ANY hopes of Leeds United being able to bring in new players during the January transfer window seem to be scuppered after the club’s latest troubled financial figures emerged.
It expects to record losses of almost £23m for the 2013-14 year after their revenue dropped to £25.3m and their wage bill climbed to more than £22m.
Draft accounts sent to the Football League but yet to be signed off by auditors or United’s owner, Massimo Cellino, show Leeds are in breach of Financial Fair Play rules limiting Championship clubs to a maximum annual loss of £8m.
Of course, such a breach also carries the punishment of a transfer embargo in January which could, then, blight any plans manager Neil Redfearn may have to strengthen his squad in the new year.
That said, Cellino – who took over in April and, therefore, has only been in charge for fewer than three of the 12 months the accounts cover – has been expecting such a blow for some time.
With regards to the latest figures, and the impact of previous owners Gulf Finance House, Leeds were sliding in that direction when they published their 2012-13 accounts.
United lost £9.5m then and saw their turnover fall to £28.5m.
Now, Leeds expect to record losses of just under £23m for the 2013-14 financial year.
GFH Capital, the Dubai-based arm of GFH, ran United for most of that period, though, according to the draft accounts, a restructuring of its stake in the club left Leeds without a majority shareholder during the second half of 2013.
In the year to June 30, 2014, United’s income dropped across the board.
Gate receipts fell by more than £1m to £8.5m and cash from broadcasting fees and merchandise sales also decreased.
Their remaining commercial revenue amounted to £6.6m, down from more than £8m in the previous 12 months. The club’s operating loss climbed to £17.89m, an increase of around £5m, and the wage bill equated to 89 per cent of turnover.
Reducing the cost of wages was one of Cellino’s main aims when he inherited what he called “a big mess” from GFH.
Last week, Cellino claimed he and the Bahraini bank had agreed to restructure United’s debt and inject capital of £23.5m into the club, a deal which was due to be ratified at a board meeting at Elland Road yesterday.
That figure is fractionally higher than Leeds’s annual loss.
The results confirm a £1.5m loan given to the club by shirt sponsor Enterprise Insurance in 2012 was paid back in February.
Cellino was acting as de facto owner of United at that time, funding the club prior to the completion of his 75 per cent buy-out.
The lease of Leeds’s Elland Road stadium and Thorp Arch training ground cost £1.94m a year as of June 30 and increased again last month.
Cellino failed to meet a promise to buy back Elland Road for £16m before the start of December but the expensive lease explains why Leeds are continuously anxious to free themselves of that burden.
More intriguing than those matters are the biggest liabilities laid out in the draft accounts and the money owed to the club’s shareholders, including both GFH and Cellino.
The accounts state that during 2013-14, Eleonora Sport Limited – the UK firm used by Cellino to purchase Leeds – loaned £8.42m to the club.
Cellino himself made a personal loan of close to £1.3m and a company in Milan with connections to his family, Eleonora Immobiliaire, lent United a further £2.5m.
Leeds have not commented on the figures but sources close to Cellino say the money does not represent any of the £11m fee which he agreed to pay GFH for a stake in Leeds.
GFH Capital, meanwhile, is owed a staggering sum of £20.91m by Leeds.
Much of that debt was assigned to the company from other creditors, including Brendale Holdings and Berrydale Seventh Sport Holdings.