When it comes to sensationalism few do it better than Ken Bates. In his programme notes today, he speaks of a £2m overspend on the £9.5m player budget set at the start of this season. In doing so, the Leeds United chairman thought he’d put an end to chants of “where’s all our money gone?†by throwing a huge number out there to distract Leeds United fans.
Interestingly though, Ken Bates fails to offer any point of comparison. As impressive as £11.5m sounds, it’s nothing more a number being used to distract people until you put it into context – in this case, the context is the rest of the Championship.
Before we get into all that, here’s the quote in full from Ken Bates’ programme notes;
January is a month of the transfer window; excitement, rumours, misinformation, double-dealing and shadow boxing. All the fun of the fair. Meanwhile, the club’s management have to cope with all this while still running the club.
In Leeds’ case, we have bought Danny Pugh, obtained the loan of Andros Townsend, extended Maik Taylor’s contract and are in negotiations with a few players that are already at the club.
“Where’s the money gone?†is the latest chant from the vociferous few. Well, I’ll tell them! Simon Grayson’s player budget was £9.5m for the year. As I write, we have so far committed £11.722m, over budget by nearly 23 per cent.
For anyone that doesn’t understand what he means by “player budgetâ€, this is the collective total of all transfer money spent (and allegedly received) alongside the players wages for the year.
Unlike most clubs, Leeds United’s transfer kitty is included in the wage budget.
With £9.5m to spend, Simon Grayson can theoretically afford to pay 25 players (an average Championship squad) £7,300 each, which sounds reasonable enough for a Championship player.
The problem is, that unless Simon Grayson gets all his players for free, he can’t actually afford to offer them that amount because every time he spends money it comes off the total budget. Spend £2-3m buying the quality additions Leeds United fans are demanding and you’re left with very little to pay them.
What’s interesting is how this relates to our turnover. Plans are afoot to cap wage spending to 70% of turnover. Since our last published accounts were 2009-10 the £27m turnover I’m going to use is based on League One football. It’s safe to say our turnover has increased significantly since then.
Nevertheless, even when we use the League One figure against Ken Bates early season budget this only accounts for 35.2% of our turnover. Even with the “overspendâ€, we’re still a long way short at 43.4%.
I strongly suspect turnover for last season was closer to the £35m mark which would reduce that percentage even further. You also have to take into consideration that The FA’s guidelines do not take transfer fees into account, which is what Ken Bates has done here. That means other clubs could spend 70% of their turnover on wages and still pay for new players with other funds.
How This Compares To Other Clubs
As the last published accounts are 2009/10, I’m going to use a table published a while back by The Swiss Ramble – A renowned football blogger and financial expert who compiled the following using public accounts;
As you can see, Leeds United’s reported spending on wages is much higher than what Ken Bates is now telling us. This isn’t because he’s “cooked the books†or is lying to us now, it’s simply because Leeds United’s published figures are incredibly vague. The £14m above includes everybody – Ken Bates, Shaun Harvey, Simon Grayson, the coaching staff, the tea ladies etc…
Knowing what we know now, and assuming our budget has risen somewhat since League One, I’d suggest Millwall (also League One figures) is closer to the actual spending on the first team that year – perhaps a million or so more in Leeds’ case.
Unlike Leeds, most other clubs separate their figures out to offer further transparency. Leeds are not the exception to the rule, but their accounts are amongst the vaguest I’ve ever encountered.
Setting aside that figure entirely and using the figure Ken Bates gave us today, in 2009/10 only six clubs would have spent less than Leeds United on wages.
In itself, that is a shocking statistic, but when you consider that other clubs have separate wage and transfer budgets, it gets even worse.
All of a sudden, the £11.5m Ken mentions starts to sound less impressive. Simon Grayson has basically been left to lead a promotion charge with the budget for a relegation battle.
So we’ll ask you again Ken – “Where’s all our money gone?â€
