The price of promotion - for some!!

[shefcanary 2,955]

Leeds United: Accounts show loss of £64m in 2019-20 promotion season - https://www.bbc.co.uk/sport/football/56630497

Well, this is another interesting comparison.  I think as a self-financing club, we will be hoping to lose £64million less, although due to covid would expect a loss in the tens of millions, before promotional bonuses.  Again some of the reported loss for Dirty will be due to the success of achieving promotion (player bonuses etc.) but underlying losses would have been c. £30m versus break-even at Norwich.  

I've no real point to make given that we've been successful using the self-sustaining model, other than wondering how much Watford, Brentford, Bournemouth and Swansea will lose if they fail to gain promotion.  Something has to change surely, are we paving the way .....

[DraytonBoy 251]

That loss shows just how important it was to get promoted but with another season in the PL now guaranteed the club should be in a healthy financial position going forward and the actual value as a business has rocketed to £250 million.

[Canaries north 155]

Brentford I would imagine will be fine as they have sold a number of players for good money. Swansea have only Ayew that will be on big money but it is their last year of parachute payments and I don't see them having many assets to sell. Watford would financially be fine but would probably have to sell the best players but they do have a number with good resale value. Bournemouth are the ones who in my opinion would suffer the worst. They have a number of players signed for big money who couldn't cope in the premier League so they will never get the money back or anyone to take on the wages. Brooks is the only player who might raise some funds but his form and so his value have plummeted this year. I feel they must go up if not they will sink fast. 

[Branston Pickle 4,150]

13 minutes ago, DraytonBoy said:

That loss shows just how important it was to get promoted but with another season in the PL now guaranteed the club should be in a healthy financial position going forward and the actual value as a business has rocketed to £250 million.

Yes - it’s a bit of a shame, isn’t it.

In terms of how things work out, it’s difficult to call - there was the romantic notion that we would survive last season on a relative shoestring but we were always far more likely to fail; investing £75m like Sheffield U did to stay up wasn’t an option for us but didn’t work out for them this time around.  They have the extra £ but it is always a bit of a minefield trying to get back up first time.

In terms of financials, we have to hold up the likes of Burnley (not in playing style, hopefully) as a guide, but the truth is that even if we become ‘established’ - like them - we’re likely to be in the bunch of sides - like them - continually looking over our shoulders. 

[Badger 2,745]

2 hours ago, DraytonBoy said:

That loss shows just how important it was to get promoted but with another season in the PL now guaranteed the club should be in a healthy financial position going forward and the actual value as a business has rocketed to £250 million.

The interesting figure in these accounts is the fact that even without parachute payments, Leeds had a revenue figure of over £54 million. Leeds non parachute revenue figures are over 20 million more than our non parachute revenue and ours are better than most clubs in the Championship. A club of the size of Leeds should never have had such an extended stay outside the EPL and it is only because of their financial diarrhea of about 20 years that they did.

Like Villa, you would expect Leeds to be almost permanent fixtures in the EPL. Of course, the problem is that the fans want them to go to "the next level." In the case of both Leeds and Villa this could be perfectly possible if the clubs are developed upon a sustainable basis - for example, ground expansion rather than chasing quick success with a South American striker. It depends on what the owners want from their ownership - sustainable improvement takes longer and might not be as financially rewarding as a short-term gamble.

[dylanisabaddog 6,148]

14 minutes ago, Badger said:

The interesting figure in these accounts is the fact that even without parachute payments, Leeds had a revenue figure of over £54 million. Leeds non parachute revenue figures are over 20 million more than our non parachute revenue and ours are better than most clubs in the Championship. A club of the size of Leeds should never have had such an extended stay outside the EPL and it is only because of their financial diarrhea of about 20 years that they did.

The figure of £54m is extraordinary. Gate receipts were probably £30m at most so the merchandising income must be huge

[king canary 8,758]

I think some of these losses when a team goes up are inflated somewhat by bonuses etc but that is still a huge figure.

[DraytonBoy 251]

There's been a transformation at Leeds thanks to the new owner and the arrival of Bielsa which has led to a massive increase in merchandising revenue and interest in the club all over the world with every game being shown live in South America. Advance home shirt sales at the start of this season were 300,000 which I doubt many newly promoted teams could match.

[Badger 2,745]

23 hours ago, dylanisabaddog said:

The figure of £54m is extraordinary. Gate receipts were probably £30m at most so the merchandising income must be huge

According to this the merchandising figures were £15 million! With revenues like this, it is amazing that they ever got themselves into so much trouble chasing the dream (quickly). It has probably set them back as a club by more than 20 years.

The loss was largely accounted for by £55 million in promotion bonuses. 

 

[Ward 3 484]

1 hour ago, Badger said:

According to this the merchandising figures were £15 million! With revenues like this, it is amazing that they ever got themselves into so much trouble chasing the dream (quickly). It has probably set them back as a club by more than 20 years.

The loss was largely accounted for by £55 million in promotion bonuses. 

 

55m bonuses wow thats crazy for just doing your job. Id be chuffed with 55 quid 🤣

[Nuff Said 5,965]

I thought most of our promotion bonuses were paid in the following financial year? So the Champs winning year looked good financially, the following one not so good. Were Leeds quicker to pay, or is this a Covid knock-on effect?

[Badger 2,745]

3 hours ago, Ward 3 said:

55m bonuses wow thats crazy for just doing your job. Id be chuffed with 55 quid 🤣

🤣

I'm not sure how the bonuses work - Leeds live reported: 

"They paid out £20m in promotion bonuses, and securing their top-flight status this season will cost a further £35m in bonuses, while the club will also owe a £18m in potential transfer add-ons."

https://www.leeds-live.co.uk/sport/leeds-united/brexit-covid-leeds-united-accounts-20319263

[Ward 3 484]

13 minutes ago, Badger said:

🤣

I'm not sure how the bonuses work - Leeds live reported: 

"They paid out £20m in promotion bonuses, and securing their top-flight status this season will cost a further £35m in bonuses, while the club will also owe a £18m in potential transfer add-ons."

https://www.leeds-live.co.uk/sport/leeds-united/brexit-covid-leeds-united-accounts-20319263

I know we paid our lads bonuses when we went up but nothing to that extent im sure? Leeds just throw money at it. I do hope they do a Sheffield United  extent season

[Badger 2,745]

1 hour ago, Ward 3 said:

I know we paid our lads bonuses when we went up but nothing to that extent im sure? Leeds just throw money at it. I do hope they do a Sheffield United  extent season

The truth of the matter is that with a championship turnover of £50 million plus (non parachute), they can afford to spend a lot more: this is three times the turnover of many championship clubs and 60% greater than ours (which itself is very good for the championship).

Next year they will have a far bigger turnover than many EPL teams, probably top half, and should be ok. The simple fact is that they can afford to spend more without the spectre of debt. It is only when they go completely crazy, like they did about 20 years ago, when the debt becomes unsustainable. I hate to say it, but they also have a far bigger "brand name" than Sheff U or us, and will always find it easier to attract buyers.

[Surfer 1,547]

Fact is Leeds is a big club. Also the fact a club of Leeds stature were essentially a feeder club for Norwich for several years must be pretty humiliating. Still, they're finally back where they belong. 

[dylanisabaddog 6,148]

12 hours ago, Nuff Said said:

I thought most of our promotion bonuses were paid in the following financial year? So the Champs winning year looked good financially, the following one not so good. Were Leeds quicker to pay, or is this a Covid knock-on effect?

For accountancy purposes the bonuses are included in the year to which they relate whether paid or not. Accounts will always show income earned and expenses incurred whether or not those amounts had been paid or received.

[DraytonBoy 251]

4 hours ago, Surfer said:

Fact is Leeds is a big club. Also the fact a club of Leeds stature were essentially a feeder club for Norwich for several years must be pretty humiliating. Still, they're finally back where they belong. 

Until two years ago Leeds were a 'selling' club out of necessity, hopefully with a more stable ownership structure now those times won't return. There is a trade-off though, the club is jointly owned by an NFL team owner and a wealthy Italian rather than people who have a real love for the club such as Delia and co, I guess as long as the club stays in the PL and has some sort of success it doesn't really matter to the fans.