We’ve made a big deal of Leeds’ finances this year. Finances have been key even for those not interested in this side of football. Leeds fans have become amateur accountants and economists with the years of turmoil the club has gone through. It’s endearing and it shows what a fantastic support this club possesses. I have barely any training in business and economics, but I’ve decided to collate figures from Championship Clubs’ published accounts. We used The Swiss Rambles’ figures for the 09-10 season, but we got some minor criticism for that. So these stats will all come from me and the sources will be linked at the bottom of the page.

Leeds fans have been pretty certain that Leeds haven’t been investing enough in the team, while Shaun Harvey has insisted Leeds’ budget is something the majority of managers in this division would be happy to work with. So let’s take a look at the actual figures.

First of all, these figures should be taken as illustrative. We have tried  to collect accurate figures, but we have had to rely on individual transparency of clubs like Watford, Bristol City, Cardiff and Millwall for the original accounts, and on media reports for the rest of the figures. Because of these limitations Barnsley, Doncaster and PNE are not included in tables because their figures weren’t reported. Swansea’s only reported figure (surprisingly) was an operating loss of £8.4m. Middlesbrough, Scunthorpe, Leeds, Burnley and Crystal Palace each have certain figures missing. Debt is the most interesting one to collect. Leeds are unlikely to be in significant debt with Ken Bates revealing a £4m cash reserve in 2010 and very few and small operating losses since Leeds’ last administration. Crystal Palace are in a similar boat with administration only two years ago wiping off debts.

Below is an overview of the information we have found. Operating Profit/Loss (i.e. before player sales/personal investment), overall Debt/Reserves, turnover (income), the last two years of staff wage levels, and wages as a percentage of turnover, are all listed. “Affordable” wages are what the clubs could spend on staff while breaking even. It is important to note that wages here are reported as “staff costs” and include tea ladies, coaches, etc. as well as players. Debt is reported as different things, sometimes as only debt due within one year. We have always taken the overall debt due as the debt-level. Click the image below, for a full-size version.

The black filling most of Portsmouth’s and Coventry’s rows is the result of the two clubs failing to submit their accounts because of financial difficulties. All information collected on them is based on media reports. The purple/pink colour beside Burnley, Hull, Middlesbrough and Portsmouth signifies that these clubs are receiving significant ‘parachute’ payments from the EPL (thought to be about £10m-£12m).

Left is a table of club wages. Blue signifies automatic-promotion, green playoffs, red demotion. Leeds’ spending of £17m puts the club 8th of 18 whose figures we know. Leeds spent marginally less than13th placed Ipswich, and relegated Sheffield United, and marginally more than mid-table Leicester and 6th placed Forest, showing the club punched significantly above its weight on the whole as it finished 8th in 2010-11. We should also take into account that the club’s accounts include wages from non-playing staff. Leeds are notoriously bad for this, with Yorkshire Radio and the Pavilion’s accounts showing no staff – so we can guess they are on Leeds’ books.

It also might highlight the pull the club possesses, attracting better players for a given wage than other clubs. The flip-side of this phenomena being the expectation that Leeds’ standing in the football world creates.

More generally, it’s clear that simply throwing money at the team does not create success. While QPR’s whopping £30m budget allowed Neil Warnock’s team to run away with the league, it took good management to harness these resources with the club employing an amazing five different managers the season before. Norwich, meanwhile, spent £2.9m less than Leeds and yet managed a late charge to the second automatic promotion spot. We can see what happens when high-budget teams with high expectations aren’t managed well. Middlesbrough spent a staggering sum but finished exactly mid-table, while Hull finished only one spot higher.

Taking operating profits/losses into account, we have created a table of clubs by “affordable” staff costs for the 2010-11 season. Leeds is the only club whose figures benefit, with a rise of £0.9m, while Middlesbrough lose £14m on their wage figures. Although we don’t have all figures, Leeds’ position changes from 8th to 2nd.

These figures show that in a balanced world, Leeds would be a major force in the Championship. They show that last season in the real world, Leeds were not. QPR spent far beyond their means, and managed promotion. Middlesbrough didn’t. The debt of clubs like Middlesbrough mounts. Cardiff is the most obvious example of Boro’s ultimate destination without promotion. With debts listed here of £55.5m, but possibly far higher, Cardiff’s repayment and ever-increasing interest payments means it could barely afford £3.6m on staff spending – less than demoted minnows Scunthorpe spent in reality.

This table shows clubs’ wage spending as a percentage of their annual turnover (or income). We’ve rounded to the nearest 0.1%. UEFA guidelines recommend that clubs spend between 50-70% of their turnover on staff wages. As we see from these figures, there are only two clubs within UEFA’s guidelines, and only four more within 10% of this bracket. Norwich and Derby are, according to the guidelines, models of footballing responsibility. Norwich made an operating loss of roughly £4m, while Derby lost £7m. Leeds are at the far end of responsibility. At 35.6% Leeds are spending within their means by spending half as much as their nearest competitor on wages. Judging these figures, while it’s good that Leeds seems to more or less break even annually, it is not in a position to compete for promotion let alone gain it.

Burnley, Derby and Norwich are interesting as teams who have made a point of fiscal responsibility. Derby County traded an embarrassing record-breaking 2007-8 season for a short-term break-even; in 2010-11 Blackpool followed this model, being narrowly demoted and sending £11m of the cash accrued out of the club. Burnley also followed this model, being demoted by 5 points, while Norwich’s fiscal responsibility has seen the club easily able to spend to compete in the top half of the table. Derby, Burnley and Blackpool have gained very little if anything at all from their promotion. They have prepared actively for the worst-case scenario and reintegrated into the Championship more easily than clubs like Middlesbrough and Hull.

Norwich is the one club that seems to have made this work. Swansea’s loss of £8.4m suggests they spent more than many realise in order to gain promotion, but Norwich spent relatively little and without over-spending, Norwich have almost cemented a place as a Premier League team. They’ve got the balance just right, but the other clubs so far seem to have almost rejected the Premier League in favour of the Championship. There is a middle-ground between Birmingham and Portsmouth, and Burnley and Blackpool.

Using this table of our competitors, as well as UEFA guidelines, Leeds can afford reasonably to up their spending to 60% of revenue at least. Based on 2010-11’s 27,000 average attendance, this would give Leeds a staff budget of £19.56m which should be sufficient for a promotion challenge. It would have seen us 5th highest in spending last year, instead of 13th (and probably 15th if Portsmouth’s and Swansea’s figures were available).

At the other end of the spectrum, we see clubs spending far beyond their means. QPR’s wage-bill would take two seasons of employing postmen and keeping capacity crowds to pay off. I’m no financial expert as I said, but these figures should ring alarm bells. Clubs in this boat include Sheffield United who are now fighting back from League One after narrowly avoiding financial implosion by becoming bloated on parachute payments, gambling on a Premier League return under Kevin Blackwell; Portsmouth are in financial meltdown; If Birmingham fail to win promotion this season, they will enter administration.

There are numerous examples of financial failure. Leeds is by now an example of light at the end of the tunnel. Even with little spending, Leeds nearly made the playoffs because the size of the club is far too large for this league. This should be a comfort for Blades (and Wednesday) fans fighting the depressing battle for an escape from League One, and for Pompey fans facing a new season at the unfamiliar arenas of Plainmoor, Broadhall Way, and Huish Park only a couple of years after games at Old Trafford, Stamford Bridge and The Emirates.

I don’t think financial fair-play laws will help Leeds. At the moment, we suffer because we are a self-sustaining club with no investment from our owners. Other clubs spend more than they can afford, and are caught before they fall into Pompey’s position by their owners. Hull City’s Egyptian-born owner Dr. Asseem Allam picked up the pieces following the clubs demotion; Forest’s late owner Nigel Doughty bought debts of over £75m and delayed repayment; Reading’s new owners have restructured their debt; Middlesbrough’s owner Steve Gibson has been chairman since 1994 and his private wealth has been invaluable as a guarantee of their financial safety. Even under financial fair-play, what’s to stop owners from sponsoring stadiums for convenient sums, while creaming the money back from the Premiership in a similar way to Oyston at Blackpool? This would force their investment in the club, rather than their effective purchase of the club’s debts which would be a step forward, but as Leeds fan, this doesn’t solve the problems for my club.

These rules seem to me another false horizon. What’s more, it will be at least two years until we begin to see the effects even if I’m wrong. In the meantime, we have a club in Leeds United that could afford to become one of the Championship’s highest spenders while remaining within UEFA’s recommended bracket. That should highlight what a sleeping colossus Leeds is.

Leeds’ average attendance last season was 27,000. QPR’s stadium holds 18,000. Several Premier League stadiums hold less than our average attendance last season. 33,000 against West Ham is the kind of crowd that is physically impossible for some mid-table Premier League teams. When all’s said and done, rich owners might bankroll debts but they’ll want their money back eventually. The power behind a push for promotion has to come from a club, and Leeds has the ingredients if only the support-base can be galvanised. Neil Warnock has recognized this and has quickly established a rapport with the fans who seem to appreciate his honesty and hard work. Warnock is active, not reactive.

Leeds’ dormant power is further highlighted by the turnover of most clubs in the Championship. Leeds is top of the table by a significant margin (£5.2m). The two clubs behind Leeds are benefiting from over £10m in parachute payments. The next highest earner is Norwich, now a Premier League team, who earnt £9.5m less than Leeds.

Leeds has the financial power to push into the Premier League. The responsible and intelligent ownership is able to do so in a way that won’t destroy the club, while in Neil Warnock we have for one season only a manager who has proven himself completely capable of masterminding a promotion push and who will spend wisely. 2010-11’s financial results are encouraging for us, but they are also frustrating. Leeds has spent over £20m on stadium maintenance, development and redevelopment under Ken Bates. That’s not a bad thing, and in the Premier League improving our stadium and the surrounding features will be a smart move with financial regulations bound to come into force over the next decade. But our turnover as well as existing key assets like Warnock and Snodgrass show that we are capable of spending for promotion. YEP interviewed an expert in football finance. Rob Wilson said:

Seeing these results, it wouldn’t surprise me to see a club with such good finances being be a bit more aggressive from here on. There’s clearly been a bit of dissent about the way they operate and a bit of disassociation with the fans. You’re looking to find the right balance.

Frustrated fans are bound to be vocal, but we’ve experienced years of hangover from Ridsdale’s overspending. We’re not asking for Pompey-style overspend, but a slightly more aggressive approach in my opinion. Fans welcomed the vastly experienced Neil Warnock and I’m sure if the club acted, attendences would react as hope returns and visiting Elland Road no longer becomes a chore.

Congratulations to those who got to the bottom of this post without skipping!


QPR: Source; Norwich: Source; Swansea: Source; Cardiff: Source; Reading: Source1, Source2; Nottingham Forest: Source; Leeds: Source; Burnley: Source; Millwall: Source; Leicester: Source; Hull: Source; Middlesbrough: Source; Ipswich: Source; Watford: Source; Bristol City: Source; Portsmouth: Source1, Source2; Coventry: Source; Derby: Source; Crystal Palace: Source; Sheff Utd: Source; Scunthorpe: Source.

Last Updated: 29/05/12.