Yesterday Leeds released the annual accounts for the year to 30th June 2019, and showed a loss that increased to £21.4m. So will we be able to avoid breaching the FFP limit when the current season finally comes to an end.
The loss made in 2018/19 was a significant increase on the £4.3m deficit the season before, but once the board had managed to land a world class coach in Marcello Bielsa they realised they had to back him by signing players of the quality needed to mount a serious promotion challenge.
Not only was Bielsa himself handsomely rewarded for his decision to come to Elland Road from the other side of the world, but Douglas, Bamford and Casilla were recruited and a number of players already at Leeds were awarded new deals. The result of all that was that the wage bill almost doubled from £24m to £46m.
This was partly offset by an increase in turnover up to £49m (£8m more than the year before) as average crowds increased from 31,500 to 34,000 and the corporates came along in ever greater numbers to associate themselves with our success. But we still posted an operating loss of £36m, so we needed the sales of Patrick Vieira and Jack Clarke to drag that figure down to a pre-tax loss of a mere £21m.
The Football League’s "profit and sustainability” rules dictate that clubs can lose no more than £39m over a three year period, so according to my maths losses for 2019/20 can’t exceed £13.3m. But the club are confident they can get through to the end of the current season without breaching them, and it will help that we already have the transfer fees of Pontus Jansson, Kemar Roofe and Bailey Peacock-Farrell in hand.
The club are in the process of upgrading the facilities at Thorp Arch, but investment in infrastructure and youth development doesn’t count towards losses for FFP purposes. But Leeds have still got to keep a keen eye on the bottom line, which explains why we weren’t able to go mad in the January transfer window, when many fans were hoping for several quality signings to boost our squad.
And of course the one big unknown factor is whether the current shutdown due to covid-19 will blow these plans out of the water. It has been estimated that cancelling the remaining home games or having to play them behind closed doors could cost the club as much as £2.5m, as they would have attracted sell-out crowds as we closed in on promotion.
This explains why the playing staff agreed to a wage deferral, though this will still have to be paid with interest once the lockdown is over. And it’s probably why the commercial department having been sending my inbox at least one email a day to try to get me to buy different sorts of Leeds United branded clothing.
Leeds are also believed to have furloughed some of the non-playing staff, but will continue to pay the 20% that isn’t coming from the government. It will still be very difficult to keep the losses down in these circumstances, but it must be likely that the League will relax the FFP rules this time, as we obviously won’t be the only club feeling the pinch.
But one thing is clear from these figures, we won’t be able to sustain the current level of expenditure in 2020/21 if we don’t go up to the Premiership if and when this season eventually resumes. So the final nine games are very much make or break, either we go up to the riches of the Premier League and attract a wad of investment from Qatar, or we remain in the Championship and have to part with Kalvin Phillips and almost certainly Bielsa as well.