Leeds’ accounts endorse 49ers interest – and show why a takeover needs to happen - The Athletic 14/4/23

By Philip Buckingham

It will be five years next month since 49ers Enterprises was first convinced to take a punt on Leeds United. A fallen force of English football had no shortage of potential, but all those years of mediocrity in the Championship had it well hidden.

The 2017-18 season, immediately preceding that first injection of U.S. money into Elland Road, was typical of a club and its flawed ambition. A 13th-place finish in the Championship. Nothing more, nothing less. Not even the arrival of Andrea Radrizzani as owner in January 2017 had been able to snap a dispiriting cycle.

An optimistic eye – and perhaps a leap of faith – was required to picture better days but, as a crossroads approaches this summer, 49ers Enterprises has helped drive a financial transformation of the club it pushed its first chips towards in the spring of 2018.

Leeds’ annual accounts, published at Companies House last weekend, underlined just that.

Turnover for the 2021-22 season – the club’s second back in the Premier League – had leapt up to a record high of £189million ($236m). Broadcast revenues might have dipped year-on-year but Leeds are now producing the sort of numbers that have convinced 49ers Enterprises to see value in an outright takeover.

How this season ends will dictate if the investment arm of NFL team San Francisco 49ers opts to proceed, but Premier League survival will see Radrizzani parting with a very different club to the one he first marketed to the U.S. five years ago.

Leeds had to work hard for a turnover of £41million back then, with commercial streams amounting for half that figure. Broadcast revenues were flatlining at £8million along with matchday income that stood at £11million without the guarantees of Elland Road reaching its capacity.

And now look at the balance sheets.

Broadcast revenues have increased 14-fold since 2017-18, even allowing for a 17th-place finish last term curbing distribution through merit payments. That £115million had been £132million the season before when finishing ninth under Marcelo Bielsa.

Commercial revenues, meanwhile, have doubled in the past five years, climbing from £22million to £44million. This growth alone, wrote chief executive Angus Kinnear in the accounts’ strategic report, should provide a “competitive advantage that can be leveraged to secure Premier League status” in the long term. In layman’s terms, it is an area where Leeds now do better than most outside the “Big Six”.

Matchday income, with sell-out crowds of 38,000 guaranteed, has also bounced skywards. The £24.5million banked in a first post-COVID campaign was more than Leeds’ gate receipts for their last two years in the Championship combined.

The undeniable – albeit finite – power of the Premier League has been mined by Leeds since winning promotion in 2020 and meant last season they could boast higher incomes than Everton (£181million), Newcastle United (£180million), Aston Villa (£178million) and Wolverhampton Wanderers (£166million).

Those capabilities and the potential to jump the pack — admittedly before Newcastle’s takeover — are ultimately what attracted 49ers Enterprises to English football. First when buying a 10 per cent stake in 2018 and then, via two further cash injections, lifting that up to more than 40 per cent. Survival this season is expected to trigger an outright takeover, ending Radrizzani’s long stint as the club’s majority shareholder.

That is by no means guaranteed with Leeds 16th and only two points above the bottom three, of course. Relegation is the fate that must not be mentioned around Elland Road. Even in the accounts it is referred to as a “temporary loss of status” that can be ridden out.

This latest audit of Leeds’ financial health is an endorsement of why 49ers Enterprises is keen to take the reins, but the numbers also show why a long-touted takeover needs to happen.

Leeds have heads nearing a ceiling with Radrizzani at the helm. He knows it and so, increasingly, do supporters. Commercial and matchday revenues are close to being maximised in the Premier League, with broadcast money the only area where modest variables are in play.

The redevelopment of Elland Road is a must for Leeds to grow and part of the plans for 49ers Enterprises if – or should that be when? – it takes control. Huge investment would be required to upgrade a stadium that has not seen meaningful regeneration since a new East Stand was opened in 1993. Those elite English clubs Leeds wish to eventually join have left them lagging far behind in the past two decades.

Leeds’ would-be owners see the potential for turnover to be increased as high as £400million, something they believe would see the club valued in excess of £1billion. Put another way, 10 times what Leeds were considered to be worth when 49ers Enterprises first bought that 10 per cent stake five years ago.

Long-term plans have been formulated but there are pressures for the here and now during these closing weeks of the season.

Leeds can ill afford to take a backward step into the Championship if the promise of new owners is to be guaranteed and there were warning signs in the accounts that heightened the need for a fourth season in the top flight.

Like most outside the establishment, they walk a tightrope where the fall would be heavy. There is reliance on shareholder investment and an acceptance of manageable losses. Even with record revenues, there was an operational loss of £34million last term.

Money owed for transfers was reported to be north of £100million after a season that saw £86million spent on recruitment. The subsequent sales of Raphinha and Kalvin Phillips last summer has not yet made it to the books, but the same can be said of the settlement to former player Jean-Kevin Augustin.

As well as the £15.5million that has already been agreed with RB Leipzig, Leeds have been told by FIFA they must also find £24.5million in compensation for a loan player they reneged on signing permanently in 2020. Leeds intend to appeal the second decision but failure to overturn the hefty payment to Leipzig offers little cause for hope. The whole sorry Augustin affair might eventually end up amounting to a fifth of the club’s annual income.

Leeds have come a long way in the past five years – the Bielsa boom and all that followed – but everything in these next few weeks rests on clinging to the Premier League riches.