Leeds United owner contradicts itself over plans to sell club
Guardian 20/3/13
Company now says it will sell only some, not all, shares
New position goes against statement in annual accounts
David Conn
Leeds United's owner, GFH, has taken the extraordinary step of contradicting statements made in its own annual accounts, insisting it is not, in fact, intending to sell the club immediately, only a stake in it. The Bahrain-based finance firm stated in its 2012 accounts that it bought Leeds, as recently as 21 December, as an "asset held for sale", which it planned to realise within six to 12 months. The accounts stated that the club had "commenced negotiations relating to the sale of its stake".
Following media reports of that detail, GFH issued a statement on the Leeds United website emphasising its previously publicly stated position that, having bought the club from the previous owner Ken Bates for £22m, it is looking for "strategic investors" to buy a stake in the club, but is not selling it completely.
"To clarify and as previously stated, GFH Capital is looking for investment in part of its share in the club, not its entirety," the statement said.
Pointedly, the statement referred throughout to GFH Capital, which is based in Dubai, the subsidiary of GFH that carried out the takeover from Bates, not to GFH itself, the parent company. However the statement did not explain why the stated strategy of GFH Capital, to invest in Leeds and look to rebuild the club's fortunes while selling a stake to strategic partners, was contradicted by the parent company's accounts.
"GFH Capital … is continuing to look for strategic investors in part of the club that can invest in Leeds United, alongside GFH Capital, to ensure a long-term, sustainable future," the statement said.
Salem Patel, the chief investment officer of GFH, the parent company, who was centrally involved in the takeover from Bates, told the Guardian last month that even in purely profit-motivated terms, the finance house would do better to rebuild Leeds and win promotion to the Premier League than sell the club immediately.
Explaining it was interested in selling a 30% stake to a "strategic investor", Patel said that if it sold a majority stake to a buyer without the funds capable of making Leeds successful, "we become a minority shareholder in an investment not going anywhere". He added: "We do not wish to make a short-term profit to miss out on the £150m-£200m which could be made if the club wins promotion to the Premier League."
GFHC has put money into the club, which it said was partly to cope with cashflow problems inherited from Bates, under whose ownership the club mortgaged future season ticket income to finance work on the Elland Road east stand. The statement on the club website said the cash injected into the club by GFH now amounts to £10m, "to strengthen the squad and for other working capital purposes". GFHC also promised: "Additional financial support will continue to be provided as required."
The statement highlighted a price cut for 2013-14 season tickets in a bid to re-engage fans, many of whom complained of high costs under Bates. "GFH Capital has fulfilled the plans pledged," it said. "Its strategy for the club remains the same; to build a group of strategic investors to put Leeds United in the best position both on and off pitch for the long term."
Company now says it will sell only some, not all, shares
New position goes against statement in annual accounts
David Conn
Leeds United's owner, GFH, has taken the extraordinary step of contradicting statements made in its own annual accounts, insisting it is not, in fact, intending to sell the club immediately, only a stake in it. The Bahrain-based finance firm stated in its 2012 accounts that it bought Leeds, as recently as 21 December, as an "asset held for sale", which it planned to realise within six to 12 months. The accounts stated that the club had "commenced negotiations relating to the sale of its stake".
Following media reports of that detail, GFH issued a statement on the Leeds United website emphasising its previously publicly stated position that, having bought the club from the previous owner Ken Bates for £22m, it is looking for "strategic investors" to buy a stake in the club, but is not selling it completely.
"To clarify and as previously stated, GFH Capital is looking for investment in part of its share in the club, not its entirety," the statement said.
Pointedly, the statement referred throughout to GFH Capital, which is based in Dubai, the subsidiary of GFH that carried out the takeover from Bates, not to GFH itself, the parent company. However the statement did not explain why the stated strategy of GFH Capital, to invest in Leeds and look to rebuild the club's fortunes while selling a stake to strategic partners, was contradicted by the parent company's accounts.
"GFH Capital … is continuing to look for strategic investors in part of the club that can invest in Leeds United, alongside GFH Capital, to ensure a long-term, sustainable future," the statement said.
Salem Patel, the chief investment officer of GFH, the parent company, who was centrally involved in the takeover from Bates, told the Guardian last month that even in purely profit-motivated terms, the finance house would do better to rebuild Leeds and win promotion to the Premier League than sell the club immediately.
Explaining it was interested in selling a 30% stake to a "strategic investor", Patel said that if it sold a majority stake to a buyer without the funds capable of making Leeds successful, "we become a minority shareholder in an investment not going anywhere". He added: "We do not wish to make a short-term profit to miss out on the £150m-£200m which could be made if the club wins promotion to the Premier League."
GFHC has put money into the club, which it said was partly to cope with cashflow problems inherited from Bates, under whose ownership the club mortgaged future season ticket income to finance work on the Elland Road east stand. The statement on the club website said the cash injected into the club by GFH now amounts to £10m, "to strengthen the squad and for other working capital purposes". GFHC also promised: "Additional financial support will continue to be provided as required."
The statement highlighted a price cut for 2013-14 season tickets in a bid to re-engage fans, many of whom complained of high costs under Bates. "GFH Capital has fulfilled the plans pledged," it said. "Its strategy for the club remains the same; to build a group of strategic investors to put Leeds United in the best position both on and off pitch for the long term."
