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Leeds United’s 2017/18 accounts covered the first season under owner Andrea Radrizzani, when they finished a “disappointing” 13th in the Championship, sacking two head coaches (Thomas Christiansen & Paul Heckingbottom), before appointing Marcelo Bielsa. Some thoughts follow #LUFC
#LUFC posted a £4.3m loss, compared to a £1.0m profit the previous season, despite revenue growing £6.6m (19%) from £34.1m to £40.7m and profit on player sales doubling from £9m to £18m, due to “investment in both player registrations and salaries and scouting expenses”. 
The main reason for #LUFC £6.6m revenue growth was a £5.5m (33%) increase in commercial income to £21.8m (catering, merchandising and the Selby-Warrington boxing fight), though gate receipts also rose £1.1m (11%) to £11.3m. Broadcasting was flat at £7.7m.
The revenue increase was more than offset by #LUFC cost growth, as wages surged £10.6m (51%) to £31.4m, player amortisation/impairment increased £3.3m to £8.9m and other expenses were up £3.8m to £19.4m. Net interest went from £1.2m receivable to £1.7m payable, a £2.9m swing.
#LUFC have only made money once in last 6 years (and that was just £1m in 2016/17), though losses have significantly improved since the £20m reported in 2013/14. Following the investment in Bielsa, his coaching team and the squad, the 2018/19 loss is likely to be much higher.
Improvement in #LUFC finances is partly due to profit on player sales, averaging £10m over last 4 seasons. As Radrizzani explained, “Unfortunately to sustain a club in this league we need to sell one or two players each year.” 2018/19 will include Ronaldo Vieira to Sampdoria.
#LUFC EBITDA (Earnings Before Interest, Depreciation and Amortisation), which strips out player sales and non-cash items to give underlying profitability, declined from £(2)m to £(10)m, though not quite as low as £(13)m in 2014.
#LUFC revenue has grown by an impressive £16.3m (67%) in last 3 years from £24.4m to £40.7m, though £5.2m was due to bringing catering back in-house. Other commercial up £5.3m, TV £3.3m & gate receipts £2.5m. Should further increase in 2018/19 (higher crowds, merchandising, etc).
#LUFC TV income was flat at £7.7m. Most Championship clubs receive £7-8m TV money, including £2.3m EFL distribution and £4.5m PL solidarity payment. Leeds benefited from being shown live 20 times, but the sums involved are not that much: £100k home game, £10k away.
This is in stark contrast to TV money in the Premier League where clubs receive £95m to £150m. Radrizzani is unhappy with #LUFC distribution, “It’s difficult to be in a league where we make losses, because there is not enough income generated from media rights.”
The “improvement in fan sentiment” was responsible for #LUFC higher attendances, which have risen by 8,000 since 2016 to 31,500, including the highest .season ticket sales for 15 years. In fact, crowds have further increased this season and are currently averaging over 40,000.
#LUFC shirt sponsor, 32Red, signed a 3-year deal in 2016, while Clipper are the club’s secondary sponsor (back of shirt and shorts). Kappa have a 5-year kit supplier agreement that started 2015/16.
#LUFC wage bill increased significantly by £10.6m (51%) to £31.4m, including £830k redundancy payments, “to ensure we created the foundation of a squad that could effectively compete for promotion over the medium term.” Will further increase in 2018/19 due to the Bielsa factor.
#LUFC directors increased from zero to £212k, though this is still a long way short of the recent peak of £794,000 in 2013 during the Ken Bates/David Haigh era.
#LUFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, has risen steadily from £1.0m in 2010 to £8.1m in 2018, reflecting increased transfer spend. Also £2.5m of impairment (write-down of player values) in the last 5 years.
#LUFC gross debt fell from £25.2m to £21.5m, including £7.2m from Radrizzani, £12.6m unspecified other loans and £1.7m finance leases. Figure would have been higher without the owner converting £8.8m of debt to capital, making £20.3m in last 4 years.
Although debt is high in the Championship, most of it is provided by owners who charge little or no interest. However, #LUFC are charged 4% + 3 month LIBOR, resulting in £430k interest payments in 2017/18, the 8th highest in the division.
Interestingly, #LUFC have revealed that promotion to the Premier League would cost them £25m (£18m bonus payments and £7m additional transfer fees). This is in line with the amounts paid by recently promoted clubs.
#LUFC accounts also note that there are a number of legal claims outstanding against the company, without quantifying the potential cost. In addition, the club is pursuing a debt of £2m, though this is expected to be recovered.
#LUFC lost £8m cash from operations in 2017/18, then spent £3m on players (net) and £3m on infrastructure (stadium refurbishment). Largely funded by £11m share issue for a minority stake bought by 49ers Enterprises (San Francisco 49ers investment arm) and £2m additional loans.
In the last decade #LUFC received £62m funding from owners (£32m share capital & £30m loans) and made £5m from (net) player sales. This has mainly been spent on funding operating losses £28m, capital expenditure £23m and loan repayments, interest and dividends £14m.
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 2017/18, even before deducting allowable expenses for academy, community & infrastructure (£3m a year).
To date Radrizzani has been a good owner at #LUFC, buying back the ground and investing significantly more in the squad. However, it remains to be seen whether he is in it for the long-term, if Leeds fail to win promotion, especially given the issues at his company Eleven Sports.
Under previous owners #LUFC have adopted a very conservative strategy that has made it difficult for the club to compete. They are now spending much more than before, which gives them a better chance, though they are (financially) still way behind clubs with parachute payments.
