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With funds set to run out in January, selling was only optionDavid Parkin
Business Editor
AS Leeds United face yet another change in ownership, one is reminded that when it comes to football and business the two just don't mix.
With the exception of Manchester United, arguably the world's biggest club, football clubs just can't be run at a profit.
When clubs are saddled with massive debts it makes the job even harder. Just paying the interest on those borrowings is tough enough, never mind paying them off.
The consortium which bought Leeds United earlier this year succeeded in erasing more than half of the club's £110m of debt.
They borrowed £15m from property investor Jack Petchey to help fund the takeover and negotiated to pay in instalments to creditors such as the Inland Revenue and former managers and players owed compensation. But they were still saddled with more than £40m of borrowings.
Perhaps that is why, when it came to the crunch, they were the only group of investors prepared to put their money on the table.
The consortium, led by chairman Gerald Krasner, a highly-rated Leeds insolvency accountant, gambled on three things.
Firstly they hoped the team could remain in the Premiership. They didn't and were relegated with the massive financial consequences that involves.
Secondly they hoped to raise millions through a debenture scheme by selling thousands of 20-year season tickets. With the club in the bottom three of the Premiership and facing relegation, they sold around 100.
And thirdly they were advised by former Bradford City chairman Geoffrey Richmond.
An experienced football man, Richmond had left Bradford with huge debts and, only weeks after his involvement with Leeds was revealed, he was declared bankrupt.
While the first two were financial disasters, here was a public relations disaster to match them.
The four-strong board staggered on and have since sold the club's training ground for £4.2m in a sale and lease back scheme and a site for a casino next to Elland Road which raised £5m.
That only succeeded in reducing the debt to £30m, leaving just the Elland Road stadium left to sell – the asset cupboard was almost bare.
Seasoned observers of the club have been predicting that they would run out of money by January. That may or may not have been the case, but a sale has looked the only option for some time.
The Anglo-American group which hope to buy the club face two problems: fans and finance.
Leeds United supporters are bound to be suspicious of a group which are not fans of the club and have no previous experience of running a football club.
On the finance front, the group say they can use the club's worldwide brand to generate funds. Yet this brand is worth little unless the club are competing successfully in the Premiership.
Sitting 17th in the Coca-Cola Championship table, the promised land looks a long way away.

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