Leeds United’s Premier League relegation is expected to cost the club around £100m in revenue. That’s according to football finance expect Kieran Maguire, who believes the Whites must prepare themselves for a significant blow when it comes to their income over the next 12 months at least, even with the advantage of parachute payments.
The Whites can expect to earn around £43m from their first parachute payment instalment, which is 55 per cent of what they would be in line to pick up in broadcast money had they managed to stay in the Premier League. That’s significantly more than what most Championship clubs will receive next season and, even without this summer’s potential takeover, Leeds should be one of the richest clubs outside the top flight next season.
But, they will still have to cut their cloth accordingly as they get to grips with life in the Football League. Relegation clauses in player contracts will help to cushion the blow in terms of wages, of course, while the club can expect some financial return in the form of player sales.
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However, United will also be forced to contend with a significant drop in both commercial revenue and hospitality income next season, Maguire has warned.
“Even with parachute payments I think we’re looking at a drop probably in the region of £100m,” Maguire told Leeds Live. “Leeds certainly benefitted significantly from promotion to the Premier League and their commercial income shot up, but it’s difficult to maintain that in the Championship, although I think you could argue Leeds will be the biggest club in the EFL.
“Their revenue for 2022 was £189m and that was with slightly more TV money than they’ll get this season, but there’s not a lot of difference there. I would imagine that ticket sales will be broadly maintained, but they’ll find it harder to sell hospitality packages. If you’ve got, for example, Cardiff on a Tuesday night, getting the premium prices you can get when Liverpool, Manchester City, Chelsea and co are coming to town is that much more difficult.
“That £189m, I think we’re looking at a drop of £100m, if not a wee bit more. That means the club will have to look at its cost base.”
He added: “If we look at 2022, last season, which was the first season with fans back, the commercial income was £49m. If you go back to 2019, it was £21m.
“Front of shirt deals and the deal with Adidas, the front of shirt deal with SBOTOP will have a step down, they’ll have a clause in the contract that will say if there is relegation then this is the fee and in the Premier League the fee is much higher. You talk to people who sell perimeter advertising and they say rates in the Premier League are normally 8-10x higher than what you would expect to get in the Championship because the Premier League is exported to 198 different countries.
“The EFL is a fantastic product but it’s not commanding the same number of eyeballs. You have to be realistic to expect a drop in your commercial revenue.”
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