuses, it’s still sizeable. The reason I don’t think fans should be concerned is that they have saleable assets.
“Owner Andrea Radrizzani himself is not hugely wealthy, he’s not in the ultra-high net worth individual area of Roman Abramovich, Peter Coates at Stoke City or Sheikh Mansour at Manchester City. He’s put in a few million and now the club has assets they could sell if they chose to - not that there seems to be any desire to do that.
“If you compare their losses to losses made in the Premier League that season, the likes of Spurs who have always been profitable but made a big loss in 19/20, Brighton and Southampton made significant losses as well, all around the same types of figures Leeds had. I don’t see an issue.”
Had they not achieved promotion to the Premier League and enjoyed the huge increase in broadcast revenue - the accounts showed Leeds having £31m in the bank, with the first tranche of television money received - the squad could have looked quite different this season but Maguire doesn’t think disaster was inevitable.
“I don’t think they would have been in trouble,” he said.
“They would have had to sell though. They would have sold Patrick Bamford to someone like a Palace, a West Ham perhaps. Bamford would have gone, [Kalvin] Phillips would have gone, [Luke] Ayling would have gone.
“They certainly had the strength of the squad to ensure there wouldn’t have been a crisis, but it would have been a year of retrenchment before trying to build a new squad. Having said that, they could still have got promoted this season.
“We saw Norwich get relegated and sell Ben Godfrey and one or two others and they’re still walking that division.
“Leeds wouldn’t have been able to hold on to everybody, some of the bottom-half Premier League clubs would have seen the players developed under Bielsa and picked them off.”
The financial performance of the club, who took advantage of the government furlough scheme to the tune of around £1m, was largely in line with what Maguire anticipated.
Some of the numbers, including a debt of around £2.2m that the club don’t expect to recover from an unnamed debtor, did raise his eyebrows, however, and he sees the scale of their revenue, with turnover up from £48.9m to £54.2m, as a feather in the cap of those running Elland Road operations.
“There are big positives for Leeds,” he said.
“The fact that they made £15m from merchandise sales is astounding. That’s more than other clubs in the Championship were making from all income streams.
“Their revenue would have been higher as well had it not been for Covid, it could have been closer to £60m.
“If you can get £54m of revenue in the Championship, and if you look at other clubs who have published their results, it was £20m more than the next club if you ignore parachute payments, that’s indicative of where Leeds are in the pecking order and indicative of being able to grow the club further.”
Premier League status, which helped grease the wheels of a record kit deal with Adidas, can be further harnessed to boost the club’s financial performance but keeping that status is going to be just as expensive a business as it was gaining it. Maguire believes he has seen enough from the ownership to suggest they’ll go about building for the future in a different way to some of those who came before them.
“They’re as well run as you can be if you are ambitious and want to get promoted out of the Championship,” he said.
“It’s a really expensive task. You look at all of the clubs who have come up in recent years and it’s cost them a lot to recruit, to keep players and pay the bonuses.
“To me, it’s a club that has potential and it’s now a case of managing it and not doing a Peter Risdale [former Leeds chairman who left in 2003 with club £103m in debt].
“There’s no way Radrizzani is going to go down that particular route. The 49ers have a strategy as well. Any club that has a long-term strategy is one which I tend to have a bit more confidence in.
“Fans are probably still scarred from some of the clowns they’ve had but I can’t see any parallels myself.”