On this occasion Rich, I think you're being a bit naive. I think the YEP
version is a cut down of Phil Hays piece in the new Athletic website
(Subscription required, but I signed up on a £30 for a year option. The
writing is VERY good I think). It's clear we were over loaded with
youngsters who weren't going to 'make it' and they needed offloading,
otherwise we'd breach the rules. Doing a Derby and selling the ground
wasn't (apparently) an option due to the buy back recently. So, much as
I'd have loved the two Inter Milan lads, the Spurs centre half AND Ryan
Kent on top of what we did, I think we may be OK judging by what other
clubs are also having to do.
StigOfThePragmaticDump
CEO Kinnear: Leeds rejected £35m of offers this summer but finance rules
are ‘pointless’
By Phil Hay Aug 8, 2019
The Championship is where clubs and owners go to lose money. A chief
executive who now works abroad once summed it up like this: “You’re
going to make losses whether you want to or not. You just have to decide
how much you’re going to lose.”
From time to time there are exceptions to the rule, like the nominal
profit of £976,000 Leeds United turned in 2017. That would pay their
current wage bill for less than a fortnight. And less again after tax.
England’s second division has long been a diverse field in which certain
clubs overspend because they feel they have no choice and others
overspend because they have the cash and the mood takes them.
What CEOs across the league noticed in this transfer window was a
developing trend: that of a high proportion of teams heading for
negative net spends, some by a very comfortable margin. Incoming fees
have been vast: £15 million to Birmingham City for Che Adams, £20
million to Brentford for Neal Maupay, £20 million to Bristol City for
Adam Webster. In a demonstration of the disparity with the Premier
League, Brighton alone financed two of those signings (Maupay and
Webster).
The mutual prudence of the clubs who pocketed those fees was not a
coincidence. The Championship has been bound by Profit and
Sustainability (PnS) rules for the past three years but in March,
something happened. Birmingham City exceeded the losses permitted by the
EFL and, on the guidance of an independent disciplinary commission, were
deducted nine points.
“The Birmingham decision changed the world in this division,” Leeds
chief executive Angus Kinnear tells The Athletic. “Everybody realised
PnS had teeth.”
Birmingham’s breach of EFL limits, which allow a maximum loss of £39
million over a rolling three-year period, was public knowledge and
widely discussed but no-one in the Championship was sure how the EFL
would act. The end of the 2018-19 season marked the end of the first
full PnS accounting window and Birmingham became something of a guinea
pig: the only club officially in breach and the only club in harm’s way.
Even the directors at St Andrew’s were in the dark about the likely
consequences.
The lack of clarity was a frustration. “Every club wanted to be
absolutely clear about the sanctions,” Kinnear says. “None of us were
sure if there would be sporting sanctions or if the penalty would be
financial. If it’s financial then a decision over whether to abide by
PnS becomes an economic one, like in US sport if you breach the salary
cap. If it’s a sporting sanction, like a points deduction, then that’s
very different.”
Leeds made a big play of PnS – the EFL’s version of Financial Fair Play
(FFP) – throughout the transfer window just gone. They concentrated
heavily on ensuring compliance internally while trying to manage an
external audience who questioned the numbers involved and, in some
quarters, debated whether the club’s majority shareholder, Andrea
Radrizzani, was merely being tight.
Radrizzani, a charismatic Italian who made a fortune through the sale of
TV rights deals, is heavily invested in Leeds: £45 million for his
original takeover, some £20 million to buy back Leeds’ Elland Road
stadium from its private landlord two years ago and the person whom
Kinnear calls whenever the club need additional funds.
A stake of around 13 per cent was sold by Radrizzani to the San
Francisco 49ers last summer but the £11 million paid by the 49ers went
back into the Elland Road accounts. Leeds are a perfect example of how
life in the Championship works: the team with the biggest annual
turnover in the league, losing more than £1 million a month.
In the first two years of the EFL’s PnS cycle — which began with the
2016-17 season — Leeds’ deficit stood at less than £4 million, a long
way short of £39 million. But last year, as the wage bill inflated to
more than £30 million, the yearly loss rose above £15 million despite a
turnover of close to £50 million. (Leeds, commercially, have few serious
rivals below the Premier League).
Certain costs are exempt from PnS calculations. Financial experts
estimate that a category two academy, which Leeds have, removes around
£1.2 million from the total annually, but United worried that another
round of heavy losses this season would put them in breach. Even now,
Kinnear says, their figures are extremely close to the limit.
The wage bill is where Leeds have stretched themselves most. According
to Kinnear, it is two and a half times higher than it was when
Radrizzani bought out Massimo Cellino in 2017, and not by accident.
“Over the past 10 years or so the club’s average finishing position in
the Championship was around 12th and the wage bill when Andrea first
came here was in line with that,” Kinnear says. “We’ve done a lot of
analysis of this.
“There’s always the odd exception but, in general, a wage bill of £15
million or £16 million will get you a mid-table place. A wage bill of
£25 million will get you into the play-offs. And over £30 million will
get you promoted.”
Less than £10 million – the reality for a newly-promoted side like
Charlton Athletic –will most likely bring about relegation.
“The reality when Andrea started was that players here weren’t being
paid enough,” Kinnear says. “They were underpaid.” By acquiring
goalkeeper Kiko Casilla from Real Madrid in January, United were
committed to a wage of £35,000 a week.
When this transfer window opened, the club had three priorities beyond
the new signings they were targeting: to retain their most important
players and staff, including head coach Marcelo Bielsa; free the squad
of fringe players who had no chance of playing and to cover their back
against the EFL by selling a few who figured in the manager’s plans.
Bielsa extended his contract in May and players unlikely to play under
him became a hindrance when it came to complying with PnS — particularly
in light of the threat of a points deduction.
Most of the names who left were surplus. Caleb Ekuban took up an offer
from Turkey, Yosuke Ideguchi went back to Japan and Tom Pearce joined
Wigan Athletic. “In the past these were players who you might have kept
to develop,” Kinnear says. “But with the way PnS is, it’s simple: you
cannot afford to have them on your balance sheet. You cannot afford to
have them doing nothing.”
Other sales were more high-profile and politically sensitive, the type
over which supporters fret. Tottenham Hotspur paid £9.5 million for Jack
Clarke, though loaned the winger back to Leeds immediately. Pontus
Jansson joined Brentford for £5.5 million – a transfer driven as much by
deteriorating relations between the Swede and Bielsa – and Anderlecht
bid £6.5 million for Kemar Roofe days before the window closed. Leeds
had allowed Roofe’s contract to run into its last 12 months and could
not tempt him with the late offer of improved terms. In all, Leeds
estimate that £27 million has been raised through outgoing deals.
At points they had scope to make far more. Kinnear says incoming offers
which Leeds rejected totalled £35 million, the largest of which was made
for Kalvin Phillips. The 23-year-old, the player whose development at
Elland Road has been most stratospheric on Bielsa’s watch, was the
subject of an approach by Aston Villa but Leeds were always adamant that
Phillips would stay unless he asked to leave.
“I can’t think of another team in the league who’ve kept a £20 million
player,” Kinnear says. “That was very important for us.”
Bielsa fell into the same category as Phillips: someone who was
irreplaceable in the same shape or form and who was worth the biggest
coaching salary United have ever paid out. Bids for Luke Ayling, Adam
Forshaw and Pablo Hernandez, none of which were ever publicised, also
failed.
“This is where I get a bit frustrated about the criticism of Andrea’s
financial investment,” Kinnear says. “If he was only thinking from a
financial point of view, he’d have sold them.”
Fulham have worked in a similar fashion since their relegation from the
Premier League, despite the tranche of parachute money which came with
it. Anthony Knockaert, Ivan Cavaleiro and Harry Arter are expensive
loanees but Fulham raked in £25 million by selling Ryan Sessegnon to
Spurs on deadline day. Like Leeds and Phillips, one of their biggest
priorities appeared to be the retention of Aleksandar Mitrovic and Tom
Cairney. Manager Scott Parker described that as “vitally important”.
Leeds’ signings came to six, five of them on loan and one – Helder Costa
– on a temporary deal which will automatically convert into a permanent
move next summer. He will cost Leeds £16 million over the course of his
permanent four-year contract – one of the most expensive purchases in
their history – but an initial loan kept the first amortised payment to
Wolverhampton Wanderers off the books for another 12 months. Bielsa does
not often throw his weight about with transfers but he was relentless in
pressing Leeds to get Costa signed as the days before pre-season ticked
down. Wolves’ willingness to help made it happen.
At that stage, Elland Road was still being circled by rumours of
imminent investment from Qatar Sports Investments (QSI), the Middle
Eastern muscle behind Paris Saint-Germain. Officials at Leeds doubt that
the reports had substance, which is not to say QSI might not have plans
for the future, but the impact of an immediate injection of cash was
nonetheless moot.
PnS rules limit shareholder investment and the club were close to the
red line. “The reality is that if someone had given us £40 million, we
couldn’t really have been able to spend a penny of it,” Kinnear says. “I
mean, we could have made the academy look nice or built a new stadium
(infrastructure costs do not count towards PnS) but not (spend it) on
players. We were already right at the limit.”
Leeds’ willingness to abide by PnS regulations hides a general feeling
of contempt for them. The EFL’s structure has been plagued by
suggestions of creative accounting and attempts by owners to
circumnavigate the restrictions. Derby County are the subject of legal
action from Middlesbrough after using the sale of Pride Park to owner
Mel Morris to comply with EFL limits. Aston Villa and Sheffield
Wednesday employed the same strategy, exploiting a loophole which the
EFL is yet to close.
“We’ve no complaints about those clubs doing that,” Kinnear says. “Our
complaint is that the rules are so porous so as to be pointless. We
think the loopholes need to be closed up because the rules aren’t fit
for purpose. The permitted loss is an arbitrary figure which can’t be
properly enforced.”
There are other ways of sidestepping costs, too. Clubs in the
Championship believe one team last season kept a prominent player
registered as an academy footballer to avoid his wages contributing to
PnS. Yet despite the problems, Kinnear thinks fewer than 50 per cent of
clubs want to see PnS revised.
Birmingham’s nine-point penalty came late in the day last season, a
matter of weeks before the campaign finished. Now that the EFL has
established clear sanctions, Championship boards expect that similar
penalties will be enforced at the start of a season, potentially
wrecking it before it begins. The maximum deduction of 12 points is
deliberately punitive and too severe for clubs to treat with disdain.
But all the while, the failure of the EFL to convince the Premier League
to automatically impose sanctions on promoted sides tempts owners to go
big regardless, in the hope of escaping the EFL’s claws before the
governing body can strike.
Kieran Maguire, a specialist in football finance at the University of
Liverpool who runs the insightful Price of Football Twitter account,
believes few clubs are well served by the system as it is. “You’re
damned if you do and damned if you don’t,” Maguire says.
Leeds and Bielsa did not look damned at Bristol City last Sunday, where
their football outshone every other performance in the Championship over
the course of the season’s opening weekend. The club added Eddie Nketiah
to their squad before the transfer deadline, talking Arsenal into
loaning them a striker who numerous clubs were crawling over glass to
sign. Even Nketiah, a 20-year-old with a tiny amount of senior football
behind him, commands a loan fee and a salary which, when all is said and
done, will leave precious little change from Leeds’ sale of Roofe to
Anderlecht.
“The days of Championship clubs buying six or seven players for
substantial fees is gone,” Kinnear says. “That is until the market
resets itself or until PnS rules evolve, which I think they have to.”
Birmingham were bitten and the Championship is twice shy. For now, at
least.
On 2019-08-08 22:10, Richard Walker via Leedslist wrote:
I read the article and got no answers only that they'd refused another
£35 million of offers.
Yes we don't want another Ridsdale situation but 27 million out and
not a penny spent in can be considered sensible or just lacking in
ambition.
As I say, promotion on the cheap hopefully.
On Thursday, 8 August 2019, 22:07:08 BST, Richard Naef
<rich...@triumph-computers.co.uk> wrote:
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