Leeds United’s failure to win promotion in May placed the club’s financial situation under all sorts of scrutiny.
It was reported even before Leeds’ play-off final defeat to Southampton that £100 million would need raising through player sales due to how close they were to breaching the EFL’s P&S rules.
Their latest accounts in early April also showed that Leeds still owed a whopping £190 million in unpaid transfer instalments to other clubs, £73 million of which was owed by June 30.
Had Leeds returned to the Premier League, the vast increase in TV money would have helped to offset the vast majority of that.
However, another season of Championship football means they have to find other ways to raise money, particularly given that parachute payments are also reduced in the second year after relegation.
Leeds could break Championship record for revenue
Leeds let go a total of 21 players over the course of the summer which therefore allowed them to raise £143.5 million through sales, second only to Chelsea in Europe.
Red Bull’s sponsorship is also regarded as the most lucrative in Championship history, while the club’s new yellow away kit also generated a record amount of sales.
With all that mind, Leeds should now be in a much stronger financial position than what they entered the window. Speaking exclusively to LeedsUnited.News, football finance expert Adam Williams has delved into that theory.
He believes all the factors previously mentioned could see Leeds generate a ‘record revenue’ for a Championship club for this financial year, potentially allowing them to attack the January transfer window if they feel they need to do so.
He said: “The fact that the value of sales are booked immediately while fees paid for new signings are amortised over five years means Leeds have freed themselves from the shackles of PSR almost entirely – in the short to medium term at least.
“They lost nearly £34m in 2022-23, which is now the last season in the three-year PSR calculation. That is down from £37m the previous season, so they have got some extra breathing space there too.
“My guess is that with the new EFL TV deal as well as matchday and commercial income streams that are the envy of most clubs in Europe, Leeds could generate record revenue for a Championship club this season.
“That will depend on where they finish in the league, of course. But even after losing so many quality players, you’d think they would be there or thereabouts come the end of the season.
“We won’t know their financial results for 2023-24 until early next year, but Leeds were obviously close to breaching for the three-year period up to 30th June,
“However, they will make a very healthy profit this season that will offset the losses they made last term. I think that would also give them scope to attack the January transfer market, if further improvements to the squad are needed.
“That is from a PSR perspective. What you also need to understand is that profit in accountancy and PSR is different from cash.
“There is a saying in business – turnover is vanity, profit is sanity, cash is reality. Profit includes non-cash adjustments like amortisation. The cash picture, which is how much actual money the club has in the bank, is more complex.
“They need cash flow to service their debt, pay down transfer instalments, and potentially to keep in reserve for future capital expenditure projects, the potential expansion of Elland Road and so on. I think the sales have given them the wriggle room they needed in that regard.”
49ers deserve praise despite summer criticism
Ultimately, all supporters care about is watching their team perform well on the pitch. However, behind-the-scenes football is much more than that, with clubs now effectively businesses.
Leeds fans were understandably frustrated when Georginio Rutter became the third high-profile exit of the summer last month despite having been promised that Archie Gray’s sale would help them keep key men.
Leaving it so late in the window to find replacements also did not help 49ers Enterprises reputation with supporters, but it does look like a strategy that could pay off.
Even after all those departures, Leeds have one of, if not the strongest squad in the division and are more than well equipped to win promotion.
If they manage to do that, Leeds should then be able to attack the transfer window as a Premier League club due to the money raised this summer.
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