The authoritative Swiss Ramble reviews the 2019/20 accounts of Leeds United., a year that saw them promoted as title winners from the Championship. Some fans saw it as a 'now or never' season.
The club paid a price for success, as their pre-tax loss
widened from £21m to £62m, despite revenue rising £5m (11%) from £49m to £54m,
as significant investment led to expenses increasing £44m (52%), including £20m
promotion bonuses and £7m TV rebate to broadcasters.
The main reason
for the £5m revenue growth was £7m (25%) increase in commercial income from
£27m to £34m (largely merchandising), as gate receipts fell £1.2m (9%) to
£11.4m and broadcasting was down £0.5m (5%) to £8.7m. Profit on player sales
dropped £6m to £10m.
Commercial income
is by far the highest in the Championship and more than all but eight clubs in
the Premier League. Commercial
income will further rise, as lucrative new deals have been signed in 2020.
SBOBET shirt sponsorship reportedly worth £6.5m a year, compared to 32Red
£750k, while Adidas replaced Kappa in 5-year kit supplier deal and new training
kit partnership with Clipper.
Revenue has more than doubled in the last five years from
£24m to £54m, mainly driven by commercial, which has tripled from £11m to £34m,
now contributing 63% of total revenue. The growth was partly due to bringing
£4m catering back in house.
Excluding
parachute payments, the £54m revenue would have been comfortably the highest in
the Championship. In fact, this is the highest ever revenue for a Championship
club not in receipt of parachutes (Leeds have the four largest on record, all
from last four seasons).
However, the club saw significant cost growth, as wages shot
up £32m (70%) from £46m to £78m (including £20m promotion bonus) and other
expenses rose £7m (30%) to £30m. wage
bill rose significantly by £32m (70%) from £46m to £78m, which means that wages
have almost quadrupled in the last 3 years, rising from £21m.
The wages to turnover ratio
worsened from 94% to 144%, though this would be reduced to 108% if promotion
bonus excluded. Even excluding the promotion bonus, wages were pretty high at
£58m.
Of course, most clubs in the Championship habitually report
large losses. Even before the pandemic, quite a few lost more than £20m. That
said, the Leeds £62m loss is by far the worst to date in 2019/20, much more
than the next highest, Boro £36m. £62m
loss is only below £69m posted by Villa in 2018/19.
Leeds have only
made money once in last eight years (and that was just £1m in 2016/17). Losses
have been increasing in the three years following Radrizzani’s arrival, due to
investment in Bielsa, his coaching team and the squad, amounting to £88m.
Profit on player sales has been on the rise, averaging £15m
over last three years. As Radrizzani explained, “Unfortunately to sustain a
club in this league we need to sell one or two players each year.” However,
this will fall this season, as mainly free transfers last summer.
Leeds will earn much more TV revenue in the Premier League,
e.g. current 11th place gives around £120m based on 2018/19 distribution.
Figures for 2019/20 have not been published, but should be higher (before any
COVID rebate) with each league place worth around £3m.
As a result, revenue this season could increase from £54m to
around £160m. Would have been even higher without COVID, which Radrizzani
estimates has cost £30-40m with no fans at games and loss of
corporate/commercial business. This would place Leeds among the revenue elite.
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