Leeds United have managed their relegation from the Championship and have avoided a repeat of Leicester City's financial plight. With Daniel Farke putting his side in a strong position to return to the top flight, there is very little to worry about.

Having dropped down a division, also missing out on immediate promotion after play-off final disappointment last season, Leeds are well-placed to get back to the Premier League. Twenty-nine games into Farke's second campaign and they top the table having scored the most goals and conceded the second-fewest.

This all comes despite losing some key players over the past few years. Notably, in the summer Leeds found themselves backed into a corner with selling academy graduate and rising star Archie Gray. That has done more than just keep them afloat, though, and in fact there is room to manouvre for Leeds.

“As Farke stated when quizzed on the situation before Christmas, Leeds are in a reasonably strong position when it comes to profitability and sustainability rules (PSRs)," states Reach PLC's Business of Football writer Dave Powell. “For the 2021/22 and 2022/23 seasons, when Leeds were a Premier League club, they posted pre-tax losses of £37million and £34million respectively.

"For those two seasons, Leeds were subject to the £35million per year limit for losses, provided it was backed by secured owner funding, which it was. In the Championship, the allowable loss is £13million for the season, meaning that the total rolling three-year assessment period would allow for them to lose £83million, not the £105m had they been a Premier League club during the 2023/24 season.

“Leeds losing £71million across two seasons would, on the face of it, leave them with the ability to post a £12million loss in 2023/24, which might be challenging on the first season after a Premier League exit. But that doesn’t tell the whole story.

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“Leeds’ allowable deductions, which are costs attributed to investment into infrastructure, the women’s team, the academy and community initiatives, stand at around £12million per year. So, assuming that same figure for 2023/24 would see the actual allowable loss rise to £24million before being concerned about PSR."

As opposed to Leicester, who were coming under scrutiny when they secured a bounce-back-promotion nine months ago, Leeds face no such questions. Leicester are still under the firm grip of financial regulations and were limited not only over the summer but this window too.

Leeds, on the other hand, have been able to better prepare themselves for an unwanted second season in the Championship as well as readying themselves for the desired return. Their summer work, in particular, was evidence of this, even if it did see three key pillars depart.

“The position of the club has also been aided when it comes to the sales of players during that financial window," explains Powell. "Deals such as Tyler Adams, Rodrigo and Leo Hjelde, will help stem losses, while the club has access to a year of Premier League cash thanks to parachute payments, which will decrease on a sliding scale over three years.

“The club will be compliant with PSR for 2023/24, and the investment from Red Bull and additional capital from the owners, 49ers Enterprises, means that the club has no working capital concerns when it comes to cash flow and meeting obligations. The focus will really be on 2024/25, the financial year we are currently in.

"Big fees received for Georginio Rutter, Archie Gray, Luis Sinisterra, Glen Kamara and Crysencio Summerville will be significant in positively impacting the balance sheet and allowing the club to reduce the wage bill and aid revenue during a season when the value of parachute payments will drop. The club are in a reasonably strong position and look to have managed their relegation well from a financial perspective."

Summing up just what Leeds have done on the sporting side, Powell finishes: "Adding players to aid the first team squad as well as selling major assets for good prices against market value." The challenge is now to make it all pay off. Over to you, Mr Farke.