Phil Hay, Michael Normanton and Dan Moylan talked about Leeds United’s recent transfer business on the most recent edition of The Phil Hay Show, as Hay shed some light on how the Yorkshire-based club funded their recent signings during the podcast.
As per Transfermarkt, the Whites have spent £96.1m on incoming players during the 2020/21 season so far. They haven’t received any money from player sales following their promotion from the Championship to the Premier League, meaning that this is also their net transfer expenditure for the current season at present.
During this recent edition of The Phil Hay Show, Hay explained how the Yorkshire-based club funded these signings, saying: “The way I understand it is that a lot of the deals, both fees and the wages but the fees, in particular, have been back-ended. Which is to say that Leeds will pay more by way of instalment towards the end of the player’s contract.
“They’ve also done what’s called amortisation – a lot of people will know what that means but for anyone who doesn’t – it’s the way in which you structure a fee so that you pay it in instalments over the course of a contract.
“From what I’m told, with the individual transfers that have been made and the signings that have come in, the initial payment for them, in each case, has been no more than around about £3m, with obviously, more to come, it’s not to pretend that the fees aren’t there to be paid further down the line.
“There are a number of ways in which this can be managed and ways in which it can be handled and that is certainly the first one for clubs these days, is to make sure that with very, very rare exceptions, the fees that you’re agreeing to do not come out in one big whack.
“From what I understand, Leeds have taken a forward funding deal, which is essentially borrowings that are paid back using future broadcast income and TV rights money that is owed to you. I believe they’ve borrowed in excess of £30m.
“The thing to say about this is that forward funding is incredibly common in the Premier League, most teams do it. The way it’s structured is that when it comes to repaying these loans, which come from banks or other established lenders, the Premier League secure it by essentially agreeing with the lenders that they will pay the TV money direct to them when the payments are due.”
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TIF Thoughts…
So, while the total cost of Leeds’ recent transfer business is just under £100m, they haven’t actually parted with that much money yet, due to how the deals were structured and Leeds will continue paying for the signings in the future. It also seems that Leeds funded their transfer business in the form of a forward funding deal.
Judging by Hay’s comments, it seems as though Leeds didn’t do anything out of the ordinary for a Premier League club with regards to their recent transfer business, which may be reassuring news for Whites fans, as perhaps this indicates that this was a relatively safe way of doing their business.
Hopefully, for Leeds, their new signings perform well and help them to enjoy the financial benefits that come with being a Premier League club for longer than just this season.