Leeds United have been praised by a finance expert for being in no danger of breaching FFP/PSR rules with the club in a position to weather a failure to win promotion back to the Premier League if they miss out on promotion again this year.
Leeds are currently second in the Championship table and with hopes of making amends for last season's failure to win automatic promotion and then mis-fire in the play-off final. However, the club have not gambled their future on returning to the top flight and as accounts published for the year ending June 2024 show, the club are in a position to remain competitive despite a significant loss of £61m for the year.
Accounts show the club’s revenue income sank by 33% to £126.7million, with losses rising by 80% to £61m due to severe reductions in TV and central distribution money - which has almost halved in both cases after dropping out the Premier League. That said, this revenue figure is still a fantastic return for a Championship club.
“If you look at the averages, a non-parachute-payment club - some of them will be in and around £25-30m, you'll have some kind of floating around the £50-60m mark that have perhaps had parachute payments,” said Dr Dam Plumey, Sport Finance Lecturer at Sheffield Hallam University.
“Leeds United fall into that category, the revenue line is always going to be higher. It’s well above the championship average and that's testament again to some of the things where they can enable them to keep hold of some of those players for a promotion push.
“So yeah in the context of the Championship it's a very high revenue line - but ultimately as well, of course, boosted by parachute payments.”
With last season being their first back in the Championship, Leeds received around £40m in first-year parachute payments. This reduced to £32m this season and will be just circa £16m next term if Leeds do not go up. The financial accounts also do not cover a large portion of last summer's transfer window when a number of significant sales went through.
“Even if they don't get promoted this season, they'll still have the third year worth of parachute payments which will support the financial position for a little bit longer,” Dr Plumely added. “Listen, promotion is really important for sure, and the club obviously wants to get back to the Premier League to be able to push on with some of their other plans.
“So it's not kind of desperation stakes yet, but certainly for any club that's come down from the Premier League and been used to that broadcast money for a couple of years, you're trying your hardest to get back there within three years.”
The return to the Premier League would see United earn a boost of around £80m even before new commercial deals come into play. But even back in the Championship, figures show commercial revenue has held up not too badly.
That income only dropped by around £5m to £43.3m while gate receipts went up from £29.9m to £30.6m - though this is likely due to more home games in the Championship, including the home leg of the semi-final play-off. Merchandise income rose to £25.4m, an increase of £1.4m.
Furthermore, the wage bill fell by 24% to £84m, which includes both players and staff, many of whom will have had relegation clauses in their contracts. The amount of income spent on wages has reduced from 77% to 66%, as a consequence.
Dr Plumey added: “I think it's really positive that we've seen Leeds United do that thing that we say clubs always should do, which is plan for the worst in terms of wage reductions if you get relegated.
“That certainly looks to me that they've had some in there given the wage bill. You're always looking at the losses as a concern but the ownership group are well committed to the club and they've got plans moving forward in the future.
“I think headline figures - it sounds weird saying this when you're looking at a £60m loss - but it's not the worst set of football club accounts in the context of where the club are.
“But I do think you know getting back to the Premier League within that three-year window of parachute payments is really important because if you don't do that then you have to start to cut harder.
“You know you've got to be mindful of the EFL regulations further down the track if you're still in that league so promotion back up as soon as possible is a big thing at the minute for the club not just on the pitch but financially as well.”
What about possible finance breaches, are Leeds safe? “I've not seen anything to the contrary,” Dr Plumey added.
“There's obviously the things that they can claim back against PSR, we don't see that in the details or in the annual reports. So there'll be things to take off in relation to infrastructure spend, investment in the women's team, investment in the academy youth development.
“All those things are exempt so it will be lower than that the reporting figure anyway. There's nothing I've seen that suggests that they're in any danger of EFL non-compliance.”