Guardian 3/5/11
Why did Leeds sell to Ken Bates, who claims he has no money to invest?
Leeds United's mystery owners have just sold out to Ken Bates for an 'undisclosed sum' at a time when they stood a good chance of realising a thumping return on their outlay
David Conn
Ken Bates was attempting to "end the speculation" and settle what he derided as "scaremongering" over Leeds United's anonymous offshore ownership by announcing todaythat he has finally bought the club himself. Characteristically of this saga, in which the proud Yorkshire club have been owned by unnamed beneficiaries of trusts in tax havens since Bates arrived as chairman in 2005, he said he had bought Leeds from those anonymous owners "for an undisclosed sum", via a company, Outro Ltd, registered in a tax haven – Nevis, in the West Indies.
Leeds said in an official club statement that the "change in ownership structure" was meant to settle the issue, the lack of transparency over who owns Leeds, in which the Premier League and the football inquiry by the culture, media and sport select committee has recently taken a keen interest. Yet many more questions are prompted by this move than Leeds are answering.
Will Leeds supporters, the wider football public and the parliamentary select committee ever be told who those owners were? Why, after buying Leeds back after administration in 2007, seeing the club up from League One and to the brink of the playoffs for Premier League promotion, did those owners decide to sell now? Leeds's statement said the reason was to satisfy the Premier League whose chief executive, Richard Scudamore, told the select committee inquiry last month that if Leeds were promoted he would seek more details about the owners than the Football League had required.
"The Football League have chosen not to apply the rule as robustly as we think we will be applying it," Scudamore said.
That, though, seems a strange reason for the offshore owners to sell. Their investment would have been worth a fortune, at last, if Leeds did win promotion, so why would they not have happily furnished Scudamore with any information he wanted?
And when they decided to sell, whatever their reasoning, why to Bates? Leeds is widely regarded as one of the last remaining good prospects as a football club to buy – in a one-club city, with a huge support which has stayed solidly loyal, paying eye-watering ticket prices in League One and the Championship. As Bates and the chief executive, Shaun Harvey, have proudly said, the club's financial position is healthy as the £35m debt was wiped out when Bates and his fellow directors put Leeds into administration.
So did the investors, having waited through the rebuilding from League One under Simon Grayson's inspirational management, market the club far and wide, to Gulf state sheikhs and US sports-franchise owners, but find Ken Bates, with his offshore company, the one person offering the best deal?
Bates told the high court, in a libel action brought against him by the former Leeds director Melvyn Levi in 2009, which Bates lost, that he had never put money into Leeds. Bates said he did not have cash; his wealth is mostly tied up in assets. So is this a good deal for Leeds fans who might think, with a bit of investment, their club could be in the Premier League?
Yet of all these questions, the most curious episode in the Leeds United ownership saga remains the way Leeds emerged from administration. In that financial wreckage one offshore company, Astor Investment Holdings, was owed £17.6m after the two years in which the club was owned by the Forward Sports Fund, a company registered in the Cayman Islands, and run by Bates. There were four competing bids to buy the club, one of which was Forward, which wanted to install Bates as the chairman again.
The administrator, Richard Fleming of KPMG, said Bates, his solicitor Mark Taylor and Harvey had stated there was no connection between Bates or Forward and Astor. Yet Astor said it would write off millions of pounds if Forward was allowed to have the club back with Bates as the chairman. If a competing bid for Leeds was accepted, Astor would add its £17.6m to the debts for repayment.
When that issue came up in the libel trial the judge, Sir Charles Gray, told Bates he was "exceedingly puzzled" about why Astor would "kiss goodbye" to so much money, if it had no connection to Bates and Forward.
Bates replied that he could only "presume" Astor wrote off its £17.6m because "there would be the option for business in the future", if he and Forward remained in control. Presumably the company believed it would not have the opportunity to lend more money to Leeds if anybody else took over.
In the two years since, Astor never did lend money to Leeds United again. When Bates wanted the club to buy back their Thorp Arch training ground he sought a loan from Leeds city council, which ultimately was not agreed.
Some chinks of disclosure in the ownership of Leeds have emerged in a court action Bates himself brought in Jersey against a company, Admatch, he claims owed the club money. First it was revealed that Astor had actually owned Forward originally, then Taylor said that connection had been "severed" in late 2006, before the Leeds directors put the club into administration.
Bates's solicitor then told the court that he and his long-term Guernsey-based financial adviser, Patrick Murrin, owned Forward Sports Fund, being the sole owners of two "management shares". Subsequently, however, Bates told the court in a sworn affidavit that was not correct, he had made "an error", and in fact did not have a management share. Instead Murrin and Peter Boatman, "a representative of a Geneva-based fiduciaire [financial administrator]", owned the management shares, on behalf of investors.
"This information has only just come to light," Bates told the court. In that affidavit, he said that although he was authorised to manage Leeds, "Neither I, Mark Taylor or Shaun Harvey are able to confirm who the ultimate beneficial owners of Forward are."
Now, apparently, nobody will ever know, and Leeds believe they have put a lid on all the questioning. Those never-named beneficial owners, who had no connection to Bates, for whom Astor wrote off millions so it and Bates could remain charge, have now sold to Bates "for an undisclosed sum". Why it did, why now, why to Bates, and how much he paid, nobody is to be told.
Yet Leeds are confident neither the Football League nor Premier League rules require any more information to be given.
"This change in ownership structure … delivers the transparency sought," said Leeds United, now owned by the 79-year-old Monaco-based Ken Bates, via Nevis, in the West Indies.
Why did Leeds sell to Ken Bates, who claims he has no money to invest?
Leeds United's mystery owners have just sold out to Ken Bates for an 'undisclosed sum' at a time when they stood a good chance of realising a thumping return on their outlay
David Conn
Ken Bates was attempting to "end the speculation" and settle what he derided as "scaremongering" over Leeds United's anonymous offshore ownership by announcing todaythat he has finally bought the club himself. Characteristically of this saga, in which the proud Yorkshire club have been owned by unnamed beneficiaries of trusts in tax havens since Bates arrived as chairman in 2005, he said he had bought Leeds from those anonymous owners "for an undisclosed sum", via a company, Outro Ltd, registered in a tax haven – Nevis, in the West Indies.
Leeds said in an official club statement that the "change in ownership structure" was meant to settle the issue, the lack of transparency over who owns Leeds, in which the Premier League and the football inquiry by the culture, media and sport select committee has recently taken a keen interest. Yet many more questions are prompted by this move than Leeds are answering.
Will Leeds supporters, the wider football public and the parliamentary select committee ever be told who those owners were? Why, after buying Leeds back after administration in 2007, seeing the club up from League One and to the brink of the playoffs for Premier League promotion, did those owners decide to sell now? Leeds's statement said the reason was to satisfy the Premier League whose chief executive, Richard Scudamore, told the select committee inquiry last month that if Leeds were promoted he would seek more details about the owners than the Football League had required.
"The Football League have chosen not to apply the rule as robustly as we think we will be applying it," Scudamore said.
That, though, seems a strange reason for the offshore owners to sell. Their investment would have been worth a fortune, at last, if Leeds did win promotion, so why would they not have happily furnished Scudamore with any information he wanted?
And when they decided to sell, whatever their reasoning, why to Bates? Leeds is widely regarded as one of the last remaining good prospects as a football club to buy – in a one-club city, with a huge support which has stayed solidly loyal, paying eye-watering ticket prices in League One and the Championship. As Bates and the chief executive, Shaun Harvey, have proudly said, the club's financial position is healthy as the £35m debt was wiped out when Bates and his fellow directors put Leeds into administration.
So did the investors, having waited through the rebuilding from League One under Simon Grayson's inspirational management, market the club far and wide, to Gulf state sheikhs and US sports-franchise owners, but find Ken Bates, with his offshore company, the one person offering the best deal?
Bates told the high court, in a libel action brought against him by the former Leeds director Melvyn Levi in 2009, which Bates lost, that he had never put money into Leeds. Bates said he did not have cash; his wealth is mostly tied up in assets. So is this a good deal for Leeds fans who might think, with a bit of investment, their club could be in the Premier League?
Yet of all these questions, the most curious episode in the Leeds United ownership saga remains the way Leeds emerged from administration. In that financial wreckage one offshore company, Astor Investment Holdings, was owed £17.6m after the two years in which the club was owned by the Forward Sports Fund, a company registered in the Cayman Islands, and run by Bates. There were four competing bids to buy the club, one of which was Forward, which wanted to install Bates as the chairman again.
The administrator, Richard Fleming of KPMG, said Bates, his solicitor Mark Taylor and Harvey had stated there was no connection between Bates or Forward and Astor. Yet Astor said it would write off millions of pounds if Forward was allowed to have the club back with Bates as the chairman. If a competing bid for Leeds was accepted, Astor would add its £17.6m to the debts for repayment.
When that issue came up in the libel trial the judge, Sir Charles Gray, told Bates he was "exceedingly puzzled" about why Astor would "kiss goodbye" to so much money, if it had no connection to Bates and Forward.
Bates replied that he could only "presume" Astor wrote off its £17.6m because "there would be the option for business in the future", if he and Forward remained in control. Presumably the company believed it would not have the opportunity to lend more money to Leeds if anybody else took over.
In the two years since, Astor never did lend money to Leeds United again. When Bates wanted the club to buy back their Thorp Arch training ground he sought a loan from Leeds city council, which ultimately was not agreed.
Some chinks of disclosure in the ownership of Leeds have emerged in a court action Bates himself brought in Jersey against a company, Admatch, he claims owed the club money. First it was revealed that Astor had actually owned Forward originally, then Taylor said that connection had been "severed" in late 2006, before the Leeds directors put the club into administration.
Bates's solicitor then told the court that he and his long-term Guernsey-based financial adviser, Patrick Murrin, owned Forward Sports Fund, being the sole owners of two "management shares". Subsequently, however, Bates told the court in a sworn affidavit that was not correct, he had made "an error", and in fact did not have a management share. Instead Murrin and Peter Boatman, "a representative of a Geneva-based fiduciaire [financial administrator]", owned the management shares, on behalf of investors.
"This information has only just come to light," Bates told the court. In that affidavit, he said that although he was authorised to manage Leeds, "Neither I, Mark Taylor or Shaun Harvey are able to confirm who the ultimate beneficial owners of Forward are."
Now, apparently, nobody will ever know, and Leeds believe they have put a lid on all the questioning. Those never-named beneficial owners, who had no connection to Bates, for whom Astor wrote off millions so it and Bates could remain charge, have now sold to Bates "for an undisclosed sum". Why it did, why now, why to Bates, and how much he paid, nobody is to be told.
Yet Leeds are confident neither the Football League nor Premier League rules require any more information to be given.
"This change in ownership structure … delivers the transparency sought," said Leeds United, now owned by the 79-year-old Monaco-based Ken Bates, via Nevis, in the West Indies.
