What Leeds’ relegation would mean: Takeover, head coach, stadium and more - The Athletic 23/5/23
By Phil Hay
The sobering reality for Leeds United is that relegation
next Sunday, if indeed there is no way out, would barely be even the start of
it. The club are all but sunk with one game left, reliant on the biggest stroke
of luck they could ask for, and Elland Road can see a monumental summer
looming.
The close-season promises to be manic if Leeds survive and
more frantic again should they return to the Championship, heralding changes
which have to amount to an almost total reset. They got away with it last
season, rescuing themselves on the final day against Brentford, but the drop
feels more inevitable this time and nothing in their sorry surrender away to
West Ham United on Sunday suggested they are about to dodge disaster for a
second year running.
What next, then, for the club who stormed the Championship
in 2019-20?
Their head coach, Sam Allardyce, has a short-term contract
that covers one more match. They have been without a director of football since
Victor Orta parted company with them three weeks ago. The proposed takeover by
49ers Enterprises is still only a proposal. And what of other issues, like the
future of individual players, the management of a sizeable Premier League wage
bill and the impact of reduced income?
Leeds United: What happened?
What would relegation on Sunday actually mean for Leeds
United? What are the nuts and bolts and the brass tacks for the months ahead?
The takeover
A change of ownership is what everything at Elland Road
hinges on — and it can be credibly argued that the impasse on that front is a
reason why Leeds have stagnated to the point where relegation is nigh.
At present, the arrangement in the boardroom is this: Andrea
Radrizzani is majority shareholder with slightly more than 50 per cent of the
shares. The remainder is held by 49ers Enterprises, a US investment vehicle
with close connections to the NFL’s San Francisco 49ers. Were Leeds to stay up
following their season-finale at home to Tottenham Hotspur this weekend,
contracts are in place for 49ers Enterprises to buy out Radrizzani for a sum
which would value Leeds somewhere between £400 million ($496m) and £500million
($621m).
The expectation is that the sale would go through by July 1
at the latest but in effect, the handover would start more rapidly.
The investment group behind this 49ers Enterprises project —
made up of entrepreneurs, private equity firms, businessmen such as current
Leeds director Peter Lowy and at least one unidentified US political figure —
has been in place for some time and ready to buy Radrizzani out under the
agreed terms, provided Leeds retained their Premier League status. While that
collective is providing the funding, the day-to-day management of the club
would be the responsibility of 49ers Enterprises figures including Paraag Marathe
and Collin Meador.
However, the agreement with Radrizzani in its current guise
will be void if Leeds go down.
Nonetheless, 49ers Enterprises remain intent on buying
Radrizzani out, or at least securing majority control, even if relegation
happens. Discussions to that effect have been taking place and gathering pace
over the past few weeks, driven by the realisation that a bottom-three finish
was increasingly likely and that the amount of work to be done this summer
would be substantial either way.
Radrizzani is open to selling in the event Leeds find
themselves back in the EFL next season, so long as the numbers work for him.
That is the crux of discussions as it stands: relegation
promises to significantly reduce Leeds’ value and 49ers Enterprises would only
be willing to buy at a much lower price, somewhere in the region of £150million
($186m). It is not clear if Radrizzani is prepared to drop his valuation to
that level.
He was pictured in his Italian homeland yesterday (Monday)
and, as reported by The Athletic over the weekend, he is part of a group who
are attempting to buy Sampdoria, who were relegated from Italy’s top flight two
weeks ago. Radrizzani would almost certainly require funds from the sale of
Leeds to help secure the purchase of the Genoa-based club.
His involvement in those talks, all while Leeds are
themselves on the brink of going down, suggests he is going to exit Elland
Road, and soon — but even so, he and 49ers Enterprises are not yet agreed on
the terms of a post-relegation takeover.
What is clear is that the club cannot afford to get stuck in
a prolonged ownership wrangle after this season ends. They have too much to do
and no time to lose, making urgency in negotiations essential.
Income
Revenue at Elland Road has reached a record level for the
club, falling just short of £190million for the 2021-22 season. Pushing up
their turnover to new heights is one area in which they have been consistently
successful over their six years with Radrizzani as chairman. Even in the
Championship, English football’s second tier, they were pulling in more money
than any of the 71 other EFL sides — albeit while also posting hefty losses.
But it is no secret that the bulk of Premier League earnings
come from central distributions, consisting mainly of money earned through the
league’s lucrative broadcast deals. The EFL has just renegotiated its TV deal
with UK broadcaster Sky Sports but the figures involved are still a world away
from the cash earned by the Premier League through such rights. Last season,
for example, Leeds’ central distributions were £95million — more than three
times Nottingham Forest’s entire turnover in the Championship that year.
So at a stroke, a large chunk of that funding disappears with
relegation. But as it has for years now, the parachute payment scheme exists
between the Premier League and the Championship, giving those clubs who go down
assistance to cope with the financial hit of dropping divisions. In year one
back in the EFL, Leeds would receive 55 per cent of the basic payment made to
Premier League clubs — around £45 million. If they then fail to bounce straight
back, the year two figure drops to 45%. In year three, the final season of
parachute payments, it’s 20%.
Used smartly, parachute payments can help a relegated club
reframe their squad, be competitive in the promotion race and go again. That
cash can facilitate signings other sides in the Championship cannot afford and
support larger salaries. But they don’t last forever and they won’t avert
sizeable losses, because virtually every club loses money in the second tier.
They are no guarantee of promotion either.
Relegated clubs have little choice but to substantially
reduce budgets, and Leeds would be no different.
Wage bill
Leeds’ last recorded wage bill, for the 2021-22 year, was
£121million, and after so many signings made this season it can only have
increased. Plainly, they could not afford to carry such high costs while in the
EFL, but they would be helped at the outset by substantial reductions in the
salaries earned by their first-team squad.
The players stand to incur hefty wage cuts in the aftermath
of relegation, with drops of up to 60 per cent (some in line with the increases
a number of them received after winning promotion three years ago). Clauses in
their contracts allow Leeds to automatically decrease their earnings when in
the EFL, bringing down the outlay overnight.
None of that would stop Leeds having one of the highest
Championship wage bills but between parachute payments, transfer income and
shareholder investment, it is possible to manage a large salaries figure for a
finite period.
The problem comes if a relegated club find themselves stuck
outside the Premier League for a sustained spell. An expensive squad becomes
harder and harder to maintain in those circumstances.
Players
Whatever happens against Spurs at Elland Road this weekend,
this summer will be an intensive and busy transfer window for Leeds.
Many of the first-team squad have relegation-related release
clauses in their contracts, giving other clubs the right to buy them for a
fixed fee (usually one that is less than their true market value). Leeds pulled
in almost £100million by selling Raphinha and Kalvin Phillips last summer.
Because of release clauses applying to both players, the club would have
recouped merely half as much had they been auctioning them on the back of
relegation.
Departures from Elland Road in the coming window could well
run into double figures if Leeds are relegated.
Weston McKennie is certain to leave, however the season
finishes. Neither he nor Leeds are minded to activate the option to make his
half-season loan from Italian giants Juventus permanent. Goalkeeper Illan
Meslier has endured a difficult season but his valuation remains relatively
high and Leeds were always open to the possibility of accepting a worthwhile
offer for him in this window. Robin Koch has a year left on his contract and,
as a Germany international, would naturally attract bids if Leeds are an EFL
club again. So too would Colombia international Luis Sinisterra, a footballer
with high-level potential provided he stays fit.
Jack Harrison has only just signed a new five-year deal but
it is understood to include a release clause, and there is ample Premier League
interest in him. Rodrigo is on course to be a free agent in 12 months’ time
and, as a top earner, would cost too much to keep in the Championship.
There are some who Leeds would be very keen to retain,
though. McKennie’s fellow USA midfielder Tyler Adams is one. They would be
reluctant to lose Wilfried Gnonto too, though his performances have put him on
the radar of clubs in Europe.
But it is accepted that a large turnover is inevitable,
partly because some names are too expensive, some names have no further part to
play and some names are a route to transfer fees which can help to build a
suitable team to contend in, and win promotion from, the Championship.
The window ahead will be active from start to finish for
Leeds. A critical part of it will be finding takers for surplus players — a
task which is never simple on the back of a relegation.
Head coach
Unlike short-lived predecessor Javi Gracia, there is no
agreed provision in place for Sam Allardyce to remain as head coach beyond the
end of the season. His contract was as short as four games and no discussions
have taken place about his future. Whether Leeds are in any way tempted by the
idea of Allardyce in the Championship, a division he has got Bolton Wanderers
(2001) and West Ham (2012) promoted from in his career, remains to be seen but
there will be a clamour among the fanbase for fresh thinking.
Over the past couple of weeks, 49ers Enterprises gave
thought to Marcelo Bielsa returning as an avenue worth pursuing if they went
down, but he has now taken the Uruguay national-team job and, in any case, the
doubts about the ownership structure at Leeds would not have made his old job
easy to sell to the Argentinian — without even touching on the two sides’
uncomfortable parting in February last year.
If Leeds were to stay up, they would like to try to engage
someone such as Graham Potter, who did well in three Premier League seasons at
Brighton but lasted just seven months of this one after joining Chelsea last
September. Should they go down, recently-sacked Leicester manager Brendan
Rodgers is likely to come into the equation, at least in terms of the sort of
coach they would want. Whether Rodgers is open to working in the EFL again,
having led Swansea City up from it in 2011, is another matter altogether.
Expect a swing towards more established domestic candidates,
or coaches with experience of that league, because nobody at Elland Road is
trying to pretend going out on a limb with Jesse Marsch as Bielsa’s replacement
worked.
But Leeds will not be able to sell themselves on name or
reputation alone. They have masses to do to make sure that, on the other side
of this summer, they are ready to attack the new season.
Director of football
Leeds have operated under a director of football model since
Andrea Radrizzani bought out Massimo Cellino and appointed Victor Orta in 2017.
But Orta’s exit this month leaves that position vacant, and dealing with it is
one of various priorities facing the board.
The first thing for Leeds to decide is whether they want to
stick with precisely the same model — a structure in which a single director of
football oversees that side of the business. In contrast, certain teams split
authority between a specific head of their recruitment department and a figure
who takes charge of other football operations.
While some of Orta’s staff are departing with him — scout
Gaby Ruiz, for example — some other scouts remain in place, but Leeds need a
fresh tier of management around whoever ends up becoming their next head coach.
Norwich City’s Stuart Webber, a lifelong Leeds fan, and
Kieran Scott of Middlesbrough are two names from the Championship touted as
possible options, but at this stage the club have not taken any firm steps
towards filling the void. In many ways, recruitment on that front will be as
crucial as any player-transfer business — because the director of football’s
input is what tends to create ethos and philosophy, for better or worse.
Stadium
The capacity of Elland Road has not just been inadequate in
the Premier League, but inadequate since the start of the Marcelo Bielsa era
five years ago next month. Leeds’ home games sold out consistently from his
arrival onwards and the waiting list for season tickets soared very quickly, to
a peak of 22,000 names.
This is a handicap in two senses. Firstly, supply is a long
way below demand and supporters who would like to attend matches cannot. And
secondly, Leeds are missing out on the commercial and corporate income a bigger
stadium would let them generate.
But for all the talk, the idea of redeveloping the ground
has been exactly that for a few years now — an idea.
The proposed project would start with the rebuilding of the
West Stand and the club have architectural designs for that in place but they
would have to go through the process of applying for planning permission and
that was only due to happen once 49ers Enterprises assumed control of the
boardroom. In itself, planning could take 12 months to secure.
The project would also require large amounts of funding,
many tens of millions of pounds predominantly secured via loans, and it has
been clear for a while that any such work was not going to start on Radrizzani’s
watch. It is a sad aspect of these three seasons aboard the Premier League
gravy train that Elland Road has hardly been touched to any great extent.
If Leeds go down on Sunday, there is no expectation that
redevelopment would move forward in the Championship.
Upgrading Elland Road has long been described as Premier
League-dependent and, given the financial impact of relegation, it is not
something the club can prioritise — and there is very little point securing
planning permission for the project if they are not able to push the button on
it rapidly.
Back in a division where every penny counts, increasing the
capacity of Elland Road would slip into the background once more, delayed by
the immediacy of trying to get promoted again.
The question is essentially this: do Leeds need a 50,000 or
60,000-capacity home playing in the EFL?
Season tickets
This is about as close as you’ll get to an upside of
relegation.
Those 10 per cent rises in costs for next season? They’ll be
canned if Leeds go down. You’ll get more games for your money (46 league
matches in the Championship, up from the Premier League’s 38) and if you’re on
that long, long waiting list, your chances of reaching the front of it might be
slightly enhanced.
Still, good news about the chocolate oranges.