Top 10 stories of 2015: 2 Leeds United in "critical condition" after £20m losses
FORMER Leeds United owner Massimo Cellino described the club as being in a “critical condition” in the club’s accounts just days before he was hit with an FA ban.
In accounts published yesterday, Mr Cellino laid bare the financial and commercial pressures the Championship football club was facing – a situation that has become more entrenched since he was given a short ban by the FA from having a management role at the club which plunged the club’s already opaque ownership into greater confusion.
“We, the board, recognise the perilous state that the club finds itself in,” he wrote.
“Our task is very simple: this is a football club that its fans own, and I am, as its major shareholder, a steward and a guest and one who needs to take its patient out of a ‘critical condition’, put it in to ‘accident and emergency’ and then allow it to independently walk and then run.”
Since writing that, Mr Cellino has said he will not be returning to run Leeds United once his ban expires.
Figures from the draft accounts became public before Christmas – the club more than doubled its pre-tax losses to £20.3m while revenues fell 11% to £25.3m – but the details now available show the range of commercial pressures the club faces.
The club is facing a £5.65m lawsuit from its sportswear supplier Macron after a contractual dispute, although it said “the company’s solicitor believes that it is unlikely that the claim will be successful”.
It acknowledged that it will fail the Championship Financial Fair Play test, “as a consequence of historic and reported set of results for 2013/14”, but said it expects this to be a one-off.
Its deteriorating revenues, allied with its continuing on-the-field struggles, present a bleak picture.
The only revenue stream to increase was central distributions – that is, money direct from the FA – while gate receipts fell 12%, TV income was halved, merchandise sales dropped 6% and other commercial income was down 17%.
Mr Cellino said the strategic review resulted in a significant cost cutting and redundancy plan, which saw non-football staff reduced by 21 to 107 people, while football team management was reduced by eight people to 12. However the effects of this were not felt in the accounts, with its wage bill rising 12% to £22.4m.
The club’s shareholders have been forced to pump money into the club, with £15m arriving through long-term loans. There has been written assurances given by Mr Cellino and other group companies that amounts payable would not be called in within 12 months of the accounts being signed off, which was done on January 14.
At the year-end, GFH Capital was owed £20.9m. Half of this is a loan bearing 5% interest and repayable in instalments up to Demeber 2017. The other half is repayable on Leeds United joining the Premier League, and attracts interest at 2% per year.
