Finance expert issues verdict on who will be ‘top dog’ as Leeds United owners 49ers take over Rangers

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49ers Enterprises, who own Leeds United and will shortly add Rangers to their sports investment portfolio, don’t make business decisions based on sentiment.

The Americans talk a good game in terms of their emotional affinity with Leeds. But fundamentally, they are venture capitalists and have not plunged several hundred million pounds into the club out of altruism.

On-pitch success and the ego boost and brand advantages it delivers are a bonus, of course, and financial gains are – unlike the 49ers’ business model in the NFL – still inherently linked to sporting achievements.

However, in their stewardship of Leeds United, the 49ers’ KPIs are based on capital appreciation. They might bankroll year-on-year losses in the short term, but they will eventually cash out at a huge markup.

In layman’s terms. it’s about monetising the Leeds brand, demonstrating the viability of the business plan, and one day selling the club to a buyer who thinks they’re smarter than the previous regime.

In finance, it’s called the ‘Greater Fool Theory’.

Leeds United haven’t made an operating profit (a surplus before player trading) since 2012, when they were in the green by a measly £400,000. Total operating losses in that time are over £200m.

To consistently generate profits, Premier League status is essential, yes, and Daniel Farke are in position to deliver that for the 49ers this season. But there is far more to it than that.

Position	Team	Played MP	Won W	Drawn D	Lost L	For GF	Against GA	Diff GD	Points Pts
1	LeedsLeeds	35	22	10	3	72	22	50	76
2	Sheff UtdSheffield Utd	35	23	6	6	50	27	23	73
3	BurnleyBurnley	35	19	14	2	45	10	35	71
4	SunderlandSunderland	35	18	11	6	52	32	20	65
5	CoventryCoventry	35	15	8	12	49	44	5	53
6	West BromWest Brom	35	12	16	7	45	32	13	52

There will be a US franchise sport-style fixation on sponsorship and merchandise, plans to expand Elland Road will be geared towards the corporate sector, and attempts to de-couple profits from football.

Rangers, who have agreed a deal in principle with 49ers, will have a similar business plan once the 49ers takeover led by Paraag Marathe is complete.

It is a different proposition in Scotland, however, where the Old Firm’s duopoly ensure access to lucrative European football but where the domestic TV deal is a fraction of that available to Leeds in the top flight.

49ers, who appointed Gretar Steinsson as head of a new global football department in November, have clearly been preparing to launch a multi-club model for some time meanwhile.

With Red Bull’s investment at Elland Road and their perpetually expanding multi-club empire as well, Leeds will now sit somewhere in a labyrinthine structure of eight clubs, plus Rangers.

But where in 49ers’ hierarchy of priorities will Leeds be? LUN spoke exclusively to Liverpool University football finance lecturer and industry insider Kieran Maguire to find out.

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49ers budget could be split between Leeds United and Rangers, says Kieran Maguire

Despite attempts by UEFA and FIFA to clamp down on the model, multi-club ownership is in vogue at present.

Some multi-club models have a ‘mothership’ – Manchester City in City Football Group, for example – who unambiguously sit at the top of the food chain. They benefit commercial, in terms of talent ID, and more.

Other models, such as John Textor’s Eagle Football, have less of a defined hierarchy, with players traded within the group for mutual benefit and a culture of symbiosis throughout the network.

Significantly, under UEFA’s conflict of interest rules, Leeds and Rangers would not be allowed to play in the same European competition in the same season.

Therefore, is their investment in the Ibrox club a tacit admission that there is a natural ceiling for their ambitions in West Yorkshire, having previously said they want to take the Whites into Europe?

“I think the major concern from Leeds’ perspective is who is going to be top dog,” says Maguire,

“Both clubs have dedicated fanbases and proud histories domestically and in Europe.

“Both sets of fans will be concerned that, if there is a limited overall transfer budget, how is that going to be allocated between clubs?

“Leeds have the benefit of potential Premier League revenues next season, which are of course transformative for a club who is promoted.

“Rangers, who are operating second in a city where finishing 2nd is considered finishing nowhere, still realistically have a high probability of European adventures every season.

“If you get into the group stages of the Champions League each season, that can be almost as good as a season in the Premier League.

“I think both sets of fans will be watching with cautious optimism that, if this deal goes ahead, their clubs will not be disadvantaged.

“49ers at the moment have sufficient funds to provide backing for both clubs, but if circumstances change, that’s where some of the worries lie.”

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Elland Road expansion: Liverpool-style project will be game-changer for 49ers

Leeds have not had enough room to meet demand at Elland Road for some time now and, having purchased the site back from Andrea Radrizzani last July, are free to forge ahead with expansion plans.

49ers are preparing to sell a stake in their San Francisco NFL franchise which will raise around £750m. And with only a fraction of that going towards the Rangers deal, funds may be diverted to the stadium project.

The latest on the plans is that Leeds want to increase capacity to around 53,000 and, in a move similar to how Liverpool have approach the expansion of Anfield, want a phased development.

This way, capacity will not be dramatically hit while Leeds have to play matches elsewhere.

Marathe has emphasised the need to preserve Elland Road’s atmosphere, but it is also inevitable that the redevelopment will – like the Levi’s Stadium the 49ers built in San Francisco – be commercially focused.

Clubs like Chelsea now have 25 per cent premium seats, Arsenal’s top-tier hospitality season ticket costs £30,000, and Bayern Munich make more money from posh seats than they do the rest of the stadium.

The 49ers want a slice of that pie and, along with the multi-club model, see real estate and bricks-and-mortar projects as central to boosting the club’s enterprise value.