Future for Leds is bright

Leeds United’s pre-tax loss widened from £12m to £37m, despite revenue rising £18m (11%) from £171m to a club record £189m, as total expenses increased by £44m (24%) from £183m to £227m. In addition, they only booked £1m profit from player sales.

Although Leeds’ £37m loss is obviously not great, it is actually not too bad in the Premier League, as some clubs reported much higher losses last season, including Manchester United £150m, Chelsea £121m, Leicester City £92m, Newcastle United £73m and Tottenham £61m.

Many clubs had lower profits from player trading, due to the pandemic deflating the transfer market, but Leeds’ result was more because of a deliberate decision to retain players to cement their status in the top flight.

Leeds have only been profitable once in the last decade – and that was just £1m in 2017. Since then, losses steadily increased in the Championship, following the arrival of owner Andrea Radrizzani, as Leeds invested big sums to help secure promotion, leading to a £62m deficit in 2020.

Leeds’ revenue has increased by £135m since promotion from the Championship from £54m to £189m, the highest ever for the club. This is 5.5 times as much as it was before Radrizzani bought the club in May 2017. The difference in the top flight is particularly evident in broadcasting, which is £107m higher, thanks to the amazing Premier League TV deal. However, there have also been impressive increases in commercial, up £15m (44%), while match day has more than doubled from £11m to £25m. Leeds’ revenue growth since 2018 is the highest of the mid-size clubs, albeit obviously boosted by the promotion impact.

Broadcasting is the most important revenue stream with 61%, followed by commercial 26% and match day 13%. This is the lowest in the Premier League outside the Big Six. This means that their performance is very good in terms of commercial (particularly) and match day.

The wage bill has shot up by £100m in the last five years, so is now almost six times as much as the £21m paid in 2017. Despite the increase, Leeds’ £121m wage bill is still firmly in the bottom half of the Premier League, sandwiched between Crystal Palace and Wolves. The top four clubs pay around three times as much as Leeds.

Despite the increase, Leeds’ £121m wage bill is still firmly in the bottom half of the Premier League, sandwiched between Crystal Palace and Wolves. The top four clubs pay around three times as much as Leeds.

Leeds’ £73m debt is pretty low for the Premier League, far below the likes of Tottenham £853m (to fund their new stadium) and Manchester United £636m (Glazers’ leveraged buy-out).

If we compare transfer debt to revenue, Leeds owe 55%, which is the third highest in the Premier League, only behind Aston Villa and Tottenham. This is something that the club will have to keep an eye on, especially as these figures do not include their large outlay this season.

Leeds’ £93m owner funding in the last five years is not that high in the Premier League. In that period, owners at five clubs have put in more than £200m, including three who have similar aspirations to the Yorkshire club, namely Everton £574m, Aston Villa £351m and Brighton £216m.

Media reports suggest that the consortium led by 49ers Enterprises has an option until January 2024 to buy the club (reportedly for more than £400m). There is speculation that this option could be triggered at the end of this season, though this could be dependent on whether Leeds stay up.

Promotion to the Premier League has clearly transformed Leeds United’s finances, even though “second season” syndrome resulted in them losing money in 2021/22. They have a structural competitive advantage from being the only club in the UK’s third biggest city, as seen by the strong commercial results, so the future is bright - as long as they manage to avoid relegation.

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The Political Economy of Football V2

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