The authoritative Swiss Ramble blogger reviews the 2018/19 financial results for Leeds United. He notes, 'investment has given them a great chance to regain their status in the Premier League, despite competing against clubs benefiting from hefty parachute payments. Currently top of the division, seven points ahead of 3rd place, they will surely hope that the season is concluded.'
The Swiss Ramble comments, 'To date Radrizzani has been a good owner at Leeds, buying back the ground and investing significantly more in the squad. However, he has spoken of selling a stake to other investors, including Qatari Sports Investment.'
He continues, 'However, any plans to sell a stake have been put on hold, due to the coronavirus pandemic. Leeds are particularly impacted by the football shutdown, as they make so much money from their home games. Players, coaches and managers have deferred wages to ensure other staff are paid.'
If parachute payments were excluded, Leeds would easily have the highest revenue in the Championship with their £49m ahead of Aston Villa £43m, Norwich City £34m, WBA £33m and Stoke City £33m. In fact, Leeds’ £49m is the highest revenue ever for a club without parachutes.
TV income rose £1.5m (19%) to £9.1m, partly due to reaching the play-offs, including £2.5m EFL distribution and £4.6m Premier League solidarity payment. Leeds benefited from their games often being shown live, but the sums involved are not that much: £100k home, £10k away.
Gate receipts increased £1.4m (12%) to £12.6m, as average attendance grew from 31,521 to 34,033 and there was one more home game (the play-off semi-final). Revenue stream is up £4.4m (54%) in 3 years, so is now 2nd highest in the Championship, only below Aston Villa £12.7m. Attendances have risen by around 11,500 since 2016 from 22,448 to 34,033, including over 23,000 season ticket holders. In fact, crowds have further increased this season, averaging over 40,000, i.e. higher than the last time Leeds were in the Premier League. This was higher than 11 clubs in the Premier League.
Where the club have really shone is commercial income, which rose £5m (25%) to £27m, comprising merchandising £9.4m (up £2.8m), catering £5.8m (up £0.6m) and other revenue including hospitality £11.9m, up £2.0m. This is by far the highest in the Championship, well ahead of Villa £18m. Commercial income is higher than around half the clubs in the Premier League.
The club has rediscovered its appeal to international commercial partners. Commercial income should further rise, as shirt sponsor 32Red extended its deal by two years in 2019, while Unibet now sponsors training wear. There have been media reports that Adidas will replace Kappa as kit supplier next year in a lucrative new deal, but not confirmed.
The wage bill rose significantly by £15m (47%) from £31m to £46m, due to the arrival of Bielsa, his coaching staff & new players (including loanees). This means that wages have more than doubled in last two years, rising from £21m to £46m to turn Leeds into a competitive team. Even after this growth, the club's £46m wage bill was only sixth highest in the Championship. The wages to turnover ratio increased from 77% to 94%, though this was still in the bottom half of the Championship, as more than half of the clubs in this very competitive division have ratios over 100%.
Leeds made player purchases of £16m, including Patrick Bamford and Barry Douglas. In the last two years, their outlay is £44m, compared to £34m in the previous decade. This was the fourth highest in the Championship, but miles below Stoke City £67m and Villa £31m. Radrizzani loosened the purse strings in his first two years at Leeds, averaging £18m gross spend, considerably more than the £4m average over the previous 7 years. However, there were no signings for fees in 2019/20, though many loans.
Gross debt rose £14m from £22m to £36m, including £25.6m from Radrizzani, £8m other loans (presumably former owner GFH), £1.2m finance leases and £1.1m overdraft. This would have been higher without owners converting £20m of debt to capital in the last five years. Despite the growth, the £36m debt is pretty low for the Championship.
In the last decade Leeds received £80m funding from owners (£32m share capital and £48m loans). This has mainly been spent on covering operating losses £37m, capital expenditure £24m, loan repayments, interest and dividends £20m. They broke-even in the transfer market.
Although Leeds suffered a transfer embargo in 2015 for breaching FFP rules, they are now comfortably within the £39m maximum loss over the three-year monitoring period ending in 2018/19, even before deducting allowable expenses for academy, community & infrastructure (£3m a year). However, if they were to post a similar loss in 2019/20 to the £21m reported last season, they would be right on the limit in FFP terms. This helps explain why Radrizzani is unhappy about some clubs selling stadiums to their 'sister companies' to get round FFP rules.
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