Leeds United's accounts - a closer look

Phil Hay takes a closer look at some of the issues raised...

The wage bill

The average Championship wage bill is well in excess of 50 per cent of a club’s annual turnover. Huddersfield Town’s promotion last season was done on a club-wide bill of £21m, £6m more than their total income.

Leeds, in that same season, spent more than half of their £34m revenue on staff wages, on a par in real terms with Huddersfield’s outlay, but the cost of paying the playing squad at Elland Road equated to a 47 per cent ratio, a percentage as low as most in the division. It was symptomatic of Massimo Cellino’s attempt to realign a club who, in the hands of Gulf Finance House, used close to 90 per cent of all available cash on salaries.

Despite the shift in balance, the wage bill did not alter drastically after GFH cut and ran in 2014: £22m in the bank’s one year as owner, £19m in 2014-2015 and £18m in 2015-16. A small jump to £20m last season, of which around £16m was paid to first-team players, has been followed by a more major increase of over £7m this season, pushing up the wage-to-turnover ratio significantly.

Crucially, in the past two years, United’s crowds and commercial earnings have grown, raising their annual turnover to £34.1m. Minus parachute payments, no Championship club recorded a higher revenue in the 2015-16 campaign than Leeds but there is a reluctance at Elland Road to let salaries climb too high. It is why Andrea Radrizzani, as outright owner, has stuck to an upper limit of £15,000 a week.

Financial Fair Play (FFP)

As the rules stand, Championship teams are subject to a rolling three-year accounting period in which the EFL prohibits losses of more than £13m a season or £39m over three years, a sum which includes shareholder investment.

Leeds, under old regulations, were found to be in breach of FFP during Cellino’s first season as owner, though only as a result of prior losses posted by GFH, and the club operated under a transfer embargo in January 2015. It was lifted later that year and their finances since then pose little threat of them breaching the £39m limit.

Leeds posted a loss of £7m in 2015 and a loss of almost £9m in 2016, not discounting expenditure which is exempt from FFP calculations. The latest accounts for the 2016-17 year show a profit of almost £1m, leaving the club well short of the EFL’s upper threshold.

FFP might be a bone of contention and Leeds are comfortably compliant with the rules at a time when other Championship clubs are much closer to flaunting them but it could not be said that FFP is the prime factor preventing greater investment in players at Elland Road. There is scope within the EFL’s regulations to spend more if United and Radrizzani want to.

Gate receipts

This is one part of United’s business where the club are making hay. Gate receipts of £8m in 2015-16 rose to £10m last season, helped by a marked increase in average attendances, and the figure is certain to higher again when the results for this term are publish next March.

Home crowds in the 2016-17 campaign rose by more than 5,000 a game to 27,698. This year Elland Road’s average stands at more than 32,000 on the strength of the sale of over 20,000 season tickets, the biggest take-up since United were relegated from the Premier League. While Leeds required the sale of Lewis Cook to Bournemouth to put them in profit in 2017, their commercial revenue grew by 12 per cent and the club anticipate a better performance in the 2017-18 financial year.

Expenditure last season

There was, in the final calculations, no net spend on transfers at Elland Road last season. United’s signings cost £6.9m - in an accounting period which came before the departures of Chris Wood and Charlie Taylor to Burnley last summer - but almost £9m was recovered from player sales, of which Lewis Cook’s transfer to Bournemouth proved the most lucrative.

Leeds went very close to the play-offs under Garry Monk, finishing seventh after allowing a top-six place to slip away, but an overall profit of £1m and the fact that incoming transfer fees exceeded outgoing payments gives a better understanding of the tight framework that Monk was operating in.

In January, when United’s season was at its height, Leeds completed two new signings: Mo Barrow on loan from Swansea City and Alfonso Pedraza on loan from Villarreal. Sources at United claim Monk rejected other possible transfers, including a temporary deal for Lewis Grabban who went onto join play-off finalists Reading from Bournemouth, but either way it is evident that Financial Fair Play in particular was no obstacle for greater investment at a pivotal stage of the Championship year. Leeds ran out of steam under Monk and have subsequently gone backwards this season. It is hard not to see it now as a window of opportunity lost.

Gulf Finance House

Gone but not quite forgotten, or not quite paid up in full. The Bahraini bank wracked up losses of close to £23m in its shambolic year as club owner but it did vacate the premises without first laying claim to a huge pile of debt.

GFH was initially owed more than £20m, a sum which Massimo Cellino agreed to service when he bought 75 per cent of Leeds in 2014. GFH was issued with a debenture secured against the club’s assets when it sold all remaining shares to the Italian in September 2016.

Cellino managed to trim the debt slightly but only via protracted negotiations with an institution which was reluctant to give up its money. Radrizzani took a different approach around the time of his full takeover last May, repaying half of the £17m which GFH was claiming and asking for the remainder to undergo a legal review. Leeds are scheduled to refund the entire amount in staggered payments by 2029 but it seems unlikely that GFH’s name will be on anyone lips by then.