Leeds United’s 2016/17 financial results covered a season when they finished 7th in the Championship under former head coach Garry Monk, thus just missing out on the play-offs #LUFC
2016/17 also saw Massimo Cellino’s three-year reign come to an end, as fellow Italian Andrea Radrizzani first bought a 50% stake in December 2016 before taking 100% ownership in May 2017. He reportedly paid £45m to acquire #LUFC.
#LUFC reported a £1m profit, around £10m better than the previous season’s £8.9m loss, mainly due to £6.1m increase in profit on player sales to £8.9m, though revenue also rose £4m (13%) to £34.1m. 
Main reasons for #LUFC revenue growth were: (a) the Premier League solidarity payment, up from £2.3m to £4.3m, which meant broadcasting income rose £2.4m (45%) to £7.6m; (b) gate receipts, up £2m (24%) to £10.4m. However, total commercial fell £0.4m (2%) to £16.4m.
This was offset by #LUFC cost growth: wages £2.6m (14%) to £20.7m, player amortisation/impairment £1.6m to £5.6m and other expenses £1.5m to £15.6m. On the other hand, no repeat of 2015/16 £3.5m exceptional items (mainly for termination of Macron kit deal and stock write-down).
However, #LUFC would have made a similar loss to 2015/16 without £9m profit on player sales, mainly arising from Lewis Cook’s move to Bournemouth. This was the 10th highest in the Championship, though a long way below Newcastle £42m, Aston Villa £27m and Fulham £17m.
#LUFC have been profitable six times in the last 10 years, though the 2016/17 £1m profit was the first since 2011/12. In the intervening 4 years Leeds lost a total of £41m, averaging £10m a year, though the bottom line has significantly improved since the £20m loss in 2013/14.
Improvement in #LUFC finances is partly due to player sales, e.g. £10m in 14/15 (Ross McCormack to Fulham). This should again be the case in 2017/18, when the lucrative sales of Chris Wood and Charlie Taylor to Burnley should help deliver a player trading profit of around £20m.
#LUFC EBITDA (Earnings Before Interest, Depreciation and Amortisation), which strips out player sales and non-cash items to give underlying profitability, has improved from £(13)m low in 2014, but is still negative at £(2)m.
In fairness, only four Championship clubs managed to achieve positive EBITDA in 2016/17, so #LUFC £(2)m was actually 6th best in the division. For some context, it’s a lot better than promoted clubs, around £(20)m, though they were adversely impacted by hefty promotion bonuses.
Much of #LUFC recent revenue growth is due to bringing catering back in-house, so 2016 included £4.9m (net increase £3.8m, as Compass paid club £1.1m commission in 2015). Revenue has grown by a quarter in the seven seasons since promotion from League One, mainly central TV deals.
#LUFC have the highest revenue of clubs not receiving a parachute payment £34m, just ahead of promoted Brighton £29m. However, even if parachutes were excluded, Leeds revenue would still have been below Newcastle £49m, Norwich £39m and Aston Villa £37m.
#LUFC TV income was up £2.4m to £7.6m, as PL solidarity payment rose from £2.3m to £4.3m, thanks to new 3-year TV deal. Most Championship clubs receive £7-8m TV money, including £2.3m EFL distribution. Leeds benefited from being shown live 20 times (£100k home game, £10k away).
Looking at how the Premier League TV deal has increased (with clubs receiving £95m to £150m in 2016/17) helps explain why so many Championship clubs “go for it”, as the rewards for promotion are so lucrative. However, it’s still a risky gamble, as seen by Villa’s recent problems.
#LUFC attendance further rose in 2017/18 to 31,525, thanks to “record breaking” season ticket sales. Club’s potential shown by near 40,000 crowds in Premier League. For 2016/17 they had to repay 25% of season ticket price, as they failed to reach play-offs, costing around £1.5m.
#LUFC 27,698 attendance was 5th highest in the Championship in 2016/17, behind Newcastle 51,108, Villa 32,107, Derby 29,042 and Brighton 27,996. Club froze season ticket prices in 17/18 and 18/19 (though only for “early birds”).
#LUFC commercial income fell £0.4m (2%) to £16.4m, as a £1m decrease in catering income to £3.9m offset a £0.6m increase in merchandising to £5.8m, largely due to the 5-year Kappa deal signed in 2015/16. A new shirt sponsor, 32Red, came on board in 16/17 with a 3-year agreement.
Despite the fall, #LUFC £16m commercial income was still the highest in the Championship, just ahead of Norwich and Newcastle (both £15m). There is talk that this revenue stream has further grown (by around 25%) in 2017/18.
#LUFC wage bill grew £2.6m (14%) to £20.7m, though wages to turnover ratio only rose slightly from 60% to 61%, around £1m on first team squad, while some due to 29 increase in management/admin headcount. Still 7% below £22.4m peak in 2014, while revenue is up 35% in same period.
#LUFC £21m wage bill was only 17th highest in the Championship, way behind Newcastle £80m, Villa £61m & Norwich £55m and many clubs not receiving parachute payments, e.g. Derby £35m & Brighton £31m. This substantial gap underlines the competitive challenge to reach the play-offs.
#LUFC have the lowest wages to turnover ratio in the Championship at 61%. Much lower than previous years, partly due to catering income brought in-house. No fewer than 13 clubs pay more in wages than their revenue. Worth noting that Leeds wage bill up £7m in 17/18 per Radrizzani.
Hardly anything paid to #LUFC directors in the last three years. Recently peaked at £794,000 in 2013 during the Ken Bates/David Haigh era.
Unlike wages, #LUFC £16m other expenses were one of highest in Championship, partly due to £2.1m rent on Elland Road and Thorp Arch training ground. However, Radrizzani bought the stadium back on 28 June 2017 via Greenfield Investment Pte Ltd, so this should fall to £0.8m.
#LUFC player amortisation has risen steadily from £1.0m in 2010 to £5.3m in 2017, reflecting increased spending in the transfer market. There has also been £1.7m of impairment (write-down of player values) in the last 4 years.
Following this growth #LUFC £5m player amortisation was 9th highest in the Championship, though it was still pretty small in comparison to (relatively) big-spending clubs like Newcastle £36m, Aston Villa £24m and Norwich £17m.
#LUFC had £7m player purchases in 2016/17 (Kemar Roofe, Marcus Antonsson, Liam Bridcutt & Luke Ayling), about the same as the previous two seasons (each £6m), so they were massively outspent by clubs like Aston Villa £88m, Newcastle £41m, Wolves £32m, Fulham £24m and Derby £21m.
Radrizzani has loosened the purse strings since his arrival at #LUFC with £26m gross spend in 2017/18, considerably more than £7m annual average under Cellino. Player sales have also increased from £8m to £16m, leaving a net spend of £10m, compared to breaking-even.
#LUFC gross debt rose from £17m to £25m, including £14.5m from Radrizzani, partly used to pay-off half of £17m loan from previous owners GFH (remainder is contested). Converted £5m of debt to Eleonora Sport Ltd into shares, while it is understood £8.8m converted in May 2018.
#LUFC £25m debt was among the smallest in the Championship, far below 3 clubs that have since been promoted to the Premier League (Brighton £207m, Newcastle £152m & Cardiff £127m). Worth noting £24m of contingent liabilities, dependent on promotion, player appearances, etc.
Although debt is high in the Championship, most is provided by owners who charge little or no interest. That said, #LUFC £533k interest payment in 2016/17 was the 5th highest in the division.
From a cash perspective #LUFC lost £6m from operating activities in 2016/17. £8.5m was spent on repaying a historical loan, £1.2m on infrastructure and £0.5m interest payments. This was largely funded by Radrizzani’s £14.5m loan, £2m from another loan & £2m (net) player sales.
In the last 5 years #LUFC has received £47m funding from owners (£29m loans & £18m share capital). This has mainly been spent on funding operating losses £26m with £16m going on loan repayments £13m, interest £2m and dividends £1m. Only £4m capex, while player trading broke-even.
Although #LUFC suffered a transfer embargo in 2015 for breaching FFP rules, they are now comfortably within the £39m maximum loss over the 3-year monitoring period ending in 2016/17, even before deducting allowable expenses for academy, community & infrastructure (£3m a year).
One intriguing development at #LUFC is a partnership with 49ers Enterprises, the investment entity behind the American Football team San Francisco 49ers. It is believed they have taken a 10% stake in Leeds with funds invested used to “improve results on the pitch”.
Under previous owners #LUFC have adopted a prudent strategy (with an uncompetitive wage bill), but it looks like Radrizzani may be more expansive. The club has a much better FFP position than most, but it remains to be seen whether Leeds do invest – and whether they invest well.
