Leeds Utd Funding

Very interesting and detailed article from Phil Hay today regarding our Finances and future plans.....

At Leeds United, the mark of the Premier League is everywhere.
It is there in a waiting list for season tickets, stacked with over 20,000 names.
It is there in the projection that shirt sales this season could exceed 250,000. It is there in the deals with 19 new sponsorship partners and the money those contracts pay.
More than anything, it showed itself in the way that Leeds took on their first transfer window after promotion.

The market, people said, would be depressed and sluggish, awash with caution as COVID-19 ate away at revenue streams, but the Premier League missed the memo. Overall spending was set at £1.2 billion when the window closed on Monday night.
Leeds alone accounted for around £100 million of the total bill.
Those are top-line figures and transfers have long been structured in a way where the price agreed goes way above the cost of initial payments but how does a newly-promoted club in the middle of a pandemic find a way to fund recruitment in the way that Leeds have? Is the sharp increase in income after promotion enough to cover the bill?

And what is the longer-term plan behind four new signings at so high a price?
The answers relate to a combination of factors: structured fees, a significant rise in their turnover, a forward finance deal related to television broadcasting cash and the likelihood that further equity investment will come from existing shareholders. Andrea Radrizzani, Leeds’ chairman, told the Financial Times last month that COVID-19 had cost the club £30-£40 million through the loss of corporate and commercial business and the absence of match-day crowds at Elland Road but Leeds have successfully capitalised on opportunities to increase annual earnings, which already stood at around £50 million in the EFL.
With that base beneath them, Radrizzani is said to value the club at no less than £250 million.

In total, they signed seven first-team players this summer, ending their business with a £17 million deal for Brazilian winger Raphinha from Rennes.
One of those transfers, Jack Harrison, was a loan from Manchester City with a future £10 million option. Helder Costa and Illan Meslier were loanees who became permanent signings from Wolverhampton Wanderers and Lorient, for £15 million and £5 million respectively. Rodrigo broke Leeds’ transfer record with a £27 million move from Valencia and Diego Llorente and Robin Koch came in at £18 million and £13 million.
Before factoring in any expenditure on academy transfers — of which there have been several, including Sam Greenwood from Arsenal for a seven-figure fee — Leeds are committed on paper to combined fees of £95 million.
Leeds spent £17 million on Brazilian winger Raphinha from Rennes.
When Costa’s move was negotiated in 2019, Leeds agreed a payment plan with Wolves across the four years of his contract. In this window, a similar method was used to spread the club’s expenditure over an extended period of time.

Some of the fees are back-weighted, which means the staggered payments increase in value towards the end of the players’ contracts. The Athletic understands that the immediate outlay on signings in this window did not rise far above £3 million per player. Most of the fees and salaries are incentivised and dependent on appearances, retention and the club’s league status.

The point of this window as Leeds saw it was not just to stay up but to do so convincingly, beginning the process of creating a dependable and capable Premier League squad.
Radrizzani carried the financial burden of a £50 million wage bill million towards the end of Leeds’ time in the Championship and, as a result of recruitment and salary increases due through promotion-related clauses, it is likely to double in this financial year.
In the Premier League, though, the value of everything goes up. Leeds stand to receive an additional £1 million in broadcast cash for each televised game they appear in, and have already been chosen for five.
They are budgeting for a 17th-placed finish but each position above that in the final table would pay them an additional £2 million. Their old shirt sponsorship deal with 32 Red pulled in £750,000 annually but the close-season switch to betting firm SBOTOP is worth more than £5 million alone.
In total, match-day and training kit sponsors are paying the club £10 million this season, on top of a new five-year kit contract with Adidas.
In some cases, Adidas pay clubs a flat fee for the right to produce and sell their kit. Leeds have a different arrangement, where the German firm commits a smaller sum but allows the club to sell the merchandise themselves and pocket the income.

More to follow