Towards the end of their life as an EFL club, Leeds United would call on Andrea Radrizzani for between £1 million and £1.5 million each month. That money from their chairman paid the club’s bills and furthered the Championship’s reputation as a league where owners who dabble in it are compelled to incur losses hand over fist.
It was often said that their long-awaited promotion would transform the landscape at Elland Road, righting a multitude of financial wrongs stretching back many years — and there is no other conclusion to draw from Leeds’ latest financial accounts, their first set of books since becoming a Premier League club again.
One season back in the world’s most commercially powerful division and Leeds were back to talking about overall profits — something they so rarely achieve.
Ken Bates prided himself on turning a profit at Leeds, however competitive or otherwise the club’s squad were, and the penultimate accounts on his watch as chairman, 2010-11, recorded a gain of £4.5 million. Close to £1 million was made in 2016-17, the last year before Massimo Cellino sold the club outright to Radrizzani, but Cellino had driven the wage bill down to £20 million, a figure which made promotion improbable. Chasing the Premier League led to regular financial shortfalls and in the season where Marcelo Bielsa took Leeds up, 2019-20, the losses came in at £62 million.
Eleven months later, and at the end of 2020-21, that deficit was converted into an overall pre-tax profit of £26 million, though the numbers are not as black and white as that.
The latest gain was helped by an undisclosed shareholder, most likely Radrizzani, waiving loans worth £21.3 million, and Leeds’ operating profit in real terms came in at just over £5 million. But in a period where COVID-19 shut down stadiums all across the sport and wiped out large portions of commercial revenue, the value of promotion speaks for itself. Everton, as a recent comparison, lost £120 million in the same accounting period. Sheffield United were the only other Premier League side to post an operating profit for 2020-21, and they went down having finished bottom.
The cost of COVID-19 to Leeds was still very real. Their accounts estimate that the pandemic and an empty Elland Road, a ground which had a crowd through the turnstiles for only one game last season, wiped £23 million from their results. Gate receipts dropped to below £2 million, which is well down from £11 million the previous year but a change of division and the astronomical difference in income between the Premier League and the Championship meant they were as well placed as most clubs to ride the turbulence.
Radrizzani and Leeds’ board fought in the Championship for the EFL to revise its TV deal and that was where the biggest change was felt: less than £2 million of TV and broadcast revenue and £7 million of central distributions as a second-tier side in 2019-20 compared to £22 million of TV and broadcast revenue and £110 million of central distributions among the elite in 2020-21.
On top of that, a ninth-placed finish with Bielsa was worth £20 million in prize money alone.
In the Championship, Leeds were as strong commercially as any other club. They pushed their annual turnover up to £54 million by 2020, far beyond the earning power of the average EFL side, but that figure was dwarfed by a turnover of £171 million in their first Premier League season since 2003-04.
Through a shirt sponsorship deal with betting firm SBOTOP, they were able to pull in around £7 million a year. A kit deal with Adidas was worth a high seven-figure sum and merchandise sales earned them £20 million. Outgoings of £150 million limited the operating profit but income streams expanded overnight, as they were always likely to do.
Movement on the boardroom front was significant too.
A purchase of shares by 49ers Enterprises, Leeds’ minority shareholder, in December 2020 injected £23 million and the US group has since made a further investment, raising its stake to 44 per cent late last year. It continues to hold an option to buy majority control of the club from Radrizzani.
On top of £21 million of waiver loans mentioned above, £8-million worth of shareholder loans were converted into shares, demonstrating that Leeds are still reliant on boardroom backing. Additional borrowing of £43 million most likely relates to the forward financing deal Leeds negotiated after promotion, a strategy used by many Premier League sides in which loans are taken from established lenders for working capital and secured against future TV income.
Returning to the Premier League also changed Leeds’ financial approach to the transfer market.
In their first summer window back in the top flight, they are committed to signings worth in the region of £100 million. The cost of most, if not all, of those transfers will be paid instalments.
What is notable at Elland Road though is that, in the past four transfer windows, barely any money of note has been made from outgoing moves.
Leeds have not used player sales to fund their own recruitment in the Premier League, though the summer ahead might change that if interest in Raphinha, Kalvin Phillips and others leads to offers that the club decide to accept. Their first Premier League window had the desired impact, setting them up for that ninth-place finish last May. Squad investment since then has been far less effective, resulting in a relegation fight this season.
As a consequence of the expenditure, the wage bill jumped to £108 million, the equivalent of 64 per cent of turnover.
In 2019-20, a wage bill of £78 million was more than £20 million higher than the club’s total income.
Leeds pushed the boat out that far in the EFL to try to ensure that Bielsa’s second year as head coach took them out of the Championship, knowing full well that cutbacks would be necessary if promotion went begging. Reaching the Premier League was the right step at exactly the right time, coming before Leeds were hit by the perfect storm of a pandemic and unavoidable belt-tightening.
The club’s position at the end of this season, for which the accounts will appear in 12 months’ time, is unlikely to be provided to be drastically weakened they avoid relegation.
Leeds will finish further down the table than they did in 2021, thus reducing the prize money coming their way, but they have regained their match-day revenue streams and the outlay on first-team players last summer was lower than 12 months previously. Further boardroom support has come from 49ers Enterprises, and would ensure a third tranche of Premier League income.
The importance of avoiding relegation, meanwhile, is shown by Leeds committing to bonuses of £35 million in return for survival last season. A total of £48 million will be paid in bonuses if they stay up again for 2022-23, though the club are understood to have included relegation provisions in the contracts held by many of their prominent players.
Financially, they look like a business in good health, albeit with pressure on them to spend before next season begins.
A year on from the 2020-21 accounting period, the obvious room for improvement is on the pitch.
(Photo: Naomi Baker/Getty Images)