Guardian Unlimited Football | News | Leeds close to Elland Road sale
Leeds United were yesterday forced to sell off their training ground and moved closer to a similar deal for Elland Road. But even these drastic measures will not end their financial plight.
The scale of the challenge was illustrated by documents filed at Companies House which revealed that the chairman Gerald Krasner and his board have taken out eight new mortgages on property and land owned by Leeds to fund their takeover and keep the club afloat in the seven months since saving it from bankruptcy.
The Thorp Arch training complex, on valuable land near Wetherby, was sold to an unnamed property investment company and the club will lease it back over 25 years. It also has first option to buy back the land if the financial situation improves.
Once mortgages on the land around Thorp Arch are paid off, Krasner said Leeds would be left with "in excess of £4m" to go towards reducing debts, currently around £40m.
Krasner is also believed to be close to a similar deal on the stadium. He said yesterday that negotiations to sell Elland Road and lease it back were at a "delicate stage", dismissing claims that the club was unable to meet debt repayments and insisting it was "business as usual".
The stadium deal should enable Leeds to meet their commitments but will not be a long-term solution. They will get up to £15m for the ground, but most of that will immediately be spent repaying a loan taken out to fund the takeover.
That loan is secured on Elland Road via a debenture mortgage with Trefick Ltd, an investment vehicle owned by the property developer Jack Petchey. Trefick loaned the club £15m to help fund the takeover and Leeds have been paying a hefty £1.5m a month in interest to service the debt since August.
Selling the ground would ease the dependence on Petchey's company, but Leeds would immediately have to pay rent to the new owner instead. One mortgage expert likened such deals, which he said were common in businesses with cashflow problems, to "running to stand still".
At the time of the takeover, which more than halved the club's £100m-plus debt, Krasner admitted a ground sale and lease-back was not his "No1 option" but he has now been forced to reconsider.
Leeds United were yesterday forced to sell off their training ground and moved closer to a similar deal for Elland Road. But even these drastic measures will not end their financial plight.
The scale of the challenge was illustrated by documents filed at Companies House which revealed that the chairman Gerald Krasner and his board have taken out eight new mortgages on property and land owned by Leeds to fund their takeover and keep the club afloat in the seven months since saving it from bankruptcy.
The Thorp Arch training complex, on valuable land near Wetherby, was sold to an unnamed property investment company and the club will lease it back over 25 years. It also has first option to buy back the land if the financial situation improves.
Once mortgages on the land around Thorp Arch are paid off, Krasner said Leeds would be left with "in excess of £4m" to go towards reducing debts, currently around £40m.
Krasner is also believed to be close to a similar deal on the stadium. He said yesterday that negotiations to sell Elland Road and lease it back were at a "delicate stage", dismissing claims that the club was unable to meet debt repayments and insisting it was "business as usual".
The stadium deal should enable Leeds to meet their commitments but will not be a long-term solution. They will get up to £15m for the ground, but most of that will immediately be spent repaying a loan taken out to fund the takeover.
That loan is secured on Elland Road via a debenture mortgage with Trefick Ltd, an investment vehicle owned by the property developer Jack Petchey. Trefick loaned the club £15m to help fund the takeover and Leeds have been paying a hefty £1.5m a month in interest to service the debt since August.
Selling the ground would ease the dependence on Petchey's company, but Leeds would immediately have to pay rent to the new owner instead. One mortgage expert likened such deals, which he said were common in businesses with cashflow problems, to "running to stand still".
At the time of the takeover, which more than halved the club's £100m-plus debt, Krasner admitted a ground sale and lease-back was not his "No1 option" but he has now been forced to reconsider.