Leeds United and 49ers Enterprises should welcome, not fear, the Independent Football Regulator, says football finance expert Kieran Maguire.
Speaking exclusively to Leeds United News, the University of Liverpool academic and Price of Football podcast host said that the regulator could indirectly boost the price that the 49ers get when they do eventually come to sell the club.
That day is not imminent, but we do know that Paraag Marathe and the rest of the 49ers clan have a long-term plan in place to exit at a valuation far north of the £170m-plus they spent to acquire Andrea Radrizzani’s controlling stake in the summer of 2023.
A document 49ers sent to their investors to raise capital for Leeds’ plan to expand the stadium which has been seen by Leeds United News discloses that the American group are aiming for a £1bn valuation by 2030. And with Premier League status all but secured this term, that timeline will likely be reviewed.
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This week, sports business outlet Sportico valued the club at a little over £500m.
If and when the owners leave West Yorkshire, the sale will need to be approved by the Independent Football Regulator, which was passed into law last year and has the power to block takeovers among a number of other measures.
Former CEO Angus Kinnear was not a fan, likening the regulator’s proposed transfer levy to Maoism. Moreover, the club’s accounts have previously listed the regulator as a risk to finances, while the same aforementioned investment document said the proposal could cost the club as much as £5m.
Among fans, however, attitudes towards the regulator are generally positive. And despite rising costs, Maguire says the government-backed body should actually favour the 49ers’ business ambitions in the long run.
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The Guardian’s Matt Hughes reports that the regulator’s projected annual budget of £10m has risen significantly, leading to consternation among Premier League clubs about how the costs will be accounted for.
As previously reported, Leeds United News understands that the regulator’s top-end projection was £149m over 10 years. Although there have been no specifics about how the expense would be distributed among clubs, it is expected that Premier League clubs will shoulder most of the burden.
“Premier League clubs should be taking a holistic view of all of their costs anyway,” says Maguire.
“It seems perfectly happy to incur hundreds of millions of pounds per year in agents’ fees. In addition, the Premier League’s legal bills have increased. They’re averaging over £40m per season these days.”
Official FA data shows Leeds spent £14m on agents this season, while Leeds United News has seen a slide from a Premier League shareholder meeting that shows central legal costs have exceeded £100m over the last three seasons.
“If the regulator can help to encourage a compliance culture within clubs,” Maguire continued, “this could actually benefit Leeds and the Premier League in a variety of ways.
“The Premier League has spent £6m-plus lobbying against the regulator. Leeds are absolutely justified in having reservations about A) potential mission creep of the regulator and B) cost increases, but on a club-by-club basis it will be beneficial if it enhances the reputation of the Premier League as a whole. By extension, that will increase the value of clubs like Leeds United. I assure you, that will increase the value of the clubs by far more than the slight increases in costs of the regulator.”
After that, there is the issue of the rising cost of debt across the Premier League. For Leeds, whose plans to expand Elland Road will be at least partly funded by debt, that is particularly pertinent. So, could the regulator also help the club here?
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“If we look at other stakeholders, you’ve got the debt market. Look at Leicester City – they were paying in excess of 11 per cent for their invoice discounting with Macquarie. If the Premier League’s reputation is enhanced because it has effectively been kitemarked, that’s going to reduce market risk, which will reduce interest rates charged by external lenders. That is relevant in Leeds and the 49ers’ case because they are a private equity-owned club and their entire model is predicated on debt.”
Speaking in an earlier interview, Maguire told Leeds United News that, when the 49ers do sell up, it will likely be to another private equity group as the ownership model becomes more pervasive across football. But rather than scaring off investors, says Maguire, the regulator will probably increase demand.
“One of the other reservations that the Premier League had was that the regulator would deter future investment in clubs like Leeds. Leeds are a perfect example of that not being the case, however, because the 49ers were aware of the threat of a regulator when they bought the club.”
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