Cellino – finance improved?

Cellino – Is LUFC better financially now or not?.

This short essay looks at Leeds United’s gross financial position now vs when Cellino arrived.

There are two criteria I use to determine whether a company is in a good financial position:
– Can it settle all it debts that are due at this moment in time
– Its ability to continue trading into the future without new loans or equity
Let’s quickly compare Leeds United in 2014 and today to determine whether the club is in a better financial position now.

With relation to criterion 1:
Way back in 2014, when Cellino arrived at Leeds, the club was unable to pay wages to the team and staff, had not paid HMRC for taxes due and was subject to a winding up petition.

As Cellino leaves the club it is not in the same position: we are paying all our bills and have no significant issues with HMRC.

So it is natural to say that the club’s financial position has improved in regards to criterion 1. However, the accounts for this current year have not been released and there are rumours that Radrizzani has made a cash loan to keep the club in this position.

Even if Radrizzani has bailed the club out it was less than needed back in 2014, however a drowning man who moves upwards towards air still drowns if he’s still underwater.

VERDICT: Unknown, but likely a better position 4/10

With relation to criterion 2:
In 2014 there is no doubt that the club needed money – anybody’s money would have got us through the winding up petitions and unpaid bills.

The Club’s cash account was, and remains, loss-making and the Club has needed more loans and equity throughout Cellino’s reign to allow it to continue trading.

Cellino has cut costs to stem losses, which is a plus in this category, but has failed to make us profitable and the club still needs new money year-on-year.

Cellino, by cutting costs at the Academy, has broken a future profit stream from selling young, respected players. This is definitely a negative point.

Cellino’s baggage was not well received by sponsors and advertisers and he failed to increase revenue which should have been possible with the semi-departure of GFH. Similarly he failed for two seasons to attract fans’ match-day revenue but has done so recently.

Cellino, rightly and with my support, railed against the unfair TV money the Club receives. However his unwise attempts to increase money by protesting against Sky and the Football League resulted in more legal fees and yet more settlement costs instead.

Cellino rightly objected to the catering operation at Elland Road and exited the contract early which resulted in extra profits: he then tried the same with Macron and ended up with legal fees, settlement costs and stock write-off costs. His attitude left us without needed income from a shirt sponsor for a season too.

A club in a good financial position will be in the middle of a long-term financial plan: Cellino has failed to implement one and is selling as a result.

In regards to criterion 2 the club is in a worse financial position now. In 2014 the club was bought for £14m (even though that was an over-valuation) but now needs £36m to buy all the shares. Radrizzani, despite having paid his £36m, has fewer functioning assets at his disposal than Cellino did.

VERDICT: Implemented a retrenchment policy, lots of missed opportunities to grow, poor overall, 2/10

03/06/2017 Mike Thornton