Leeds United could soon be permitted to lose up to £41.5m under Profit and Sustainability Rules, with a subsequent positive impact on their transfer budget.
The West Yorkshire side were hoping that the Championship’s financial rules would no longer be a concern for them in 2024-25, but their play-off final promotion failure means compliance is still a necessity.
Clubs in England’s second tier are currently allowed to lose £39m over a rolling three-year period, equating to £13m per season.
Leeds are still in receipt of Premier League parachute payments following their relegation in 2022-23, but chairman Paraag Marathe has warned that player sales are a possibility in order to comply with PSR.
With that in mind, the latest news about Championship spending rules will likely be welcomed at Elland Road.
Leeds FFP position to benefit from Championship rule change
Earlier this year, it was widely reported that the Championship were set to raise their allowable loss limit by £2.5m, from £39m to £41.5m.
Now, the EFL has released a statement that they are committed to reassessing their financial controls and hope to have revised its system before the end of the year.
The decision was reached at the Football League’s AGM last week, which was attended by representatives of Leeds’ owners, the San Francisco 49ers investment fund and new minority investors Red Bull.
While the EFL stopped short of confirming that the statement was alluding to the mooted £2.5m increase in allowable losses, this appears to be a strong signal that change is imminent.
For Leeds, this means that that have a further £2.5m cushion in terms of PSR, which effectively adds that sum onto their playing budget should Red Bull and the 49ers choose to bankroll the losses.
Given the ambitions of the 49ers and Red Bull, that seems likely.
It would also tally with a report from the Yorkshire Evening Post last week which claimed that Leeds are one of the clubs advocating for a less restrictive FFP system.
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What do the new FFP rules mean for Leeds?
The EFL’s party line appears to be that the £2.5m increase is to account for rising running costs for clubs.
But given that the £39m limit was introduced at the start of the 2016-17, some analysts have pointed out that figure does not even account for inflation in that period.
However, the extraordinary losses in the Championship in recent years mean the EFL would have opened themselves up to accusations of allowing clubs to risk their futures if they raised the limit further.
Leeds have posted combined losses of £81.5m over the last three years but have a cushion worth approximately £30m per season in the form of parachute payments.
They also have a number of high-value players such as Archie Gray and Crysencio Summerville who could be sold if they find themselves scrambling to get within the Profit and Sustainability limit.
The £2.5m increase to the system might not sound like it would move the dial that much, but it could be the difference between keeping one of their big names or cashing in.