Leeds United’s financial situation revealed as £190m transfer obligation preempts summer of change

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Among Leeds United's most pressing financial issues following last Sunday's play-off final defeat is the need to fund up to £190 million in outstanding transfer fees owed to other clubs.

The Whites' failure to clinch promotion via the Championship play-offs has ramifications for their summer spending and future financial health. Premier League membership is worth approximately £140 million per season whereas clubs in the second tier receive a fraction of the income of their top flight counterparts due to reduced centralised payments in the EFL and lower broadcast TV deals.

Leeds will still be in receipt of parachute payments during 2024/25, although that will be reduced by roughly 18 per cent compared to how much they will have received in 2023/24.

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While the financial picture is far from rosy, nor is it overtly bleak, as outlined in the club's most recent set of accounts. That said, as for any business with operating costs at Leeds' level, there will need to be belt tightening over the next 12 months before the team has another crack at promotion. The club do have one of the Championship's highest wage bills, although that is to be expected considering their recent participation in the top flight where attracting the best players requires paying exponentially higher wages.

Arguably Leeds' most pressing issue is their outstanding transfer fee creditors. In layman's terms, this means the instalments Leeds still owe to other teams when previous signings have been negotiated. Rarely do clubs buy players up front, transfer fees are often spread out in instalments over several seasons. Leeds, however, did negotiate lump sum payments in the sales of Kalvin Phillips and Raphinha therefore by comparison, the club are only owed somewhere in the region of £2 million in instalments from other teams.

Up to the end of June 2024, Leeds will have been required to pay £73 million in outstanding transfer fees, leaving a £116 million figure that is due to be paid in future. The most efficient way to raise that sort of money over a period of time is through player sales, which there is expected to be at Elland Road this summer.

Fortunately, the club still generates significant revenue from commercial and sponsorship deals given its global standing and brand recognition in the world of football. Equally, the young squad at Daniel Farke's disposal has a number of saleable assets, in addition to those who have spent 2023/24 out on loan following relegation, some of whom are unlikely to be absorbed back into the squad. This includes Luis Sinisterra and Tyler Adams, whose sales for reported sums of around £20 million each, will only be reflected in the next set of accounts released in the first half of next year, and are bound to help the club's financial picture.

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As with the majority of Championship clubs, Leeds will be expected to report an operating loss when new accounts are released next year, however that is not out of the ordinary and should promotion be won at the second attempt, a much healthier financial outlook will be reflected through a return to the Premier League.

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