Leeds United took out a £5million loan to help finance the redevelopment of Elland Road’s East Stand, according to the club’s latest financial results.
United revealed that they had entered into “an agreement for a £5,000,000 facility to part fund the East Stand Development” as figures for the 2010-11 financial year confirmed a sizeable profit of £3.5m.
Leeds have spent most of the past 12 months renovating their stadium after beginning work on the East Stand shortly after the conclusion of their first season back in the Championship.
The extensive project, which was expected to cost around £7million in total, generated criticism from sections of United’s support, some of whom argued that money invested in the East Stand should have been directed towards the playing squad at Elland Road.
Chairman and owner Ken Bates countered that claim by saying money borrowed to renovate United’s ground – a stadium which Leeds currently rent from an off-shore firm in the British Virgin Islands – would not have been loaned to the club for the purpose of buying players.
The £5million facility was agreed after the end of the 2010-11 financial year, a period in which Leeds posted an overall profit for the fourth year in succession.
Their promotion from League One in 2010 brought with it huge increases in turnover, gate receipts and central distribution payments from the Football League, ensuring an operating profit of £939,000.
Rob Wilson, and expert in football finance and a senior lecturer in sports management at Sheffield Hallam University, said the figures were evidence that Leeds were planning for long-term growth, rather than overnight success.
“It’s not just the overall profit that’s significant,” Wilson said. “The operating profit and the big increase in turnover are positive too.
“Any Championship club who post results like these are going to be happy, and they’re behaving as a normal mainstream business would behave – building steadily year after year and working to post profits consistently rather than lose money.
“My personal view is that this is the right way for a football club to act. It’s a strategy that, in terms of promotion to the Premier League, you could see working over three to fives years but not in the space of 12 months. They’re not throwing every penny they’ve got at the team.
“But seeing these results, it wouldn’t surprise me to see a club with such good finances being be a bit more aggressive from here on. There’s clearly been a bit of dissent about the way they operate and a bit of disassociation with the fans. You’re looking to find the right balance.”
United’s home crowds have fallen by around 4,000 on average this season, down from more than 27,000 a game during the 2010-11 Championship campaign.
The impact of that fall will be shown in the 2011-12 accounts – due to be published in March of next year – and Wilson said: “You’d expect that to lead to a drop in turnover. The figures here don’t show the club’s financial position here and now. They show where the club was last summer.”
Meanwhile, United manager Neil Warnock has revealed that midfielder Mika Vayrynen is set to miss the closing stages of the club’s season.
The Finland international is recovering from a groin operation and looks unlikely to add to the 11 first-team appearances he has made for Leeds this term.
Warnock does not expect Vayrynen to complete his rehabilitation in time to play any further part, saying: “I can’t see him playing again this season. There’s just too much to do in such a short space of time.”