Fan base is one of strongest assets of regional capital's club

The game at Boro tonight will help decide the chances of Leeds United returning to the top flight which is surely where a team located in a regional capital of the UK’s third lar gest metropolitan area  deserves to be.  However, they have also lost money in all three of their seasons in the Premier League, adding up to £82m, so promotion to the top flight is not always as beneficial as people might expect. There is a significant revenue increase, but costs also have to grow in order to compete at the higher level.

However, there was an adverse Covid impact and  Leeds’ £82m net loss during their three seasons in the Premier League was one of the better performances, as they were only outperformed by seven clubs.

2022/23 was the last year of Andrea Radrizzani’s time as Leeds’ majority shareholder after he bought the club in 2017, as he sold his 56% stake in September 2023 to the consortium led by 49ers Enterprises, who already held 44%.

The investment arm of NFL franchise San Francisco 49ers and Radrizzani reportedly agreed on a valuation of £170m following the club’s relegation, which was significantly lower than the £400m that had been mooted in the Premier League.

Leeds United’s pre-tax loss narrowed from £37m to £34m, as revenue slightly rose from £189m to £190m. The financials were significantly boosted by profit from player sales rising from just £1m to £73m, but this was almost entirely offset by £72m growth in operating expenses from £224m to £296m. Net interest payable reduced from £3m to £1m.

Gate receipts shot up £5m (22%) from £25m to £30m, thanks to what the club described as “the supporter base’s unflinching commitment”, but there were decreases in both the other revenue streams. Broadcasting dropped £4m (4%) from £116m to £112m, while commercial fell £1m (2%) from £49m to £48m.

Although Leeds’ £34m loss is obviously not great news, this is actually not too bad for the Premier League, as some clubs reported much higher losses last season, especially Aston Villa £120m, Tottenham £95m, Chelsea £90m, Leicester City £90m and Everton £89m.

Player ttrading

Leeds made £73m profit from player sales, a new club record by some distance, thanks to two big money deals, as England international Kalvin Phillips went to Manchester City, while Brazilian winger Raphinha moved to Barcelona. Phillip’s sale represented pure profit, as he was an Academy product.  Unsurprisingly, this was one of the highest gains in last season’s Premier League, only surpassed by Manchester City £122m, Brighton £121m and Leicester City £75m.

The £73m profit Leeds made from player sales last season was not only a club record, comfortably ahead of the £18m gain in 2017/18, but also more than the previous 12 years combined.

Nevertheless, Leeds’ £99m player sales profit in the last five years was mid-table in the top flight, albeit far below the likes of Chelsea £417m, Manchester City £337m and Leicester City £249m.

In fairness, Leeds were playing in the Championship for two of those years and it invariably takes time for promoted clubs to establish a solid player trading model, as has been seen with Brighton for example.

Leeds have also made decent money from player sales this season, including the transfers of Tyler Adams and Luis Sinisterra to Bournemouth for £23m and £20m respectively. The latter deal was originally a loan, but that was made permanent in February.  According to Transfermarkt, all the deals added up to £50m in sales proceeds, though the accounting profit will obviously be smaller.

Since relegation, Leeds’ activity in the transfer market has understandably slowed down, but their £31m gross spend was still the third highest in the Championship. New arrivals included Joel Piroe from Swansea City, Ethan Ampadu from Chelsea, Ilia Griev from Werder Bremen and Glen Kamara from Rangers.

Revenue

Leeds’ revenue increased by £136m since promotion from the Championship, rising from £54m to £190m.  This was the highest ever figure for the club. This is more than five times as much as it was before Radrizzani bought the club in 2017.  The difference in the top flight is particularly evident in broadcasting, which was £103m higher, thanks to the amazing Premier League TV deal. However, there have also been impressive increases in commercial, up £14m (42%), while match day has nearly tripled from £11m to £30m.

Leeds’ £190m revenue was the 11th highest in the Premier League, which is pretty good going for a club just three years after promotion.    However, for some perspective, they were miles behind the Big Six, more than a quarter of a billion pounds below the sixth highest club, Arsenal £465m, and more than half a billion less than Manchester City £713m.

Of course, relegation will have a massive impact on Leeds’ revenue. Looking at the clubs that went down in the previous season, they could anticipate a revenue reduction of around £60m.

Leeds’ average attendance slightly increased from 36,308 to 36,566, the club’s highest for over 20 years, though they has already attracted crowds of more than 35,000 in the Championship, which was comfortably the best in the second tier.

Incredibly, Leeds’ £48m commercial revenue was the seventh highest in England after just three seasons back in the Premier League, only behind the moneyed Big Six, but ahead of clubs like West Ham, Newcastle United, Aston Villa and Everton.  That said, the gap to the leading clubs was enormous, e.g. Manchester City’s £341m was seven times as much, while sixth-placed Arsenal were around £120m higher.

Stadium

Elland Road has a relatively small capacity at just under 38,000, while the club has over 20,000 people on its season ticket waiting list, so it is not surprising that they have been looking at options to expand the stadium.  This could ultimately increase capacity to 60,000, which would enable them to compete with the moneyed elite, especially if they focus on corporate seats, hospitality and a multi-use stadium.

WaGES

Leeds’ wages rose £25m (30%) from £121m to £146m, another club record, largely due to investment in the squad in an attempt to become “an established top flight side”.  The wage bill would have been even higher if the club had stayed up, as the contingent liabilities noted there was a chunky £42m bonus for retaining Premier League status.

In fairness, Leeds have had to play catch-up following promotion, as their wages were a fair bit lower than their mid-tier rivals in the Premier League. However, it is worth noting that since 2017, the only club in this group with higher wages growth than Leeds is Aston Villa.

Leeds’ wages to turnover ratio increased from 64% to 77%, though this was obviously still a lot lower than the 144% in their last season in the Championship (also impacted by a hefty promotion bonus).  Leeds’ wage bill will have significantly dropped this season, due to relegation clauses up to 60% and many players going out on loan. However, if they do secure promotion, this would mean a £22m bonus (again, per the contingent liabilities).

In the three years since promotion Leeds’ owners have put in £63m of funding, though only £5m of that came in 2022/23. The £29m share capital was from 49ers Enterprises, while the rest was provided by Radrizzani.

In reality, the £63m funding in the last three years was not that high in the Premier League. In that period, the owners at five clubs put in more than £200m, including four who have similar aspirations to Leeds, namely Everton £399m, Fulham £330m, Aston Villa £221m and Newcastle United £206m.

The board’s long-term strategy is to establish Leeds United as a leading Premier League club by delivering success on the pitch and increasing the scale and engagement of the club’s global fan base.

That fan base is one of the club’s biggest assets, helping to drive the club forward with its strong support, both from the stands and from a financial perspective, providing a big advantage to Leeds in the Championship.