Red Bull Leeds United investment: Finance expert explains changed PSR landscape and deal value — YEP 30/5/24
By Lee Sobot
Leeds announced on Thursday morning that Red Bull had bought
a minority stake in the Whites.
Football finance expert Kieran Maguire says Red Bull’s buy
into Leeds United gives the Whites “flexibility” with FPS and can help prevent
a summer “fire sale” at Elland Road.
Leeds saw their bid for an immediate return to the Premier
League ended in Sunday’s Championship play-off final to Southampton who sealed
a 1-0 win at Wembley to instead put themselves back in the top-flight at the
first attempt.
The defeat has left Daniel Farke’s Whites heading for a
second consecutive season in the second tier but now with fresh investment from
Red Bull who will also be the club’s front of shirt sponsor starting from next
season.
Leeds announced on Thursday morning that they had sealed a
‘multi-year agreement with Red Bull for a deal which would bring in new
commercial revenues as well as additional capital investment for a minority
ownership stake.’
As the club battle with Profit and Sustainability Rules
(PSR), finance expert Maguire says the investment must be seen as beneficial
and gave an exciting verdict as to why Red Bull have got involved.
Maguire told the YEP: "Under the rules, you are allowed
to lose £15m over three years in the Championship and you are allowed to lose
£15m in the Premier League as well but you can top that up with investments
from equity shareholders.
"So this will allow Leeds to have additional funding
which contributes to their PSR limit. It could be that 49ers have already put
in enough but this will effectively carry forward for the next three years in
terms of the calculations so that's beneficial.
"It gives them flexibility and that's what you are
always looking for as far as a club is concerned. You don't have to go to the
limit. But if a coach identifies a player or if there is somebody sniffing
around one of your players and you feel that you have to sell for PSR purposes,
by having additional money coming in from new investors, that gives you the
ability to say we won't take that offer.
"It means that you are not in a fire sale situation to
the same extent and therefore that can only benefit the club because it could
be that you could sell the player later in the window for a higher fee, or you
hold on to that player for an extra six months and it contributes to Leeds
being promoted next season or hold on to the player for 12 months and so on.
All of these are beneficial issues as far as the club is concerned."
Pressed specifically on the front of shirt sponsor, and how
much of an impact that would have, Maguire said: "I think if you take a
look at the Championship this season, and no disrespect to the clubs that have
come down but Leeds United are the biggest club in the EFL.
“And I think getting a sponsor of the calibre of Red Bull,
which itself is a global brand, is indicative, it's a statement of intent, a)
from the sponsor but also an acknowledgement of where Leeds are in football's
pecking order.
"Red Bull would not be doing this unless they thought
that Leeds were going to return to the Premier League so it's a vote of
confidence in (chairman) Paraag (Marathe) and the club itself.
"In terms of the value, it is always difficult to
estimate. Normally a good deal in the Championship would be £500,000 but I'd
expect Leeds to be substantially higher than that because they sell the most
shirts, they are the most popular team as far as the broadcasters are concerned
as we know and therefore it's attracting eyeballs and attracting
attention."