The #LUFC Breakfast Debate (Thur 5th Sept)

ellandback · Sep 5, 2019

leeds60 said: ↑

Totally agree its scandalous the way Morris sticks 2 fingers in the air at the EFL
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Shame we are not all treated the same but that has always been the case as far back as I can remember.

ellandback · Sep 5, 2019

Our broadcasting rights are woeful....

swanseaandproud · Sep 5, 2019

We deserve to be in the premiership ???? No you dont at all.....Leeds have been trying for donkey years to get promoted and failed, So how do you make out you deserve to be in the premiership Leeds were obviously not good enough....I hope you make it but dont say you deserve promotion as that is so arrogant.

davy · Sep 5, 2019

Go on you Norn...at the game tonight.

JonnyLosAngeles · Sep 5, 2019

swanseaandproud said: ↑

We deserve to be in the premiership ???? No you dont at all.....Leeds have been trying for donkey years to get promoted and failed, So how do you make out you deserve to be in the premiership Leeds were obviously not good enough....I hope you make it but dont say you deserve promotion as that is so arrogant.
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Don't be such a prat!

Obviously, a club has to perform to get promoted. No one suggesting Leeds or any other club should just be placed in the EPL.

The claim is based on the stadium capacity, training facilities (i.e., infra-structure) and fan passion and attendance - home and away!

Grow up!

JonnyLosAngeles · Sep 5, 2019

ellandback said: ↑

Leeds continued

Leeds total amortisation cost, which is the figure that represents all transfers, increased by 50% in 2017/18 as the club invested in Forshaw, Jansson, Saiz, Roberts, Alioski and others for million pound plus transfer fees.

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Spreading transfer fees via amortisation reduces the volatility of the cost of transfer fees in a single season and reflects a club’s long-term spending on players.

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Amortisation and wages together as a proportion of revenue was 97%, which meant that Leeds had little left to pay for the other day to day running costs of the club, such as rent (£2.2 million) depreciation (£1.6 million) and so on, with ‘other costs’ in total coming to over £17 million.

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Profits and losses

Subtracting costs from revenue gives a profit or loss figure for the year and Leeds had an operating loss from day to day transactions of just under £20 million for 2017/18.

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Big losses are incurred in the Championship by nearly every club as owners commit to pay the wages and transfer fees on signings that they hope will result in promotion.

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In the Championship losses were £505 million last season (and that is without Sunderland, Sheffield United and Bolton) which shows the extreme pressures of trying to compete in the division.

Championship clubs all made operating losses last season and the only way for these to be financed is via player sales or owners investing money via loans or shares.

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Yearly profits from player sales have been beneficial for Leeds recently, and Liam Bridcutt’s and Chris Woods’ departures, along with some sell on clauses on previous disposals, were the main drivers of the £18 million profit on player sales last season that absorbed most of the operating losses.

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Championship clubs managed to recoup over £210 million of the losses via player sale profits but this still leaves a big gap to be plugged by owners.

Letting players go does generate cash but also has a detrimental impact on the quality of the remaining squad but is a financial necessity at times, fortunately for Leeds good cheap recruitment and an impressive academy scheme have improved the quality of football this season.

Excluding costs such as amortisation and depreciation (depreciation is the same as amortisation except this is how a club expenses other long-term asset such as office equipment and properties over time) then another profit figure called EBITDA (Earnings Before Income Tax, Depreciation and Amortisation) is created. This is liked by professional analysts as it is the nearest thing to a cash profit figure.

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Struggling to generate cash from operations is common in the Championship but is does mean that clubs must increasingly hope that owners will make up the deficit.

EFL rules allow clubs to lose for FFP purposes (officially called Profitability and Sustainability in the Championship) £39 million over three seasons, but some costs (infrastructure, academy, women’s football and community schemes) are excluded from the calculations.

An estimated P&S profit of £1.6 million over the last three seasons suggest Leeds, even if they are not successful this season, are well within the limits and would not need a fire sale of players during the summer of 2019.

The actual details of P&S calculations for EFL Championship clubs are unknown, prompting much speculation and anger amongst fans who are unsure whether or not their club is subject to ‘soft’ sanctions, which are not publicised, but Leeds are almost certainly not being punished for these given the relatively prudent way the club is run.

Player Trading

Leeds spent £28 million on new signings in 2017/18 on many signings as the two new managers tried to mould squads. The sale of Chris Wood offset a large proportion of these player purchases.

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The large spend on players is why the amortisation charge in the profit and loss account is so high. Fans often point out that clubs also sell players and that net spend is a better measure of a club’s investment in talent but again Leeds here have been relatively modest by the standards of the division.

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Leeds have been building up the squad in recent seasons, which had a total cost of £37 million at then end of 2017/18. The appointment of Bielsa as coach in the summer of 2018 resulted in a further estimated net spend, mainly on Patrick Bamford, of about £4 million.

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Funding

Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. The tie up with SF49’ers brought in share investment of £11 million and there was net borrowing of about £2.5 million in 2017/18.

Summary

Leeds had a hit and miss season in 2017/18 on the field, but the club’s strong revenue growth meant that it was in a strong position from an FFP perspective at the start of the current campaign.

It’s on a knife edge at present whether the club will go up automatically, but a playoff position is guaranteed. Promotion to the Premier League would see revenues rise by at least £100 million and the club is in a strong position given the size of the city and its history to sign some lucrative deals.

Leeds are certainly one of the best three teams in the division this season, but their biggest problem might arise is if they have a chance and fail to make automatic promotion on the last day of the season if the playoff positions are already finalised, as their potential opponents could rest the squad for the final fixture.

Promotion this season will be great for fans, but even if they fail to do so the club is in a strong position financially both in the short and medium term from the figures it has published.

Date Summary

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Fabulous analysis, deserves its own thread!

Whitejock · Sep 6, 2019

Stumbled on this by mistake. Most enjoyable. Is Josh Rae really still here?

The #LUFC Breakfast Debate (Thur 5th Sept)

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The #LUFC Breakfast Debate (Thur 5th Sept)

ellandback Well-Known Member Forum Moderator

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