Wednesday, May 30, 2012

Leeds United takeover talks: All signs point to a deal in the offing

Yorkshire Evening Post 30/5/12
Chief football writer Phil Hay looks at the implications of Leeds United’s takeover talks announcement.
Ken Bates has a stock response to anyone who approaches him with promises of meaningful investment in Leeds United.
“We have two golden rules,” he said last year, 24 hours after revealing himself as the club’s new owner. “We say ‘the identity of a proposed investor, proof of funds in a London bank.’ That usually gets rid of most of them.”
In the past decade, rumours of impending investment at Leeds have often proved to be no more than speculation but the fact that an interested party were present at Elland Road six days ago suggests the individuals concerned have already cleared the first hurdle facing them.
The group, described as North American, took a tour of United’s stadium and their training ground at Thorp Arch last Thursday as whispers of a buy-out began to circulate in the city around them.
It was an intriguing end to a concerning week in which doubts surfaced about the club’s ability to fund either the number or the quality of signings planned by Neil Warnock for his first full season as United manager.
Warnock made his first summer signing on May 4, paying £500,000 to land Jason Pearce from Portsmouth, but his attempt to follow up that deal with a £400,000 purchase of Joel Ward was frustrated by Leeds’ failure to put up the fee.
Ward slipped through Warnock’s fingers on Monday, joining Crystal Palace instead, and other proposed signings are under threat. The YEP understands that Warnock has been similarly unable to finalise an agreement to bring Derby County midfielder Paul Green – another of his targets – to Elland Road on a free transfer.
The lack of progress in the transfer market, at a time when Warnock hoped his squad would begin taking shape, pointed to two possibilities: a shortage of available cash at Elland Road or the potential arrival of new owners.
Bates, United’s chairman and majority shareholder, has rarely given any indication of a willingness to relinquish control but confirmation of discussions in Leeds last week has given the idea some credence.
A statement from Leeds read: “The club can confirm that talks are taking place regarding investment for the long-term future. “The club has always publicly stated that it would welcome potential investment but has maintained a belief whereby the quality of the investor is the most important factor in terms of the long-term development of Leeds United.”
The YEP has been told of a second consortium with an interest in purchasing Leeds, though the group are not believed to have made contact with United.
A source involved in the consortium, which has links to both England and the Middle East, admitted they were “some distance away” from being ready to table a bid for Leeds and said investment in another English club was also under consideration.
Leeds have long been seen as one of the more attractive investments in English football, despite the fact that the club do not own either Elland Road or their Thorp Arch training complex and pay more than £2million annually to lease both properties.
The club have made pre-tax profits totalling more than £10million since the summer of 2007 and posted a gain of £3.5million at the end of the 2010-11 financial year.
United’s rental agreement for Elland Road includes a buy-back clause which, according to the club’s most recent set of accounts, would cost £14.85million to exercise.
Richard Cramer, a specialist in sports law with Front Row Legal in Leeds, told the YEP: “My objective view is that Leeds as a club are a good investment but anyone who plans to get heavily involved at Elland Road is going to need serious money. They won’t get the club at a snip.
“In the first instance, I can’t see the club being cheap to buy and there’s a lot more to this than simply taking over. After that you’ve got the cost of investing in infrastructure – dealing with the stadium and the training ground for example – and the cost of building a squad good enough to take Leeds into the Premier League.
“Even then you’ve got the pressure to continue on the up and up. I don’t see the supporters accepting what happened to Burnley or Blackpool – where you go up for a season and come straight down with parachute payments to play with. The club are an attractive proposition, provided you’ve got the right financial credentials and the right vision.”
United expect to raise transfer funds through the summer sale of transfer-listed midfielder Adam Clayton, and the club stand to receive compensation if winger Aidan White turns down a new contract and leaves Elland Road.
Leeds are also likely to listen to offers for Ross McCormack, who has rejected the club’s offer of a new deal and is out of contract in 12 months’ time, but cash received through substantial outside investment could spectacularly change the landscape facing Warnock.
United underwent a change of ownership as recently as April of last year when Bates announced that he was buying a 72.85 per cent stake in the club from previous owners, Forward Sports Fund (FSF).
Leeds were heading for a seventh-placed finish in the Championship at the time but the club struggled to make a sustained challenge for promotion this season, ending the campaign in 14th place.
Their income in the past 12 months is likely to have been affected by a notable drop in attendances and the club are committed to using season-ticket money from both the 2012-13 and 2013-14 campaigns to repay a loan taken out to fund the recent development of the East Stand at Elland Road.
Cramer said: “If I was advising anyone about investment in English football then I’d certainly suggest they look at Leeds United.
“But you’d need to show the colour of your money to get involved there and it seems clear to me that investment is needed at Elland Road. You don’t get the impression that there’s a huge amount of cash available.”

Quality of investors is crucial, say Leeds United

Yorkshire Post 30/5/12
By Ian Appleyard
LEEDS United have confirmed that talks are taking place with potential investors following a season of unrest at Elland Road. Chairman Ken Bates, who took control at Leeds seven years ago, has been the subject of protests from a section of supporters who question his ambitions for the club.
The identity of the potential investors has not been revealed but Yorkshire Post sources say that one is based in North America. It is understood at least three groups have declared an interest in Leeds with a Chicago-based would-be investor – thought to have inspected the club’s facilities last week – believed to be the frontrunner.
However, Maple Leaf Sports and Entertainment (MLSE) – the owners of Canadian ice hockey team Toronto Maple Leafs – denied any involvement via Twitter yesterday, saying: “We love the enthusiasm of #LUFC Fans! However to repeat our response from last week – there is no truth to the rumours.”
And Jon Pritchett, chief executive of Chicago-based Club 9 Sports, said there had been ‘no discussions whatsoever’ between his company and Leeds.
Club 9 made an unsuccessful bid to acquire a major stake in Sheffield Wednesday two years ago and have subsequently been linked with both Rangers and Tranmere Rovers.
A spokesman for Leeds United said: “Further to media reports on Tuesday, the club can confirm that talks are taking place regarding investment for the long-term future.
“The club has always publicly stated it would welcome potential investment but has maintained a belief...the quality of the investor is the most important factor in terms of the long-term development of Leeds United. No further comment will be made at this stage.”
The Leeds United Supporters’ Trust (LUST), whose board members are currently banned from buying tickets at Elland Road, have been seeking out new investors for the last three months.
Accounts published recently showed that Leeds made a profit of £10m in the last four years but, although sizeable amounts have been spent on ground development, the team lost several top players and finished only 14th in this season’s Championship.
New manager Neil Warnock has already seen one of his top targets – Portsmouth defender Joel Ward – slip from his grasp to join Crystal Palace in a £400,000 deal. Highly-rated Scottish internationals Robert Snodgrass and Ross McCormack, meanwhile, have yet to sign new deals and may yet leave.
A Trust spokesman said: “We want change at the club whether with Ken Bates or with someone else. We want a better relationship with the club and a good team. We want people in charge who share our ambition for the club. If this is what comes about as a result of these talks, we will be very excited.”
The Trust is aware several parties have expressed interest and say at least one bid is on the table.
“In February we responded to Ken Bates’s suggestion that we ‘put our money where our mouth is’ by asking any potential investors who shared the aims and ambitions of our members and of our Vision Statement to contact the Trust with a view to working together to take Mr Bates up on his offer. Our members increasingly tell us that they feel a change of ownership would be the best route towards positive change at Leeds United.
“On Friday, we invited our members and Leeds fans everywhere to let us know their thoughts about the summer so far and we received hundreds of emails.
“The clear and resounding message from our members was that they have completely lost faith in the current Leeds United board’s ability to deliver a successful football club.
“Following the failure to meet Neil Warnock’s target of signing a new group of players before his holiday deadline and Robert Snodgrass’s comments about past promises not being met, and after last season – which saw players sold, failure on the pitch, and the season ticket income used to finance corporate facilities rather than new players – our members firmly believe that new owners and a new board are required at Leeds United to match the ambition of the fans, the players and the manager.
“We developed a presentation so interested parties could see how working with LUST could help them and have been in contact with a number of people to explore ways of bringing about change for the better at Elland Road.
“We have spoken to two groups who are interested in buying Leeds. At this stage, it is not possible for us to go into details as, with a firm offer on the table, we would not want to jeopardise any current negotiations.
“We are sure that the news of discussions around the sale of the club will be warmly welcomed by our members and make disaffected supporters feel more optimistic about the future,” he added.
LUST is a Supporters’ Trust affiliated with Supporters Direct and has almost 5,500 members.

Leeds United takeover talks: US bidders make their move for Whites

Yorkshire Evening Post 30/5/12
By Phil Hay
An American group are behind advanced plans for a takeover of Leeds United, the Yorkshire Evening Post can confirm. The mystery consortium – believed to be based in Chicago – are looking to secure a major shareholding in Leeds after travelling to England for talks last week.
The YEP understands that members of the group were shown around Leeds’ stadium and Thorp Arch training ground on Thursday with a view to pushing through a buy-out of the Championship side.
United chairman Ken Bates currently holds a controlling interest in Leeds having acquired 72.85 per cent of the club’s shares last year.
Bates purchased the stake for an undisclosed sum from former owners Forward Sports Fund (FSF), buying FSF’s interest through another offshore firm, Outro Limited.
United are actively seeking investment, however, and have attracted serious interest from across the Atlantic, leading to meetings in Leeds in the past seven days.
The identity of the American group is as yet unconfirmed but Chicago firm Club 9 Sports, who tried unsuccessfully to buy Sheffield Wednesday in 2010, are not involved in the bidding, with chief executive Jon Pritchett saying the company “have had no discussion whatsoever about Leeds United.”
In a short statement, Leeds said: “The club can confirm that talks are taking place regarding investment for the long-term future.
“The club has always publicly stated that it would welcome potential investment but has maintained a belief whereby the but has maintained a belief whereby the quality of the investor is the most important factor in terms of the long-term development of Leeds United.”
Leeds have been financially stable since their insolvency in 2007 but the need for an injection of cash at Elland Road appeared to be underlined by the club’s recent failure to tie up the signing of Joel Ward from Portsmouth.
The 22-year-old was primed for a move to Leeds after holding discussions with manager Neil Warnock three weeks ago but Ward signed for Crystal Palace on Monday with United unable or unwilling to pay the £400,000 fee set by Portsmouth’s administrators. Leeds are under growing pressure to back Warnock in the transfer market having finished 14th in the Championship this term and seen their average home attendance fall by more than 4,000.
Warnock has so far been able to secure only one new signing - centre-back Jason Pearce from Portsmouth - and the struggle to land Ward raised serious doubts about the current board’s ability to supply Warnock with the funds needed to compete for promotion next season.
But the prospect of major investment has now come to light with business figures in Leeds believing any serious offer of investment would constitute an attempt to take full control of the club, rather than the purchase of a minority stake.
Maple Leaf Sports and Entertainment (MLSE), a Canadian company who own ice hockey club Toronto Maple Leafs and Major League Soccer team Toronto FC, were initially said to be behind last week’s approach but they like Club 9 Sports have denied any interest in buying Leeds.
Beyond the American approach, the YEP is aware of one other party tentatively interested in taking charge at Elland Road. The group has connections to both England and Dubai but no official approach has been made by them.
Bates, 80, has been chairman of Leeds since 2005 when he fronted a takeover from the board headed by ex-chairman Gerald Krasner. Having remained in charge after United’s administration in 2007, he bought FSF’s shares in April of last year amid growing questions about the ownership structure at Elland Road.

Bates puts whopping £80m price tag on LUFC?

To Ell And Back 30/5/12
According to the not-so reliable Daily Mail, Ken Bates has told a mystery Canadian consortium to stump up a massive £80m if they wish to buy the club.
The Mail report that Bates has been offered a more modest £40m, however due to the complexities as to who actually owns the ground and Thorp Arch etc it is unlikely they will up the ante.
It appears that our beloved owner/chairman has realised his time is up at ER and the more he can make out of handing over the reigns to a new owner, the better for him.
Bates endured a season of conflict with supporters over perceived lack of investment in the squad over stadium redevelopments. However the ultimate embarrassment came last week when Captain Robert Snodgrass openly questioned Bates' ambition on the field and indicated this would be a massive factor in deciding his own future at the club.
Bates however has insisted that Leeds went over budget on transfer spend, Including signing on fees and wages last season following the dismissal of Simon Grayson. However a Watford player I was talking to after their 2-0 win in March alleged that he would have been a Leeds player "had it not been for your chairman".
Joel Ward, another reported target, has joined Crystal Palace for £400,000 this week with the claim that Leeds were unable to raise the capital to pay for the transfer fee up front needed by his then club Portsmouth. This set alarm bells ringing that either Leeds were facing another period of financial trauma or the chairman was heading towards an uneasy stand-off with boss Neil Warnock.
The weekend saw rumours of a takeover begin on social networking sites and the net in general.
Whilst Bates should be rightfully be credited for stepping in back in January 2005 and saving us from oblivion, his austerity measures are hard to argue against particularly after the "boom and bust" years of Ridsdale. However our Championship status now is a far cry from the rumoured £37,000 a week lavished on Seth Johnson and £65,000 on Mark Viduka. Having seen some of our best players move to lesser Championship clubs or Norwich there is a feeling we are not competitive on the wages front anymore.
Surely the biggest marketing draw for the hospitality packages will be a team who are worth watching who have a genuine chance of promotion, not a lower mid-table side like last season who punched above it's weight and collapsed after Christmas?
Let's hope that a comfortable retirement is imminent for Ken and he hands the club over to sensible owners with realistic and genuine ambitions.

Tuesday, May 29, 2012

Confirmed: Possible Takeover With Bid On The Table

The Scratching Shed 28/5/12 After days of takeover rumours, Leeds United Supporters Trust have confirmed that there is ‘firm’ interest in buying the club on their blog, and on Twitter, while the club has released an official statement acknowledging talks (see below). Talks are believed to have taken place last week between one group and the club, and so the potential takeover might be at a fairly advanced stage.
L.U.S.T. wrote:
In February we responded to Ken Bates’ suggestion that we “put our money where our mouth is,” by asking any potential investors, who shared the aims and ambitions of our members and of our Vision Statement, to contact the Trust with a view to working together to take Mr Bates up on his offer. We developed a presentation so interested parties could see how working with L.U.S.T. could help them, and have been in contact with a number of people to explore ways of bringing about change for the better at Elland Road. As part of this ongoing work, we have spoken to two groups who are interested in buying Leeds United. At this stage it is not possible for us to go into details about our conversations with these groups, as with a firm offer on the table we would not want to jeopardise any current negotiations.
They broke the news first on Twitter:
The Trust can confirm that there is a firm interest in buying #LUFC. As soon as we have updates we will let our members know #twitterwhites
We are aware that there is a bid on the table. At the moment in time we cannot say anything further. #lufc #twitterwhites #TOMA We can also confirm that we have held talks with two interested parties #lufc #twitterwhites #TOMA
Phil Hay of the Yorkshire Evening Post also tweeted his understanding of the situation:
Re tweets about investment/takeovers at #lufc – I’m aware of firm interest but still trying to establish full details Been told of two separate parties who are interested in #lufc, one seems to be much further down the line than the other.
Has to be said that at this stage I’ve no idea how likely either is to come to anything. Seen so many takeover rumours in the past few years
So three days after the first rumours started, we have some confirmation that there is serious interest in the club. Let’s just remember there’s a difference between an offer and a successful takeover.
Update – This morning the YorkshirePost have been digging for more information.
Phil Hay tweeted:
It looks like there’s one dog in this fight. The second group I spoke of say they are “some distance away” from finalising a bid for #lufc
While Richard Sutcliffe tweeted:
All those q’s re takeover, sorry no reply but been digging. talks def on, incl with nth american gp (but def not maple leaf owners) #lufc
Update – Leeds United have released an official statement:
Further to media reports on Tuesday morning, the club can confirm that talks are taking place regarding investment for the long-term future.
The club has always publicly stated that it would welcome potential investment, but has maintained a belief whereby the quality of the investor is the most important factor in terms of the long-term development of Leeds United.
No further comment will be made at this stage.
This hints at a major investment instead of a takeover. It might be worth remembering that Roman Abramovich was supposed to be a major investor with Ken Bates staying on, before the two fell out. Madejski has only sold 51% of Reading which means neither was a “full” takeover. All other sources seem to point towards the interest being very real, and being takeover based, though. As the statement says, the club is looking for a ‘long term’ investor – perhaps a hint towards a minor shareholder now, with the agreement to purchase a majority holding later?
Update – After the Official Statement, the story has been picked up by Sky Sports News who say they believe this is a takeover and that there were talks held in Leeds last week over this deal.
Update – The Trust have just tweeted:
The groups that we have spoken to wish to acquire the club. #LUFC #twitterwhites
Update – Nothing earth-shattering, but BBC News have published the story with some quotes from LUST:
LUST would like to stress to all of the parties interested in buying Leeds United that building a good relationship with the supporters must be one of their first priorities.
Update – Probably nothing, but @MLSEPR (the PR dept for Maple Leafs Sports and Entertainment Ltd) has announced they will have a ‘soccer announcement’ at 11:30am Toronto time (that’s 16:30 for Brits). Probably nothing, but then after a couple of days rejecting the idea that they were ready to takeover Leeds United the Leafs responded to Adam Pope of BBC 5Live with:
RE #lufc “At this time we can not comment on the business transactions taking place within the TFC. Thanks for your understanding.”
MLSE were strongly rumoured to be interested in Nottingham Forest recently, and were also strongly rumoured to be interested in purchasing Leeds a while back.
Update – I bet MLSE are loving the free publicity! They’ve just tweeted, probably for the last time on this:
We love the enthusiasm of #LUFC Fans! However to repeat our response from last week – there is no truth to the rumours. #leedsunited
Update – BBC Look North have revealed that the current favourites to takeover the club are based in Chicago, while an interview with LUST’s Lee Hicken has reinforced that the groups the Supporters Trust have talked to are interested in a full takeover.

Leeds United Takeover Rumour: The Origins Story

The Scratching Shed 28/5/12
I’ve received a lot of tweets and emails over the last 24 hours asking how the latest Leeds United takeover rumour managed to create mass hysteria without any comment from the club or rumours posted in the national rags.
Generally speaking, Leeds United takeover rumours start on an internet forum or across the social media sites and are shot down in seconds because the original perpetrator lacks any kind of credibility. The story is usually something along the lines of “I have it on very good authority that [random billionaire] has made an offer for Leeds United.” This is invariably followed by hysterical laughter from everyone reading, a quick cross-examination to tear the story to bits and in many cases, the sudden disappearance of the original poster.
How The Latest Rumour Began
This particular Leeds United takeover rumour started out in much the same way as every other Leeds United takeover rumour, with a couple of threads opened up on various Leeds United forums – most notably WACCOE.
As per the norm, the rumour was dismissed as the work of a WUM (forum slang for wind-up merchant). That was until the chairman of LUST posted on WACCOE stating (rather cryptically) that people shouldn’t be so quick to dismiss speculation this time around. As his cross-examination began, one of The Square Ball writers also suggested there was more to this particular rumour than your standard internet nonsense, which changed the mood entirely and led many to believe there may well be something going on.
The reason these people were afforded more credibility than your average forum poster is that they both have reputations to uphold in one way or another. The Square Ball is an award winning Leeds United fanzine that’s worked hard to uncover truths behind Leeds United’s current ownership and would be doing itself no favours by adding authority to unsubstantiated rumours. Similarly, The Leeds United Supporters Trust has grown into a large and credible organisation that represents our fans and wouldn’t want to risk the credibility it’s worked hard to create by inventing takeover rumours.
It’s important to stress that no one from LUST or The Square Ball has confirmed a takeover is in progress – they’ve merely stated (or suggested) that rumours which were already doing the rounds shouldn’t be so quickly dismissed.
Facts Forced To Fit
Because Leeds United fans are so desperate for some good news, many people resorted to making facts fit the rumour (ourselves included). The football club has been incredibly silent on the matter (and everything else for that matter) offering no denial of a takeover bid, which is pretty unusual, even for a club with the poor communications Leeds United are regularly criticised for.
Usually when rumours like this do the rounds, Ken Bates will take great pleasure in quashing our hopes by telling us how idiotic we’ve all been. If the club are feeling a bit more diplomatic then Paul Dews is usually the one to release a statement via Twitter or the official site. As things stand, Ken Bates has decided not to speak to Yorkshire Radio for a while and Paul Dews claims to know nothing.
There have been plenty of other facts and theories used to back-up the rumour, but Ken Bates’ silence is the one that is having the biggest effect. Some people have suggested he may be on holiday at the minute or simply has nothing to talk about, but it’s worth pointing out that Ken Bates was interviewed by Yorkshire Radio every week last summer and I’m almost certain he’s taken the call whilst on holiday before now. As for Ken Bates having nothing to talk about – when has that ever stopped him before?
The Chinese Whispers Effect
As with all rumours, there was a Chinese whispers effect that took place almost immediately. It’s the internet version of some drunk bloke down the pub telling you the “inside scoop” on all things Leeds United. Someone claims to know someone else who works at Elland Road (or connected to the alleged takeover attempt) and has decided to come online to share this highly sensitive information with the rest of the world – rather than sell it to a tabloid like the rest of us would.
The most impressive of these rumours was the alleged interest of Maple Leaf Sport & Entertainment Group. This was impressive partly because of the huge scale it reached, ultimately forcing a denial of interest from MLSE via their Twitter page (Link 1, 2, 3) after Leeds United fans had the “news” trending worldwide. What was also impressive is that MLSE are linked every single time a takeover rumour does the rounds – and yet people still believe they’re interested this time!
More Questions Than Answers?
Join the club.

For the record, I’m not “in the know” (why would I be?) and nor would I ever claim to be.
The obvious question is why would people from TSB and LUST know something the rest of us don’t? In all honesty, I have no idea. TSB has been around a lot of years and will have some contacts at the club, whilst LUST may have been approached by a representative of an interested party looking to form a closer bond with supporters – Ken Bates has never really grasped this fact, but it’s generally good business practice to keep your customers happy. I’m only speculating of course, your guess is as good as mine.
Truth be told, I’m kind of on the fence. On the one hand, I’ve been writing this site for four years now and there’s been more takeover rumours in that time than there has transfer rumours. We’ve all been burned before by false rumours, and it’s difficult to believe anything nowadays. On the other hand, I find it strange that the club hasn’t quashed the speculation. They don’t comment on all speculation – obviously – but they do tend to say something when things get this out-of-hand. If a Canadian Ice Hockey team can manage a quick statement, surely LUFC can? Finally there’s the cryptic comments from LUST and TSB, neither of which I have any reason to doubt. Neither of them have invented rumours/news previously, why would they start now?
I’m leaning more towards “there’s something in this” the longer it goes on…

Sunday, May 27, 2012

Snodgrass reveals new doubts

Yorkshire Evening Post 22/5/12
By Leon Wobschall
Robert Snodgrass has cast fresh doubt over his Leeds United future – and admits he is unsure whether the club’s ambitions match his own.
The United skipper is mulling over whether to accept United’s offer of a contract extension, which would make him the highest-paid player at Elland Road, and is expected to reveal his decision next month.
The Scottish international’s current deal runs out next summer, with the club keen to secure his long-term future.
But with so much to consider in the light of United’s failure to win promotion and the possibility of renewed Premiership interest, the 24-year-old isn’t rushing into things and has reiterated he will put his family first when he arrives at his decision.
He said: “The next decision for me is vital. But it’s not about me, it’s about my family and making the right decision for them. I have a wife and daughter now, plus there’s my mum and dad who have always stood by me when times were tough.
“The chairman is trying to put a bit of pressure on me. He’s telling me what planshe has got for the club. But they told me the same type of plans the season before and it didn’t work out. So it’s hard to buy into these things again.
“I’m captain now, so I should be able to just sit back and let everything else happen. But it’s a wee bit unfortunate that I’m in this situation. I’ll make the right decision when the time comes.”
Snodgrass added that his desire to become a Scotland international regular would also be an influence in his final decision, while admitting he would not rely on manager Neil Warnock to orchestrate a dream move for him into the Premiership – if he commits to Leeds, but the club find themselves out of the promotion picture next season.
Snodgrass, capped five times by his country, said: “The Scotland manager has told me a few times that there is a window of opportunity for progress. I need to think about that as well.
“It’s hard for an international manager to throw a Championship player in at the deep end for some of these big World Cup or European Championship qualifiers. He’s got a job to do and needs to pick his best possible eleven. If you are playing with better players in the Premier League, then it only helps Scotland as well.
“I’d love to get into the Premier League. I would love it to happen with Leeds United. I’m captain now, which is something new to me and a different challenge.
“To lead Leeds United back into the Premier League would be a dream come true. The full place would be absolutely buzzing.
“But who knows whether he (Warnock) has got one or two years left at Leeds? If it’s one year and I don’t sign the contract, then I’ll be free next year. If I do sign, I’d have another year left and be in the same situation I am in now.
“So it’s all right for him to say he could get me a move, but if he leaves, then the people up above him in the football club are not going to worry about what he said. My future doesn’t lie in the hands of Neil Warnock, it’s in the hands of Robert Snodgrass. “I just need to take each step as it comes, I’m sure the manager has the best interests of the club at heart. If I move on, the club keeps rolling on. It’s a business and he’ll know he can bring in new players to replace me.”

Saturday, May 19, 2012

Leeds United – Marching On Together?

Swiss Ramble 18/5/12
So another season passes with Leeds United failing in their attempt to return to the top flight. Having narrowly missed out on the play-off places the previous season, hopes were high that this could be their year, but the Whites went backwards, ending up in the bottom half of the Championship. Poor results resulted in the January dismissal of manager Simon Grayson, who had guided the team out of League One two years ago, to be replaced by the experienced Neil Warnock.
However, there was little improvement, though Warnock’s cause was not helped by the timing of his arrival – one day after the transfer window closed. That said, given the limited investment in the squad in the last few years, it is doubtful whether Warnock would have been able to spend much in any case.
In fairness to Grayson, it must have been difficult for him to make significant progress, as the club has got into the habit of selling its best players. Before a ball was even kicked, goalkeeper Kasper Schmeichel was sold to promotion rivals Leicester City, and then tricky Ivorian winger Max Gradel, Leeds’ player of the year, joined French club Saint-√Čtienne in August.
The fans’ unhappiness was compounded in January when club captain (and local boy made good) Jonny Howson was transferred to Norwich City. Leeds argued that this was good business, as he was in the last year of his contract, but this was not the first time that the club had allowed itself to get into such a situation. In much the same way, other decent players, such as Jermaine Beckford (to Everton) and Bradley Johnson (also to Norwich) had exited stage left.
This lack of ambition is infuriating to most supporters, especially as it is in marked contrast to a ticket pricing strategy that is Premier League in all but name. Even new captain, Robert Snodgrass, was moved to break ranks after Howson’s unpopular transfer, “How can you say you’re aiming for promotion and then sell your captain?”
It’s not so long ago that Leeds United were a force at the very highest levels, reaching the Champions League semi-finals in 2001, before being eliminated by Valencia. This was in the middle of a purple patch when they finished in the top five of the Premier League every season between 1998 and 2002. Leeds were actually the last club to win the old First Division before the creation of the Premier League in 1992.
Going back further, Don Revie’s Leeds side had been even more potent, never finishing out of the top four between 1965 and 1974, winning two league titles in the process in 1969 and 1974, before the FA chose him as England manager. Known far and wide as “dirty Leeds”, this team could also play a bit, as seen when Jimmy Armfield steered the team to the 1975 European Cup Final, where they were defeated by Bayern Munich (in hugely controversial circumstances).
In short, Leeds United were a genuine big club for many years, though they spectacularly imploded after chairman Peter Ridsdale’s catastrophic attempt to “live the dream” resulted in a financial nightmare. Before the likes of Chelsea and Manchester City brought in their billionaire benefactors, Leeds reported the largest ever loss by an English football club of £49.5 million in 2003 (after a £34 million loss the previous year).
Ridsdale’s decision to “go for it” could be described as courageous, though reckless and irresponsible would seem more appropriate. When he jumped ship in 2003, Leeds were around £100 million in debt, after a grand acquisition strategy using innovative finance models, i.e. other people’s money, to fund player purchases. These included high interest sale-and-leaseback arrangements, which allowed Leeds to spread the cost of buying a player over the length of his contract, and a £60 million loan, a record for English football at the time, which was essentially secured on supporters’ loyalty, i.e. future gate receipts.
A consortium of local businessmen, led by insolvency specialist Gerald Krasner, took over Leeds, but the damage was done. When results on the pitch did not improve, the club could not sustain the massive wage bill, leading to a fire sale of players and many other important assets, including the stadium and the Thorp Arch training ground. The financial turmoil ultimately resulted in two relegations with Leeds dropping to the third tier of English football for the first time in 2007.
Before that fateful day, Ken Bates had appeared on the scene with the former Chelsea owner looking for “one last challenge.” Even after all the sales, Krasner’s motley crew was still struggling to make ends meet, so a 50% stake was sold to the old bruiser for a reported £10 million in 2005. Or rather to a company called the Forward Sports Fund (FSF).
Despite extensive cost-cutting measures, two years later the club entered administration in May 2007 via a Company Voluntary Arrangement (CVA) with debts of around £35 million, incurring a 10-point deduction from the Football League, which officially relegated Leeds to League One.
The CVA was challenged by HMRC following an initial offer to settle debts at just one penny for every pound owed, but eventually went through (at an undisclosed higher payment) after it was approved by the required majority of 75% of the voting creditors.
Crucially, one of the major creditors, Astor Investment Holdings (an offshore company registered in the British Virgin Islands), said that they were willing to write-off their £17.6 million loan, but only if FSF remained in charge with Bates as chairman. This seemed extraordinarily generous, not only because other bidders offered more money, but it meant that they were supporting a man who had effectively lost them their cash.
That does not make much sense – unless Bates was in some way connected to these companies. Indeed, he initially stated that the two shares in FSF were owned by him and his financial advisor, Patrick Murrin, but later corrected this “error” when he revealed hat were in fact 10,000 shares in FSF – with undisclosed owners.
Although the club admitted that there had once been a link between Astor and FSF, they said that this had been severed in 2006 before the club went into administration, an explanation that was accepted by the administrators. This may seem a trivial issue, but it is important, as if there had been a link, then Astor would not have been able to vote on the CVA as an “unconnected” creditor and it would not have been passed.
Whatever the circumstances behind the exit from administration, the result was clear: FSF had retained control of an asset, which was now profitable after the slashing of the wage bill, while clearing almost all of the debts. Of course, this phoenix-like rise from the ashes was perfectly legal, albeit perhaps not the most moral course of action, as it left many bills largely unpaid, including many from small businesses and £7.7 million owed to the taxman.
Leeds United did not get away entirely scot-free, as the Football League imposed a further15-point deduction, due to the club not following its rules on clubs entering administration, which meant that they missed out on automatic promotion from League One and ended up losing to Doncaster Rovers in the play-off final.
The ownership issue was still far from transparent. Indeed, the report from the House of Common select committee on football governance specifically singled out Leeds for criticism with MP Damien Collins stating, “The principle is that it should never be allowed to happen again that football clubs are bought by offshore trusts of which we have no idea who the owners are.”
Under pressure from the Premier League, who require its clubs to publish the names of all shareholders with stakes of 10% or more, the Football League tightened its rules, following which Leeds “clarified” its ownership: Leeds United Football Club Limited was owned by Leeds City Holdings Limited, which was majority owned by FSF, which was owned by three discretionary trust funds, which were in turn owned by Chateau Fiduciare, a Swiss-based trustee.
Far from clearing up the situation, this statement only added to the confusion, bringing to mind Sir Walter Scott’s famous quote, “Oh, what a tangled web we weave, when first we practice to deceive.”
Never mind, because in May 2011 Leeds issued another statement, following the “scaremongering arising out of the football governance inquiry”, which addressed the ownership issue: “The chairman, Ken Bates, has completed the purchase of FSF Limited for an undisclosed sum. FSF Limited is now owned by Outro Limited, which is wholly owned by Ken Bates.”
This was not enough for that man Collins, “Very important questions remain unanswered about the real identity of the previous owners of Leeds United, and the nature of the sale of the club to Ken Bates.” The most obvious question is why FSF would sell at a time when the riches of the Premier League appeared to be within reach, having supported the club through the dog days in League One?
Also, why wouldn’t they hold a beauty contest for other potential bidders to secure the maximum return on their investment? The price that Bates paid was (surprise, surprise) undisclosed, but it is unlikely to be that high, given that the man himself informed the High Court in 2009 that he had little cash with most of his wealth tied up in assets. It is true that there are not too many people rich (or foolish) enough to invest in a football club, but they do exist, e.g. the Liebherr family at Southampton and Vichai Raksriaksorn at Leicester City.
Whatever FSF’s thinking was, Bates is still holding the reins at Leeds. His time as chairman has been colourful to say the least, featuring bans for the BBC and Guardian, when irked by their reports on his activities, and insults aplenty for those fans of the club who have the temerity to disagree with his approach, describing them as “morons” and “dissidents”. That is by no means the end of his seemingly customer hostile strategy, as evidenced by the stratospheric ticket prices.
Even when he made a valid point about adopting a long-term strategy, it was done in a crass manner, “In an age of instant gratification, Leeds United is having a long, drawn-out affair with plenty of foreplay and slow arousal.”
In fairness to Bates, other owners have gone down the path of splashing the cash with little success to show for it, so his prudent policy is not all bad. As he said, “All football clubs are now realising that you have to get your balance sheet and your profit and losses right first and then play football, otherwise as you're seeing every week you won't be able to play football.”
Indeed, he has managed to steadfastly improve the finances at Leeds, while reversing the club’s slide down the divisions, which is an achievement. However, it should be remembered that this financial recovery was originally due to the tactical administration, which cleared the club’s debts and enabled it to start afresh.

 So how do the club’s finances look these days? Not too bad at all.

In 2011 the club made a profit after tax of £3.5 million, which was the highest since the £4.5 million reported in 2008 for the first 14 months after coming out of administration. Even though £2.6 million was due to the club recognising a deferred tax asset arising from previous losses, this still left a solid £0.9 million profit before tax.
Despite a £5.2 million (19%) rise in revenue from £27.4 million to £32.7 million following promotion to the Championship, the profit before tax fell by £1.2 million, as the wage bill grew £2.8 million (20%) and profit on player sales fell by £3.9 million.
Note that these figures relate to the football club (Leeds United Football Club Limited), but there’s not much difference in the holding company (Leeds City Holdings Limited), which reported revenue of £34.5 million and profit before tax of £0.3 million in 2011. In essence, revenue is slightly higher, but profits are lower (by £0.6 million in each of the last two seasons).
In addition to the football club, the holding company owns Yorkshire Radio Limited, Leeds United Media Limited and Leeds United Centenary Pavilion Limited. The latter two companies were only created last year “to allow separate… investment into these particular areas of our business in the future.”
Since coming out of administration, Leeds have been profitable for four consecutive years, a rare feat in the ultra-competitive world of modern football. The combined profits before tax are £7.5 million (2008 £4.6 million, 2009 £0.015 million, 2010 £2.1 million and 2011 £0.9 million), while profits after tax are worth £10.1 million.
In fact, just three out of 24 clubs in the Championship managed to make money in 2011 with Leeds’ £0.9 million only surpassed by Watford £9.6 million and Scunthorpe United £1.5 million. Nine clubs lost more than £10 million, including QPR £25.4 million, Hull City £20.5 million, Middlesbrough £18.7 million and Leicester City £15.2 million.
This is partly a result of low TV money in England’s second tier, but also due to many clubs over-spending in order to reach the promised land of the Premier League. Leeds are very much an exception to this rule. In fact, they are the only club in the Championship to have made profits in both of the last two seasons.
However, the impact of player sales on these results should not be ignored. Excluding the £11.5 million profit made from this activity between 2008 and 2010, the club would have registered losses in each of those three years. As well as normal player sales, the first year after administration benefited from compensation paid by Chelsea for two academy players, Tom Taiwo and Michael Woods. In 2010, the sale of Fabien Delph to Aston Villa transformed a £1.7 million loss into a £2.1 million profit.
The good news is that last season’s profit was entirely due to normal business, as there was no once-off profit on player sales. That was the first year since administration that Leeds made an operating profit (£0.9 million), which represented a £2.6 million turnaround from the previous year’s operating loss of £1.7 million. Next year will be business as usual, as the figures will benefit from the sales of Howson, Gradel and Schmeichel amongst others.
In many ways, it is not that surprising that Leeds are profitable, as their revenue is exceptionally high for a Championship club. At £32.7 million, it is not only the largest in the division, but it is £5-6 million more than the next three clubs in the revenue league (Burnley, Middlesbrough and Hull City), all of whom were boosted by £7.4 million of parachute payments following relegation from the Premier League.
Excluding that factor, it is clear that Leeds United’s revenue is the highest by some distance with the closest contender being Norwich City, whose £23 million is almost £10 million lower. Incidentally, the other clubs promoted to the top tier in 2011 have even lower turnover: QPR £16.2 million and Swansea City £11.7 million. One conclusion is that Leeds are punching well below their weight.
Revenue has risen over 40% since 2008 from £23.2 million to £32.7 million. Much of that is due to the better TV deals in the Championship compared to League One, but the majority comes from gate receipts and merchandising. Put another way, the club is very reliant on the loyalty of its supporter base for its high turnover.
Last season the fans contributed at least £19 million (gate receipts £12.7 million plus merchandising £6.1 million), which represents around 60% of the club’s total revenue of £33 million. If other activities such as catering were broken out of Other Commercial revenue, the proportion would be even higher.
Of course, the high gate receipts represent something of a double-edged sword, as it its partly due to the very high prices that Chairman Ken charges his fans. Not only are they the highest in the Championship, but, according to a survey conducted by the award-winning Leeds fanzine, The Square Ball, only four clubs in the Premier League have higher priced entry-level season tickets (Arsenal, Chelsea, Liverpool and Tottenham Hotspur).
However, this attempt to squeeze the orange until the pips speak could be counter-productive, as average attendances have fallen by 4,000 (15%) to 23,300 this season, when overall Championship crowds rose 2%. This is still the fourth best in the division, only beaten by one promoted club (Southampton), West Ham and Derby County, but it’s a measure of how much Bates has tested the supporters’ patience.
The previous season Leeds had the highest crowds in the Championship with 27,300 (more than eight Premier League clubs), while they averaged nearly 25,000 in League One. As an indication of the potential at Leeds, average crowds were just under 40,000 at their height in the Premier League.
The decline in attendances this season will cause something like a £2 million hole in the 2011/12 accounts. That will reduce the reported revenue, but the actual cash available to the club is also going to be impacted by an agreement made post balance sheet, whereby the club sold season tickets for both the 2012/13 and 2013/14 season for £5 million in order to finance further development of Elland Road.
Leeds’ total commercial income of £14.5 million is also impressive. To place that into context, it is only just below the money generated from this revenue stream by Aston Villa £16.7 million and Newcastle United £15.8 million, while it is actually higher than many Premier League clubs, including the likes of Everton £11.7 million and Fulham £14.1 million.
However, while merchandising revenue has grown 77% (£2.6 million) in the last three years to £6.1 million, other commercial income has actually fallen 8% (£0.7 million) to £8.4 million in the same period. Leeds recently extended their shirt sponsorship deal with Enterprise Insurance for two years until the end of the 2013/14 season, while the club signed a lengthy six-year kit deal with Macron in 2010. Financial details of both deals were undisclosed.
The influence of television on a football club’s finances is undeniable and Leeds United are no exception. Relegation from the Premier League in 2003/04 led to an immediate £9.4 million decrease with TV revenue falling from £16.9 million to £7.5 million, even though the fall was cushioned by annual parachute payments of £6.6 million for the next two seasons. When these stopped in 2006/07, the club’s finances were dramatically affected with TV money crashing to £1.2 million, which was exacerbated by the relegation into League One giving TV income of just £0.7 million.
The rise in 2010 to £ 1.6 million was partly due to higher payments from the Football League (central distributions £0.64 million, solidarity payments £0.1 million), but also owed a lot to a splendid FA Cup run, featuring four ties against Premier League opposition (Liverpool, Tottenham and Manchester United).
Promotion saw a big increase in TV money, as the Football League distribution to Championship clubs is worth £2.5 million (increased from £1 million in 2010/11) with a £2.2 million solidarity payment from the Premier League (up from £1.3 million). In addition, each club was given an additional £0.5 million as their share of the parachute payments for Newcastle and WBA, because they went straight back up to the top tier.
Although there is never a good time for a football club to be relegated, it is fair to say that Leeds’ timing was particularly unfortunate, as they missed out on the significant growth in TV deals, e.g. the three teams relegated from the Premier League last season received an average of £40 million compared to Leeds’ £17 million in 2004. Similarly, while their relegation was eased by £13 million of parachute payments, teams now will receive £48 million (£16 million in each of the first two years, and £8 million in years three and four).
The other cloud on the horizon is the new Football League Sky TV three-year deal that kicks off in the 2012/13 season, which will be £69 million lower than the current contract at £195 million, a reduction of 26% or £23 million a season. This reflected what Football League chairman Greg Clarke called, “a challenging climate in which to negotiate television rights.” Whatever the reason, it will mean a reduction in the payments distributed to Leeds.
This is another reason why it is a little puzzling that Leeds do not push harder for promotion to the significantly more lucrative top tier, as that would conservatively be worth around £90 million. That doesn’t come in one fell swoop, but it’s still a magnificent prize. Even if a promoted team comes straight back down, it would receive £40 million TV income plus £48 million parachute payments over the next four years. Leeds would also benefit from much higher gate receipts and better commercial deals.
Furthermore, if Leeds were to finish higher in the Premier League, they would receive even more TV money with every season survived adding another £40+ million to the coffers. This explains why many clubs push themselves to the absolute limit to secure promotion, though it’s a dangerous game, as only three clubs go up every year.
One concern is that a promoted club might eat into that higher revenue by increasing wages and other costs, but the net effect is still likely to be positive. If we look at the three teams that were promoted to the Premier League in 2009/10, we can see that Newcastle United, WBA and Blackpool all dramatically improved their operating profitability, even though wages increased.
Leeds’ wage bill has long been a bone of contention among the fans, as it is very low compared to the club’s turnover. Despite a 20% (£2.8 million) increase from £13.7 million to £16.5 million in 2010/11, the wages to turnover ratio is only 51%, which is not only the lowest in the Championship, but is also lower than all but two clubs in the Premier League (Blackpool 48% and Manchester United 46% - though United benefit from enormous revenue of £331 million). Since exiting administration in 2007, wages have grown by just £3.8 million, while revenue has increased by £9.4 million.
This is the football club’s total wage bill, comprising £14.9 million salaries and £1.6 million social security. It is higher in the holding company, but only by £0.5 million, at £17.0 million. Directors’ emoluments are also up, rising from £174k to £299k, presumably largely for Shaun Harvey, the chief executive, as Bates “did not receive any benefits.”
According to the club website, “First team squad and management costs were £11.6 million, increasing from £7.7 million in the previous period.” They do not explain why the increase in these costs is higher than the overall growth in the wage bill, but it is probably due to bonus payments (including additional payments for loan players) made in 2009/10 for promotion. After Grayson was fired, Bates claimed that he had allowed his manager to go over his wage budget of £9.5 million in 2011/12 by 23% at £11.7 million, but that will only be confirmed by next year’s accounts.
While Bates has defended his record here (“At 30 players we have one of the largest squads in the Championship”), the figures do not lie and clearly show that Leeds’ wage bill is strictly mid-table in the Championship, coming in at the 12th highest in 2010/11. Leeds’ £16.5 million was around half the £30 million that QPR paid, though part of that will include promotion bonuses. Although many Championship clubs have over-stretched themselves with nearly half reporting unsustainable wages to turnover ratios over 100%, they do not enjoy Leeds’ revenue advantages. All other things being equal, the Whites could safely increase their spending on player wages without going crazy.
If they targeted the 60% ratio adopted by Football League clubs in Leagues One and Two, that would mean an increase of £3.1 million to £19.6 million; if they opted for UEFA’s recommended upper limit of 70%, that would mean an increase of £6.4 million to £22.9 million. Either of those options would provide a budget good enough to mount a meaningful promotion challenge, more than the two other clubs that went up in 2010/11: Norwich City £18.4 million and Swansea City £17.4 million.
However, another factor needs to be considered at Leeds, namely the high amounts spent on Other Costs. Excluding salaries and amortisation, these stand at £13 million, which is very high for a club outside the Premier League. If we compare that with other Championship clubs with high revenue (not benefiting from parachute payments), we can see that Leeds have the highest Other Costs, e.g. twice as much as Norwich and Reading, with the highest proportion of total costs, though, in fairness, it does not look too high as a proportion of revenue.
Unfortunately, the club does not provide much detail for these costs, but one of the significant items is the rent paid for the stadium and training ground, after their sale and leaseback, which is around £2 million (increasing by 3% every year), a major financial burden. Nothing was identified for legal fees in 2011, but these have also been on the high sides in recent years: between 2008 and 2010 a total of £1.5 million was paid to a company controlled by RM Taylor, a director of the holding company.
Where Leeds have not spent big is in the transfer market, at least since the Ridsdale era. His unwise spending culminated in £69 million in the two years up to 2002, followed by a massive fire sale that produced £101 million of net proceeds in the next three years. Since then, the club has continued to make money from player trading with net proceeds of £15 million: £4 million in the four years up to 2009 and £11 million in the last three years.
Although Simon Grayson spent very little, having to mainly make do with free transfers and loans (an incredible 33 in his 37 months reign), he put a brave face on this, “Money isn’t the answer. It’s a help. It’s good management and scouting.”
It is undoubtedly true that money is no guarantee of success, as can be seen over the last three years with the likes of Leicester City and Nottingham Forest under-performing despite being among the highest spenders. Nevertheless, only four clubs have spent less than Leeds in this period – though admittedly one of those is Reading, who have just secured promotion to the Premier League.
It will be interesting to see if Bates continues his tight hold on the purse strings after the arrival of Warnock, who argued, “We’ll have to invest. The chairman knows what I’m looking at and what I think. The job requires major surgery in all departments.”
Net debt (in the holding company) is just £0.5 million, comprising a loan from Outro Limited (Bates’ company) of £975k, which has since been repaid, £149k of finance leases less £600k of cash. This is very respectable, though not as good as the previous year when the club held nearly £4 million of cash. Of course, the low debt levels are perhaps not that surprising after writing-off so much as a result of the administration.
However they got there, this is a better position than the vast majority of other clubs, as can be seen by the concerns of the Football League chairman, Greg Clarke, “Debt's the biggest problem. If I had to list the 10 things about football that keep me awake at night, it would be debt one to 10. The level of debt is absolutely unsustainable. We are heading for the precipice and we will get there quicker than people think.”
That said, Leeds do have other important potential liabilities: (a) if they are promoted to the Premier League before the 2017/18 season, they have to pay £4.75 million to the liquidator; (b) £875k may be payable on transfer fees depending on player appearances and/or Premier League promotion. Note: Leeds owe £133k transfer fees, but have transfer debtors of £988k.
In addition, a total of £3.2 million has been raised via preference shares, which is a hybrid form of financing somewhere between equity and debt. These are worth £4 million when redeemed, guaranteeing a profit of £0.8 million for persons unknown. There is no fixed date for repayment, but they may be redeemed if the club is sold, liquidated or the majority shareholder (that would be Bates via Outro) decides to buy the shares.
Finally, there are the future receipts owed via the pledging of season ticket money (portion unspecified) to part fund the development of the Elland Road East Stand.
The football club’s balance sheet looks fairly strong with net assets of £10.6 million (up from £7.1 million), especially considering that the value of players in the books is only £1.5 million, compared to a real world valuation of £12.2 million (“based on the average opinions of seven members of senior football management”). Working capital is negative, but has been improving (from £5.7 million in 2009 to £1.2 million in 2011) and includes £8.1 million of prepayments of tickets and sponsorship revenue.
It also includes £4.6 million owed to other group companies (up from £0.4 million the previous year), which means that money from the football club is flowing to other companies, as opposed to being invested in the squad. The holding company notes that £2.1 million has gone to Yorkshire Radio.
The cash flow statement shows that Leeds generates money at an operating level (£9.1 million since administration), which is boosted by £5.4 million cash from player sales, but £16.6 million has been spent on capital projects, such as new executive boxes and lounges. This is consistent with Bates’ claim that “approximately £20 million” has been spent on “the clapped out, decaying stadium that I inherited”, but it gives the lie to his assertion that “all the money we have received has gone back into the squad.”
Clearly, improving stadium facilities is no bad thing, but it may be a case of putting the cart before the horse, if the club is prioritising property development before promotion. Bates has recently stated in his programme notes that the rebuilding, refurbishment and improvements of Elland Road are nearing completion, which would theoretically increase the money available to bolster the team, though, as we have seen, millions are still being invested into the East Stand.
This focus on property development should come as no surprise, as Bates once said, “In my view a football club is a property business that hosts a football match 25 days a year and is shut for the other 340 days.” While it does make sense “to increase the income generating potential of the club on non-match days”, this strategy has not always proved successful, as Bates himself should appreciate after Chelsea Village was on the brink of financial collapse before Roman Abramovich flew to the rescue.
Leaving aside reservations over whether the proposed hotel, superstore, retail arcade and casino are mere vanity projects that will not generate much revenue, the burning question is why the club should invest millions in properties that it does not own? Stop me if you’ve heard this one before, but it is not clear who owns the stadium beyond Teak Commercial Limited, an offshore company registered in the British Virgin Islands in January 2005 (coincidentally the same month that Bates became Leeds United chairman). The uncertainty about ownership has already contributed to the local council rejecting an application from Leeds for a development loan, though this decision was also partly due to the failure of England’s 2018 World Cup bid.
Either way, what might be of interest to a potential investor is that the club has the opportunity to purchase Elland Road for £14.85 million, which was valued at £54.72 million according to the accounts, while Bates has confirmed that they could also buy back the training ground for £5 million.
Furthermore, Leeds should be a beneficiary of the new Financial Fair Play (FFP) framework, which was approved by the Championship clubs in February. This will see the introduction of a breakeven model, requiring clubs to stay within pre-defined limits on losses (falling from £4 million in 2011/12 to £2 million in 2015/16) and shareholder equity investment (falling from £8 million in 2011/12 to £3 million in 2015/16).
If clubs are promoted to the Premier League with losses above these limits, any excess will be taxed with any proceeds distributed among the clubs that comply with the FFP regulations, while offending clubs that fail to achieve promotion will be punished with a transfer embargo. However, no sanctions will be implemented during the first two seasons in order to give clubs a sensible period of transition, so it will be a while before this helps Leeds.
On the other hand, Leeds voted against the introduction of the Elite Player Performance Plan (EPPP), as this is likely to hurt their ability to sell young stars to top clubs for large sums. This has resulted in the club “reviewing our Academy structure to ensure we are best placed to benefit from its provisions.”
In conclusion, Leeds United are the proverbial sleeping giant, a club with a fine history and bags of potential, but it can only be realised with promotion to the Premier League. Love him or loathe him, Neil Warnock has a proven track record in getting teams promoted, but he will need financial backing to do the same with Leeds.
To date, Ken Bates has not provided his managers with an adequate budget, his attitude encapsulated by his comment after dismissing Simon Grayson, “We are building a club first and a team second and we are making progress when so many people are having financial difficulties.” Fair enough, but it could also be a false economy to not spend more and miss out on the riches available in the top flight.
More encouragingly, Bates suggested that this might be about to change, “We want to be in the Premier League and we will support Neil in the quest to get us there.” Leeds fans might be forgiven for taking this with a pinch of salt, but there is little doubt that the club could afford to be more aggressive with its spending on the pitch – without entering dangerous territory. Or will it be another chapter of broken dreams?

Saturday, May 12, 2012

Future’s safe in my hands - Warnock

Yorkshire Evening Post 9/5/12
By Phil Hay
Neil Warnock insisted his one-year project as Leeds United boss would leave a legacy of “investments” at Elland Road after striking his first deal of the summer.
Warnock, who signed 24-year-old Jason Pearce from Portsmouth last week, claimed his strategy was aimed at securing long-term assets and avoiding the need for another overhaul of United’s squad in 12 months’ time.
Leeds paid £500,000 to sign Pearce, a fee which Portsmouth administrator Trevor Birch has been forced to defend amid suggestions that the centre-back was sold for less than his true value, and Pearce committed himself to United until the summer of 2016 by signing a four-year deal.
Warnock’s contract is far shorter, running for the next 12 months, and he plans to retire at the end of the 2012-13 season, a term in which he hopes to sign off with his eighth promotion as a Football League manager.
But he vowed to take a responsible approach to the rebuilding of a squad who finished 14th in the Championship last month, saying: “Some of the players I sign won’t only be good value. They’ll be an investment as well.
“They’re not all going to be 37 years old, giving me one year here. They’re going to be hungry lads who I hope I can make into better players.
“Some will be resaleable rather than money spent stupidly.”
Warnock could follow up his successful move for Pearce with bids for two other Portsmouth players, midfielder David Norris and striker Luke Varney.
Birch is leading the fight against Portsmouth’s insolvency and admitted more sales were likely, saying: “We don’t want to sell any of these players but it’s a necessity.
“We’re losing money hand over fist.”

Lure of Whites was hard to resist - Pearce INTERVIEW

Yorkshire Evening Post 8/5/12
By Phil Hay
For the second time in one short year, Jason Pearce has taken a leap of faith by moving clubs on the promise of a successful season ahead.
Eleven months ago he joined Portsmouth from Bournemouth believing the squad and financial situation at Fratton Park would be adequate for the Championship. The club he quit yesterday were insolvent, relegated and sadly devoid of hope.
In signing a four-year deal with Leeds United and becoming Neil Warnock’s first acquisition of the summer, Pearce engaged himself in another game of trust.
Earlier this week Warnock directed 11 professionals towards the exit door at Elland Road having previously released four others. The gaps in United’s squad are vast and Pearce, in the words of his new manager, is “the first piece of the jigsaw” – a large jigsaw which lies far from completion but should ultimately paint a picture of promotion.
Pearce’s experience at Fratton Park did not tempt him to think twice when Warnock banged on his door. “When I signed for Portsmouth I didn’t expect so many problems,” Pearce said. “I thought the finances were right and I believed we’d move forward.
“It wasn’t like we were definitely going up but we had some brilliant players. I thought we’d be there or thereabouts but when everything bad started happening, it was asking too much.
“The gaffer here (Warnock) promised me he’d have plenty of players to bring in and said that I’d be the first part of the jigsaw. There’s going to be a new crop here and with the right squad we’ll have a really good go at next season. I’m certain he’ll get the right squad.
“I had other clubs interested but this was the place for me. Even when the other clubs came forward there was no turning back. Leeds showed an interest a month or so ago and I’ve been wanting to get it done for a while.”
Pearce’s career has been on the up and up for several years, helped by a spell at Bournemouth which saw him win promotion from League Two in 2010 and appear in a play-off semi-final the following season.
For all Portsmouth’s crises and their unavoidable descent from the Championship, the 24-year-old emerged from the wreckage of this season with his reputation intact.
The captaincy became his and seven of Portsmouth’s nine end-of-season awards came his way, allowing him to move on from Fratton Park on good terms. Warnock made no effort to hide his wide smile after the formalities were completed at Thorp Arch yesterday morning.
“I only made the step up to Championship level last season but I feel like I proved myself,” Pearce said. “I hope I did.
“I feel I can cope at this level and I didn’t want to take a backwards step at my age. League One would have been a backwards step and everyone at Portsmouth seemed to appreciate that I wanted to move on.
“But I can’t deny that it was hard to leave. We went through a lot at Portsmouth and I hold them close. I was there as a young lad. This move is for my career. I want to succeed and do well.
“The pull of Leeds United is there for a lot of players. There aren’t too many, not in this division, who wouldn’t think about coming here. I think the gaffer wants young, hungry lads who want to succeed and that’s how see myself. It’s what I’m about and I can’t wait to get started.”
Warnock’s complaints about his team were plentiful during his initial two-and-a-half months as Leeds manager: no bite, insufficient leadership and a dearth of players good enough to make the play-offs or better attainable.
The deal to sign Pearce is believed to have been arranged in principle midway through last month, and Warnock was anxious to make the defender his first summer signing, offering what he said was a recruit who “showed my intent and epitomised what I want in my players.”
The signing went through within a week of the season ending and Warnock said: “We’ve had to move this quickly.
“The retained list was out on Wednesday and that’s always a bad day but you can’t just have doom and gloom. You’ve got to let the supporters know what the plan is.
“I’ve been wanting to confirm speculation about Jason but you dice with death when you do that. Now it’s done, I’m absolutely delighted – ecstatic.
“I’ve convinced him that this is the place for him to be and he’s the first piece of the jigsaw. I want to continue building it fast.”
Pearce said: “I think everyone knows I’m a no-nonsense centre-half. I’ll put my head in where others don’t and I’ll always give 100 per cent. I’m a team player.”

Friday, May 04, 2012

Jason deal is just the start - Boss 4/5/12
United manager Neil Warnock says the early arrival of Portsmouth defender Jason Pearce is just the start as his re-building plans kicked off with some urgency this week.
The boss wasted little time in signalling his intentions earlier this week when he placed six players on the transfer list, and he was delighted to be able to announce his first long-term signing so soon after the season ended.
"I'm delighted," said the United manager. "He is a lad I've been looking at a lot and for a long while now. I saw him when he was at Bournemouth and almost took him to QPR last summer.
"I tried to get him in March when I first came here, but couldn't quite do it.
"I think he epitomises what I'm looking for in a player. He's got hunger and enthusiasm, and he won all the player of the year awards down at Portsmouth. He's just the type of player we need.
"I feel disappointed for the situation Portsmouth are in at the moment, but they'll come through it. We've all been through it, and there's no sentiment in football.
"Here we want to build a side and as soon as you get your number one signing in you can really start. I couldn't have got a better one that Jason. He's a lovely lad, fits in well, he has a good family, and everything's good around him.
"He'll love it here and I'm sure he'll be a fans favourite. He's not old, he's only 24, he's not a 34-year-old. He's got so much to prove, and I think we can make him a better player here."
With the central defender now recruited, the boss is already working on further targets as he looks to maintain the momentum of his close-season recruitment drive.
"This is the hard work just starting," he said.
"We've had some late nights and we've met quite a lot of players and agents. We spoke to two or three on Thursday. I've been at some clubs where I've done deals at home because I didn't want them to see the training ground or the facilities - that's not the case here.
"Once they see the facilities they don't want to leave!
"We're trying to get some deals done and hopefully we can progress quickly."

Eleven told they can go 2/5/12
Leeds United manager Neil Warnock has placed six players on the transfer list and has told five more their contracts won't be renewed.
The boss met with all his playing staff individually on Wednesday when he informed them of his decisions, and a total of 11 senior players could now be set to leave the club this summer as the manager looks to re-build for the new season.
Midfielder Adam Clayton, strikers Ramon Nunez and Billy Paynter, defenders Paul Connolly and Andy O'Brien, and goalkeeper Paul Rachubka are the contracted players who have been placed on the transfer list.
In addition, Alex Bruce, Lloyd Sam, Mikael Forsell, Danny Webber and Maik Taylor are the players who have been informed that their contracts will not be renewed and are free to leave the club this summer.
Of the players to be placed on the transfer list Clayton has been the most prolific this season with the midfielder having made 46 appearances, scoring six goals, including the Goal of the Season winner, against Leicester in November.
Connolly has figured 30 times this term, but Nunez and Paynter have found their appearances limited. Rachubka has made seven appearances, and has spent much of the season on loan, first at Tranmere then at Leyton Orient.
O'Brien has made 38 appearances since joining the club, initially on loan in October 2010, but he has figured just six times this season.
Of the players not being offered new deals Bruce was the only one to start the final game of the season against Leicester City. Bruce, the longest serving of the out of contract players, has figured just seven times this term, and made 32 appearances during his two years with the club.
Webber, who joined on a short-term deal in February, and Forssell, who was signed until the end of the season last September, both came on as substitutes against Leicester.
Winger Sam, who was signed in the summer of 2010 and has made 39 appearances for the club, including just three starts this season, was loaned out to Notts County in March.
Goalkeeper Taylor, another short-term signing, was loaned to Millwall in March with a view to joining the London club on a longer-term basis.
In addition to the above players, Ben Parker and Mika Vayrynen had their contracts cancelled last month while loan man Darren O'Dea was told that the club would not be making his move

Sloppy Whites hit record low

Yorkshire Evening Post 30/4/12
By Phil Hay
They say charity begins at home. For the past nine months it has begun too often at Elland Road.
History will remember this as the season when the stadium’s hostile reputation collapsed like a house of cards.
It will remember certain others things too: the non-event that was Leeds United’s stab at promotion and the impotence of the transfer window preceding it. Eleven league defeats at home – a total never before seen in 90 years of existence – is not the only legacy of a wasted year but few are more symptomatic of the club’s spineless struggle.
United’s players embarked on what is generally described as a lap of honour at full-time on Saturday but their walkaround was nothing of the sort. Between driving rain, a 2-1 loss to Leicester City and a final league position of 14th, the stands were half-empty by the time it began.
A glance at the Championship table said it all: 27 points shy of automatic promotion and 14 below the play-offs. Perhaps as prominent as Leeds deserved to be.
Neil Warnock wore a bemused smile as he paced around the pitch, wondering why it was that more than 25,000 spectators had been willing to endure more of the same. “I just can’t believe the support,” he said.
Leeds lost to an injury-time goal, possibly offside but just about deserved on the part of Leicester. On an afternoon when nothing mattered beyond reaching the final whistle, they made professional work of sweeping up the points and signing off with a flurry.
Their own season has been abject, a poor return for the many millions of pounds thrown at their squad, but City’s manager, Nigel Pearson, saw shoots of potential in his side. Debutant and academy graduate Harry Panayiotou won the game with a fortuitous goal, countering a late equaliser from Danny Webber.
For Leeds and Warnock, the time for hiring and firing has arrived. If United’s manager gets his way there should be plenty of both. Beset by ceaseless showers and their own deflation, Saturday’s defeat set the scene for a post-season massacre. No conviction in midfield and no clout up front; no obvious encouragement for a coach who will try to complete an ambitious project of renovation before August arrives.
Leeds’ chairman, Ken Bates, pointed fingers at others in his programme notes, asking if the failure of this season was down to “fitness, lack of dedication, poor tactics or just too many players.” He also asked the club’s supporters to be forgiving, saying: “Let us not dwell too much on the past.”
Bates should be so lucky. The events of the past year are stacked against him.
He has the manager he wants but one reliant on immediate financial support. Warnock’s ideal squad will not come easily or cheap but United’s board are under pressure to deliver it. The expected signing of Jason Pearce from Portsmouth would be a good start. There was nothing to be read into United’s line-up on Saturday, aside from the absence of left-back Paul Robinson. Omitted for the last game of his loan from Bolton, it was an admission from Warnock that a permanent deal would not be in the post. His impact in 10 previous games failed to merit one.
Leeds are at the stage where lockers will be cleared and shirt numbers handed back.
Two of the players fielded by the Foxes have been in this situation at Elland Road before, and the rousing reception given to Jermaine Beckford as he prepared to kick the game off was as warm a welcome as he could have imagined.
Popular still, two years on from a memorable goodbye, his appearance on Saturday ended at half-time. A post-match lap of honour involving him alone would still have been as well received as that which United’s players took part in later in the day.
Kasper Schmeichel on the other hand was jeered; pantomime jeering more than open hostility. It petered out as rapidly as it started and did not distract him when City’s suspect defence caved in twice in the first five minutes.
The goalkeeper dived to gather a sliding shot from Robert Snodgrass after Ross McCormack dinked the ball towards Leicester’s box, and he was well-placed snatch a weak chip from Luciano Becchio when Adam Clayton fed a pass through another gaping gap.
With Sol Bamba shoehorned into the centre of their midfield, City’s performance was never likely to be flawless and for a while it was anything but.
Paul Konchesky’s casual attempt to run the ball out of play in the 11th minute gifted Snodgrass possession and almost handed McCormack an easy finish from 10 yards. In the meantime, Beckford was marshalled strictly by Alex Bruce, allowed no more than the sniff of a rebound when Andy Lonergan gathered Ben Marshall’s volley at the second attempt.
Beckford’s trick in his more productive seasons at Leeds was to produce goals when none seemed likely. So limited was Leicester’s hold of the ball initially that he struggled to touch it. He was far from the thick of the battle when Danny Drinkwater threw his body in front of Clayton’s goalbound strike, and a cynical foul from Danny Pugh halted him back when he threatened to run clear in the 26th minute.
There were other chances too – a header from Wes Morgan which Lonergan punched off his line and a Snodgrass volley which Schmeichel waved safely over his crossbar – but it was, as Pearson said later, a mediocre game.
Leicester’s first goal six minutes before half-time materialised from nothing, beautifully gift-wrapped as ever.
Michael Brown caused trouble by slicing a clearance behind Pugh who dithered over his header before losing his footing and leaving the ball at the feet of Martyn Waghorn. The striker advanced and forced Lonergan to commit himself before slipping the ball into the net. Half-hearted boos were heard when half-time arrived soon after.
Beckford failed to reappear for the second period, making way for Darius Vassell, but Leicester’s flow was unabated. Waghorn lashed a volley into Lonergan’s midriff and a Drinkwater shot deflected wide as City passed the ball around freely.
Then Lloyd Dyer was allowed to run the full length of the pitch before Clayton intervened and diverted his attempted finish into the crowd.
City’s repeated counter-attacks prompted Pearson to introduce David Nugent from the bench and Leeds became stretched, unable to retain the ball or do anything with it until the 82nd minute brought a hard-earned equaliser. Snodgrass’ persistence on the left wing gave Clayton and sub Mikael Forssell the opportunity to pick City’s defence open, and when Snodgrass chipped the ball over the diving frame of Schmeichel, Danny Webber ran in to slot it into an empty net.
That should have drawn a line under the threat of an 11th home defeat but Leicester pressed forward relentlessly and Marshall – the biggest threat on the pitch – conjured a winning goal in the third minute of injury-time when his shot struck the boot of Panayiotou and deflected past Lonergan.
Warnock stood soaked to the skin, rain lashing into his face; a depiction of Leeds’ entire season if ever there was one. “I’m relieved it’s all over,” Warnock said afterwards. He was not alone.