The division Leeds is in for 2025–2026 may have a big impact on their summer transfer spending, although the most crucial element may still be United’s financial flexibility following the release of their 2023–2024 financial statements.
Under the Profitability and Sustainability Regulations (PSR), teams in the top two divisions of England are only permitted to record losses up to a specific amount over a three-year accounting period.
Clubs in the Premier League are limited to a maximum loss threshold of £105 million over three seasons; however, Leeds’ circumstance, which saw them drop into the Championship for 2023–2024, has lowered their threshold.
Leeds may lose no more than £83.83 million between July 1, 2021, and June 30, 2024, since the Championship clubs’ three-year loss cap was recently raised from £39 million to £41.5 million.
This is because per season spent in the top flight, clubs are allowed a £35m loss each year, reduced to £13.83m per season in the second tier. Two years in the Premier League, followed by one in the Championship therefore brings Leeds’ loss limit for the financial year ending June 30, 2024, to the above £83m figure.
In terms of Leeds’ financial results from 2021/22 and 2022/23, the club made pre-tax losses worth £36.7m and £33.7m, respectively. This amounts to just over £70m, meaning Leeds cannot report a loss greater than approximately £13m in their 2023/24 accounts, although that is not expected to be the case due to significant player sales during the relevant accounting period, such as the likes of Tyler Adams, Luis Sinisterra and Archie Gray all leaving the club for fees in excess of £20 million.
Next season, regardless of which division Leeds compete in, United’s loss limit will be just over £62 million for the three-year accounting period between July 1, 2022 and June 30, 2025. Considering £33.7m – equating to roughly 54 per cent – is already eaten up by Leeds’ results for 2022/23, the club can ill afford to make a combined loss in excess of £30 million for financial years 2023/24 and 2024/25.
Spending this summer will therefore very certainly occur after the June 30 accounting deadline.
Leeds will have more flexibility this summer when it comes to spending on player registration and salaries if they report a post-tax profit for 2023–2024, as fellow relegated Southampton did.
However, even after large sales, a loss can require further belt tightening. If Leeds don’t get promoted this season, this will most likely be the case.
Football finance expert Kieran Maguire does not envisage Leeds’ 2023/24 financial results to cause any problems for the club from a PSR perspective, indicating any loss will be beneath the allowed £13 million figure, or perhaps even a post-tax profit for 2023/24 is on the horizon.
“I suspect 23/24 will have been a tough year for Leeds financially,” Maguire told the YEP. “The step-down in terms of broadcast revenues, despite parachute payments, is going to hit the club in the region of £60-65 million. There’ll be reductions in terms of commercial income, but it’ll still be far higher than anybody else in the Championship and higher than a good proportion of the Premier League as well, such is the value of the Leeds brand.
“A few player sales will have absorbed a lot of the operational losses, there’s no indication of any PSR breaches and certainly Leeds had to sell before they could reinvest over the course of the summer and we saw that in relation to Archie Gray.
“I think the operational losses will be substantial but the player sale profits will have offset that to a large extent,” Maguire added.
Crysencio Summerville, Georginio Rutter, Glen Kamara, and Charlie Cresswell all departed Leeds after the accounting period deadline of June 30, 2024, hence their sales will not be included in Leeds’ 2023–2024 financial performance.
