Leeds United's 'cruel' financial reality revealed as boardroom figure clearly outlines club's PSR position

Kinnear has told The Square Ball Podcast in a new interview that Leeds' PSR position was such that failure to win promotion back to the Premier League at the first time of asking meant they were forced into a reality where key players were sold for big fees.

United sold trio Archie Gray, Crysencio Summerville and Georginio Rutter over the summer transfer period, which has greatly improved the club's financial position, generating close to £110 million from those three sales alone, once all payments have been made.

Prior to their departures, Leeds' financial position was a complex one. While there were no cashflow issues, Kinnear says, the financial controls imposed by the Premier League and EFL meant they ran the risk of exceeding their minimum loss threshold over a three-year accounting period, which if breached would have likely incurred a sanction akin to those handed down to Everton and Nottingham Forest last season.

"That date is is created, so that it fits within the within the Profit and Sustainability rules," Kinnear told The Square Ball, referencing Gray's exit clause. "It gives us the flexibility to either sell him after that date, if we want to, but also if we need to pull revenue forward into the year that we've just been in, then it falls into that year."

Leeds' £40 million Gray sale is understood to have been accounted for in the club's 2023/24 accounts, which will be released early next year. It subsequently allowed Leeds to comply more comfortably with PSR for the accounting period ending June 30, 2024, although Kinnear says the club would have complied with regulations without the sale.

"Archie is very valuable from a PSR perspective, because he's academy-produced, so there is no amortisation, there's no book value to him at all. So, all of the revenue generated from the sale goes to hit the PSR target.

"The PSR targets are really cruel," Kinnear added. "To come down from a world where you've got a gap from the one, three year rolling number to another three year rolling number, plus the fact you lose all your TV revenue makes it really, really challenging to stay within those limits.

"We have stayed within them, but the only way you can do it is to sell players."

Leeds' three-year minimum loss threshold in the Premier League was £105 million, but after one season in the Championship, that figure fell to £84 million, which is the upper bound United sought to stay within last season. By the end of 2024/25, the headroom Leeds are afforded when reporting losses shrinks further, although the sales of the aforementioned trio, as well as the cutting of the club's wage bill and other, less lucrative outgoing transfers means the club are expected to meet the targets set out in PSR rubric.