The Whites are one of only two Premier League clubs last season to report a profit, out of 16 to have released their financial accounts so far.
Last year Leeds recorded an operating loss of £64million and although their wage bill and transfer spending have increased significantly for the 2021 accounts, Premier League revenue has helped push revenue from £54 million to £171 million.
Key to this were elite central payments of £110m, broadcast revenue of £22m and record sponsorship and commercial deals with SBOTOP and Adidas.
Regardless of the riches made accessible by maintaining Premier League status, Maguire is impressed with Leeds’ financial management as a club trying to stay among the top flight.
“I like how the club have shielded themselves from the worst of the Premier League because at the very end it talks about the bonuses that are paid if they avoid relegation,” he said. The wage bill is high but it would have been much lower had the club gone down – £35m of the wage bill appears to be relegation avoidance bonuses and it’s going to drop to £48m this year so it’s is quite the insurance policy, the way the club operates itself.
“Premier League status can do wonders for you, but Leeds are now the 16th club to publish accounts for 2021 and only two of them have made an operating profit – only Leeds and Sheffield United have earned any. silver last season.
“Sheffield United were in their second season of Premier League football and they were relegated. I suspect that if they had finished 17th they might have suffered a defeat as they would have paid significant bonuses to avoid relegation .”
What the accounts show, again, is that Leeds United have an incredibly high ceiling if they can establish themselves as a club in contention for European football. It’s the dream that was charted by majority owner Andrea Radrizzani and his partners, 49ers Enterprises.
“Leeds’ potential is big because they have a brand of their own, which they had in the Championship and not many clubs coming in have that,” Maguire said.
“Revenues from Commercial Goods can definitely increase in the future as they had a successful first season on the pitch.” £20m in that regard is phenomenal for a club that isn’t a big six. It shows that if Leeds have a good season and enter Europe, the numbers will skyrocket even further.
“In terms of entry receipts, they were £2m on these accounts – you would expect that to be close to £20m for a full season. Catering income were also affected, that would be an additional £5m I would expect revenue to rise from those two sources to £25m for a full season in the Premier League.
“Broadcast revenue is tied to finishing position, so it will depend on where Leeds finish this season, but it’s not going to go down, is it? The last two or three results have ensured that, this which gives them the security to plan ahead.”
The accounts show an increase in payroll from the £78million reported last year to £108million, with an average weekly wage of £55,000 and administrative costs of £152million.
They have also spent £99m on transfers and borrowed £63m, but Maguire is not alarmed by the club’s level of debt.
“Spending £99m in your first year in the Premier League for 16 years is much higher than what we’ve seen at other clubs who have been promoted, except Aston Villa,” a- he declared.
“£99m is a lot of money. They’ve borrowed, but I suspect £20m is from the 49ers. The club are a bit vague, they’re talking about related parties, so it’ll be either Radrizzani , which is the 49ers. A club would be expected to have to borrow to provide funding when it comes to the Premier League. The level of debt, by Premier League standards, is negligible and very sustainable – my Brighton club, we owe the owner something like £340m.
Maguire suspects £21m in ‘cancelled loans’ will be money written off by Radrizzani as part of the deal to increase the 49ers’ involvement with the club, although he calls it a “cosmetic exercise”.
One of the most intriguing aspects of Leeds’ accounts is the disparity between their Covid cost estimate – £23m – and Everton’s estimate of £170m.
“Aston Villa’s estimate was around £60m over two seasons, Sheff United’s was much lower, and then we have Everton,” Maguire said.
“I think what they were claiming was that Covid had hit them hard in terms of their ability to sell players. If they thought maybe they could have sold Cenk Tosun for £60m in a non-Covid environment is their call. I think as a football fan, we might have another opinion as to why they didn’t have strong player sales because their recruitment was poor. Everton’s numbers have raised many eyebrows they are an outlier rather than Leeds.
Although the Premier League picture looks rosier for Leeds than just a few weeks ago, they are still not mathematically immune to the drop. Relegation would be a disaster on many fronts, but Maguire’s ‘beer mat calculations’ suggest it wouldn’t be financially catastrophic thanks to their self-insurance policy on relegation bonuses.
Overall, he sees a reasonably run club.
“The club has been cautious and hasn’t played the way some have historically,” he said.
“These results are exceeding expectations and there is an element of conservatism. The fact that they have these relegation avoidance bonuses shows a club that was clearly aiming for survival and by finishing in the first half which has boosted results significantly and balanced the blow created by Covid.
“In a Covid year, with all the promotion costs and the bets you take, they have to be seen as a good set of results.”