Today Leeds United published the full accounts for the year 2014-15. Things might be getting worse more slowly, but due to the incompetence of several owners it’s going to be a very long time before we get out of the mire.
We already knew from last week’s preliminary statement that the overall losses were brought down from £23m in the previous year to £2m in the year in question, but that this improvement owed much to the £11m we got from Fulham for Ross McCormack. The fall in operating losses (before player trading is taken into account) was only £5m, from £18m in 2013-14 to £13m.
And that’s before we get to the mess left behind by the chaotic GFH era. Not only were the club running up unsustainable losses while they were in charge, but the bank were charging interest on the money they lent us to keep Leeds United in business. And to pay for all this expertise they had the nerve to charge directors fees of £521,000 during their final year.
When Cellino bought his majority stake in the club GFH were owed £20m, and £3m of this amount was paid off during 2014-5. A further £3.5m will be paid to GFH in instalments up to June 2019, and the final amount of £13.5m will be due once we win promotion to the Premier League, which will obviously eat into the funds we would need to build a team good enough to survive at the highest level. And if we don’t get promoted we will have to continue to pay the debt off in instalments, possibly up until 2032 if we still haven’t got back to the Premier League by then!
This legacy of debt explains why Cellino is refusing to repurchase Elland Road and Thorp Arch until he gains complete control of the club of GFH make a contribution, as the acquisition would have to be in the name of the club and Cellino isn’t going allow the value of GFH’s minority stake to increase if he has to fund the stadium purchase himself.
Yet as long as Elland Road and Thorp Arch remain in other hands the rental cost will continue to increase year on year, according to the formula agreed when they were sold in 2004. The accounts show that the rent for the stadium alone was £1.6m in 2014-15. And a range of other disputes are also costing us dear.
We are without a shirt sponsor this season due to a spat with Enterprise Insurance, the company led by Andrew Flowers, who was part of the Yorkshire consortium who were out-bid by Cellino in 2004. And Cellino’s decision to change the supplier of the shirts themselves to Kappa has led to legal action by Macron, who are looking for £5m in damages over the termination of their deal.
Even Ken Bates was continuing to make a contribution to our losses, as it cost over £1m to get out of a deal he struck to sell the club’s catering rights to Compass, an exit fee of £125,000 and refunding £900,000 the company originally advanced to the club. And inevitably there are also a number of
employment tribunals coming up due to Cellino’s hiring and firing policy, including one involving former assistant manager Nigel Gibbs.
But perhaps the most disturbing part of the accounts is the statement that read "At the year end there were a number of legal claims and various claims from HM Revenue and Customs outstanding against the company. These claims are challenged by the directors and there is significant uncertainty over their outcome.” Given Cellino’s rather lax attitude to paying taxes in his own country we have to hope that this doesn’t mean he is going to land us right in it by conducting the club’s tax affairs in the same manner.
So where do we go from here? Cellino has already told the Yorkshire Post that he expects losses for 2015-6 to be higher, not least because we won’t have made so much in the transfer market, just the £3.5m from West Ham for Sam Byram. The total wage bill is nearly 85% of the club’s turnover, yet over the next year we need to retain the fine young players we already have and attract some new talent to improve the squad.
So we’ll just have to hope that the next clutch of signings prove to be good value for money, and can bring us the success needed to generate the revenue to cover the increased cost in transfer fees and wages. Either that or someone with very deep pockets is needed to buy Cellino out and bring some sanity back to the club.