Operating loss at Leeds turned into profit thanks to Delph sale

Both Leeds United and Bradford City turned operating losses into a surplus as a result of the deal that took the midfielder from Elland Road to Villa Park in August, 2009, for an initial £6.25m.

In United’s case, it transformed an operating loss of £670,000 into a £2m profit for the year to June 30, 2010.

For City, meanwhile, the transfer of Delph, who left Valley Parade to join Leeds’s Academy at the age of just 12, helped the club post a profit of £501,000 for the same period.

It is unusual for one player to prove so valuable to the balance sheets of two clubs and one that is rooted in the terms of Bradford-born Delph’s 2001 move across West Yorkshire, whereby the Bantams are due 12.5 per cent of any fee that United receive – which in 2009-10 saw the League Two club receive more than £800,000.

The Yorkshire Post also understands City’s earnings from Delph’s move to the West Midlands have since risen to almost £1m due to clauses included in the transfer that have seen Leeds paid an additional £500,000 for Villa qualifying for Europe this season and another £500,000 last month when the 21-year-old signed a new four-year contract.

The Delph money aside, Leeds’s newly-released accounts show that the club’s turnover rose to almost £27.5m during a season that saw Simon Grayson’s side win promotion from League One and enjoy a stirring FA Cup run that included knocking out Manchester United.

Despite that, United still needed the transfer of Delph plus the sale of promising youngsters such as George Swan and Luke Garbutt to ensure they posted a profit for a third consecutive year.

The reason for this can be partly explained by the club winning promotion, meaning a pre-arranged bonus payment scheme for players and coaching staff had to be honoured in May – boosting last season’s total wage bill for all football-related staff, both players and coaches, to £7,706,000. No comparable figure is available for 2008-09 due to those accounts instead listing the club’s total wage bill, which stood at £12.2m.

Grayson’s side finishing second in League One also meant cash had to be paid to some of the clubs who had either loaned or sold players to Leeds during the 2009-10 season.

For instance, under the terms of the season-long deal that brought Michael Doyle to Elland Road from Coventry City, United agreed to pay half of the midfielder’s £10,000-per-week wage with his parent club picking up the rest.

In the event of Leeds winning promotion, however, it was agreed the Yorkshire club would immediately cover the cost of Coventry’s contribution – meaning they were hit with a bill of more than £250,000 within days of the 2009-10 season ending.

A similar deal covered Gary McSheffrey’s loan stay at Elland Road, while clauses were included in other permanent transfer deals that saw monies paid out following United’s elevation to the Championship.

With regards to the overall finances, a profit of £2,072,000 in 2009-10 compares favourably with the £15,000 surplus of the previous financial year when United lost in the League One play-off semi-finals to Millwall.

It does, though, represent less than half the £4.5m profit United posted in 2007-08 – the club’s first after administration, when the accounts covered a 14-month period as opposed to 12.

Gate receipts played a big part in boosting last year’s figures with income soaring 30 per cent from £8,966,000 in 2008-09 to £11,732,000. Likewise, merchandising income rose from £4.9m to £5,5m – up by 12 per cent.

Leading football analyst Vinay Bedi, of stockbrokers Brewin Dolphin, said: “The first thing that strikes me about these figures is that the turnover is exceptionally high for a non-Premier League club.

“It shows the power of the Leeds United brand and the strength of the club’s support base. Basically, fans put £17m into the club – either through the turnstiles or in the club shop.”

On Leeds making an operating loss, however, Bedi added: “You can’t rely on something like transfer revenue. A highly sought-after player such as Delph does not come along every year.

“Even so, it seems a case of so far, so good for Leeds United.”

On the flipside of United increasing revenue, the cost of renting both Elland Road and the club’s Thorp Arch training ground crashed through the £2m barrier for the first time during the period covered by the latest set of accounts.

This outlay on rent, which increases annually by three per cent every October, together with the money Leeds had to pay out following promotion made the income received from Delph’s transfer all the more significant.

For Bradford, too, Delph’s move to Villa meant the club was able to turn a sizeable deficit into a £501,000 profit – going some way to offsetting a loss of £765,000 made in 2008-09.