What future for Leeds?

A change of ownership is what everything at Elland Road hinges on — and it can be credibly argued that the impasse on that front is a reason why Leeds have stagnated to the point where relegation is nigh.

At present, the arrangement in the boardroom is this: Andrea Radrizzani is majority shareholder with slightly more than 50 per cent of the shares. The remainder is held by 49ers Enterprises, a US investment vehicle with close connections to the NFL’s San Francisco 49ers. Were Leeds to stay up following their season-finale at home to Tottenham Hotspur this weekend, contracts are in place for 49ers Enterprises to buy out Radrizzani for a sum which would value Leeds somewhere between £400 million ($496m) and £500million ($621m).

The expectation is that the sale would go through by July 1 at the latest but in effect, the handover would start more rapidly.

The investment group behind this 49ers Enterprises project — made up of entrepreneurs, private equity firms, businessmen such as current Leeds director Peter Lowy and at least one unidentified US political figure — has been in place for some time and ready to buy Radrizzani out under the agreed terms, provided Leeds retained their Premier League status. While that collective is providing the funding, the day-to-day management of the club would be the responsibility of 49ers Enterprises figures including Paraag Marathe and Collin Meador.

However, the agreement with Radrizzani in its current guise will be void if Leeds go down.

Nonetheless, 49ers Enterprises remain intent on buying Radrizzani out, or at least securing majority control, even if relegation happens. Discussions to that effect have been taking place and gathering pace over the past few weeks, driven by the realisation that a bottom-three finish was increasingly likely and that the amount of work to be done this summer would be substantial either way.

Radrizzani is open to selling in the event Leeds find themselves back in the EFL next season, so long as the numbers work for him.

That is the crux of discussions as it stands: relegation promises to significantly reduce Leeds’ value and 49ers Enterprises would only be willing to buy at a much lower price, somewhere in the region of £150million ($186m). It is not clear if Radrizzani is prepared to drop his valuation to that level.

Revenue at Elland Road has reached a record level for the club, falling just short of £190million for the 2021-22 season. Pushing up their turnover to new heights is one area in which they have been consistently successful over their six years with Radrizzani as chairman. Even in the Championship, English football’s second tier, they were pulling in more money than any of the 71 other EFL sides — albeit while also posting hefty losses.

But it is no secret that the bulk of Premier League earnings come from central distributions, consisting mainly of money earned through the league’s lucrative broadcast deals. The EFL has just renegotiated its TV deal with UK broadcaster Sky Sports but the figures involved are still a world away from the cash earned by the Premier League through such rights. 

So at a stroke, a large chunk of that funding disappears with relegation. But as it has for years now, the parachute payment scheme exists between the Premier League and the Championship, giving those clubs who go down assistance to cope with the financial hit of dropping divisions. In year one back in the EFL, Leeds would receive 55 per cent of the basic payment made to Premier League clubs — around £45 million. If they then fail to bounce straight back, the year two figure drops to 45%. In year three, the final season of parachute payments, it’s 20%.

Used smartly, parachute payments can help a relegated club reframe their squad, be competitive in the promotion race and go again. That cash can facilitate signings other sides in the Championship cannot afford and support larger salaries. But they don’t last forever and they won’t avert sizeable losses, because virtually every club loses money in the second tier. They are no guarantee of promotion either.

Relegated clubs have little choice but to substantially reduce budgets, and Leeds would be no different.

Leeds’ last recorded wage bill, for the 2021-22 year, was £121million, and after so many signings made this season it can only have increased. Plainly, they could not afford to carry such high costs while in the EFL, but they would be helped at the outset by substantial reductions in the salaries earned by their first-team squad.

The players stand to incur hefty wage cuts in the aftermath of relegation, with drops of up to 60 per cent (some in line with the increases a number of them received after winning promotion three years ago). Clauses in their contracts allow Leeds to automatically decrease their earnings when in the EFL, bringing down the outlay overnight.

The capacity of Elland Road has not just been inadequate in the Premier League, but inadequate since the start of the Marcelo Bielsa era five years ago next month. Leeds’ home games sold out consistently from his arrival onwards and the waiting list for season tickets soared very quickly, to a peak of 22,000 names.

This is a handicap in two senses. Firstly, supply is a long way below demand and supporters who would like to attend matches cannot. And secondly, Leeds are missing out on the commercial and corporate income a bigger stadium would let them generate.

But for all the talk, the idea of redeveloping the ground has been exactly that for a few years now — an idea.

The proposed project would start with the rebuilding of the West Stand and the club have architectural designs for that in place but they would have to go through the process of applying for planning permission and that was only due to happen once 49ers Enterprises assumed control of the boardroom. In itself, planning could take 12 months to secure.

The project would also require large amounts of funding, many tens of millions of pounds predominantly secured via loans, and it has been clear for a while that any such work was not going to start on Radrizzani’s watch. It is a sad aspect of these three seasons aboard the Premier League gravy train that Elland Road has hardly been touched to any great extent.