Takeover patience starting to run out - Hay
Yorkshire Evening Post 25/8/12
By Phil Hay
The laborious takeover of Leeds United spawned a supporter-led protest on Thursday, under the banner #Pen4Ken.
The campaign is derived from Ten4Ken, a short-lived movement which in 2010 sought answers to 10 questions about the club’s policies and ownership structure. It consists of nothing more militant or aggressive than posting pens to Ken Bates care of Leeds United and Elland Road.
All scepticism about strategy and impact aside, the sentiment of #Pen4Ken is genuinely conceived. This takeover needs signing off and patience is wearing thin. There is rising clamour for Bates, United’s chairman and majority shareholder, to put his name to a deal which passes the club to new owners. The generous public are making sure he has something to write with.
If the demand for completion – or if not that, some clarity beyond the meaningless insistence that “talks are on-going” – strikes you as premature then consider the following: 88 days have passed since Leeds stated on May 29 that they were talking to investors with serious intent. Exactly 60 have passed since the club entered into an exclusivity period with a group of buyers from the Middle East, allowing them to pick through the financial details of United’s accounts. Solicitors who specialise in corporate law find the timeline surprising and unusually long.
A week ago, two members of the management team at Dubai-based private equity firm GFH Capital Limited attended United’s game against Wolves. GFH Capital Limited are widely believed to be the go-between in this sale – the firm acting as brokers on behalf of the buyers – and their public appearance at Elland Road was no bad sign. But in the days that followed the silence has been almost total. Even whispers of back-and-forward negotiations began to dry up.
A lawyer contacted by the YEP yesterday, someone who has dealt with takeovers at other English clubs, said the duration of a typical sale was rarely more than “a couple of months.” Occasionally they are completed in a matter of days, like the purchase of Leeds by Bates and the Forward Sports Fund from Gerald Krasner’s board in 2005 but due diligence sees to it that most buy-outs take longer. Few which ultimately end in a deal are as drawn-out as the latest attempt to acquire control at Elland Road.
So the view of those who know the landscape is that this deal has strayed into the realms of the ridiculous and was heading that way for several weeks, not helped by the confidentiality agreement which smothers the full story. Bates said last week that in the absence of official comment, “rumours abound” and “pub speculation” runs wild. He is not wrong. The very reason why #Pen4Ken began consuming Twitter was because credence has been given to the idea that a signature from him is all that stands between Leeds and investment from the Middle East.
Certain legal sources believe that suggestion is not so far from the truth. The talk in the past few weeks has been about disagreements over an indemnity clause – the protection given to a buyer in the event that liabilities appear after a sale is complete – and arguments over cash paid to the club by the Middle Eastern consortium during the summer. One contact on the seller’s side claimed scheduled payments owed to Leeds had been missed. Another connected to the buyers said they were unwilling to release any more money until final agreement on the transfer of Bates 72.85 per cent stake was reached. And so it continues with no official confirmation either way.
The YEP contacted Leeds and GFH Capital Limited after Saturday’s game against Wolves in an attempt to discuss the appearance of GFH executives Salem Patel and David Haigh at Elland Road and clarify several rumours concerning the sale of United. Predictably there was no response. Both sides have stuck fast to their confidentiality clause and for many weeks there was no argument with that. People craved news and looked for developments but appreciated the complex nature of a takeover. In the past month, the commitment to confidentiality has felt more like a useful defence against valid questions, masking a confusing situation.
The only certainty almost 90 days on is that the takeover is not dead. Warnock stated as much on Thursday and it is plain from his recent comments in the press that he is not in the mood to deceive anyone, least of all the club’s supporters. It is safe to assume that he wants this buy-out agreed, for the good of himself and his team. It is hard to imagine the scale of frustration in fearing the August transfer deadline will pass without any more signings.
That, above all else, is a reason why Bates should understand the wall of noise telling him to hand the baton on. It is reckless for anyone to endorse this bid from the Middle East without any firm details about who the bidders are, how much money they have, how much they plan to invest and what their long-term strategy will be but the lack of information does not alter the debate about where Leeds are heading without serious investment.
The message from Warnock at his press conference on Thursday was that he has nothing left in the way of funds and no expectation of any coming his way without a takeover. Even his mention of the emergency loan window was tempered by the admission that any signings from that particular market would be dependent on finances. That is not only a warning for the fate of this season but a warning for future seasons too. It gives the impression of a regime that has run out of steam – a regime who should be pleased that an offer to buy the club arrived when it did. Back when takeover fever first took hold of Leeds, it was convenient to think that their meagre transfer fund was an inevitable feature of a business about to change hands. It appears now that Leeds simply had no money to give Warnock. The well is dry again and their manager is helpless. When he enquired speculatively about a player on Wednesday, he was blown out the water by an offer from another Championship club.
Bates cannot or should not be oblivious to this. He cannot hear a manager like Warnock claim that his existing squad have “not a cat in hell’s chance” of seeing through a full Championship season and fail to see the problem. Supporters and journalists who offer that view are easy to ignore but not a 63-year-old with seven promotions behind him. The air smells of stagnation.
Sixty days ago, when United announced that due diligence was underway, they said in black and white that the buyers in question “have the financial resources to support the club and will have no issues in satisfying the requirements of the Football League’s Owners and Directors Test, unlike many of the previous approaches we have had to endure.” It was a fundamental admission, accepting the consortium as fit, financed and responsible purchasers. If that is so then this deal should be ratified without delay, in the best interests of Leeds United. Those interests are not being served by the bizarre status quo.
By Phil Hay
The laborious takeover of Leeds United spawned a supporter-led protest on Thursday, under the banner #Pen4Ken.
The campaign is derived from Ten4Ken, a short-lived movement which in 2010 sought answers to 10 questions about the club’s policies and ownership structure. It consists of nothing more militant or aggressive than posting pens to Ken Bates care of Leeds United and Elland Road.
All scepticism about strategy and impact aside, the sentiment of #Pen4Ken is genuinely conceived. This takeover needs signing off and patience is wearing thin. There is rising clamour for Bates, United’s chairman and majority shareholder, to put his name to a deal which passes the club to new owners. The generous public are making sure he has something to write with.
If the demand for completion – or if not that, some clarity beyond the meaningless insistence that “talks are on-going” – strikes you as premature then consider the following: 88 days have passed since Leeds stated on May 29 that they were talking to investors with serious intent. Exactly 60 have passed since the club entered into an exclusivity period with a group of buyers from the Middle East, allowing them to pick through the financial details of United’s accounts. Solicitors who specialise in corporate law find the timeline surprising and unusually long.
A week ago, two members of the management team at Dubai-based private equity firm GFH Capital Limited attended United’s game against Wolves. GFH Capital Limited are widely believed to be the go-between in this sale – the firm acting as brokers on behalf of the buyers – and their public appearance at Elland Road was no bad sign. But in the days that followed the silence has been almost total. Even whispers of back-and-forward negotiations began to dry up.
A lawyer contacted by the YEP yesterday, someone who has dealt with takeovers at other English clubs, said the duration of a typical sale was rarely more than “a couple of months.” Occasionally they are completed in a matter of days, like the purchase of Leeds by Bates and the Forward Sports Fund from Gerald Krasner’s board in 2005 but due diligence sees to it that most buy-outs take longer. Few which ultimately end in a deal are as drawn-out as the latest attempt to acquire control at Elland Road.
So the view of those who know the landscape is that this deal has strayed into the realms of the ridiculous and was heading that way for several weeks, not helped by the confidentiality agreement which smothers the full story. Bates said last week that in the absence of official comment, “rumours abound” and “pub speculation” runs wild. He is not wrong. The very reason why #Pen4Ken began consuming Twitter was because credence has been given to the idea that a signature from him is all that stands between Leeds and investment from the Middle East.
Certain legal sources believe that suggestion is not so far from the truth. The talk in the past few weeks has been about disagreements over an indemnity clause – the protection given to a buyer in the event that liabilities appear after a sale is complete – and arguments over cash paid to the club by the Middle Eastern consortium during the summer. One contact on the seller’s side claimed scheduled payments owed to Leeds had been missed. Another connected to the buyers said they were unwilling to release any more money until final agreement on the transfer of Bates 72.85 per cent stake was reached. And so it continues with no official confirmation either way.
The YEP contacted Leeds and GFH Capital Limited after Saturday’s game against Wolves in an attempt to discuss the appearance of GFH executives Salem Patel and David Haigh at Elland Road and clarify several rumours concerning the sale of United. Predictably there was no response. Both sides have stuck fast to their confidentiality clause and for many weeks there was no argument with that. People craved news and looked for developments but appreciated the complex nature of a takeover. In the past month, the commitment to confidentiality has felt more like a useful defence against valid questions, masking a confusing situation.
The only certainty almost 90 days on is that the takeover is not dead. Warnock stated as much on Thursday and it is plain from his recent comments in the press that he is not in the mood to deceive anyone, least of all the club’s supporters. It is safe to assume that he wants this buy-out agreed, for the good of himself and his team. It is hard to imagine the scale of frustration in fearing the August transfer deadline will pass without any more signings.
That, above all else, is a reason why Bates should understand the wall of noise telling him to hand the baton on. It is reckless for anyone to endorse this bid from the Middle East without any firm details about who the bidders are, how much money they have, how much they plan to invest and what their long-term strategy will be but the lack of information does not alter the debate about where Leeds are heading without serious investment.
The message from Warnock at his press conference on Thursday was that he has nothing left in the way of funds and no expectation of any coming his way without a takeover. Even his mention of the emergency loan window was tempered by the admission that any signings from that particular market would be dependent on finances. That is not only a warning for the fate of this season but a warning for future seasons too. It gives the impression of a regime that has run out of steam – a regime who should be pleased that an offer to buy the club arrived when it did. Back when takeover fever first took hold of Leeds, it was convenient to think that their meagre transfer fund was an inevitable feature of a business about to change hands. It appears now that Leeds simply had no money to give Warnock. The well is dry again and their manager is helpless. When he enquired speculatively about a player on Wednesday, he was blown out the water by an offer from another Championship club.
Bates cannot or should not be oblivious to this. He cannot hear a manager like Warnock claim that his existing squad have “not a cat in hell’s chance” of seeing through a full Championship season and fail to see the problem. Supporters and journalists who offer that view are easy to ignore but not a 63-year-old with seven promotions behind him. The air smells of stagnation.
Sixty days ago, when United announced that due diligence was underway, they said in black and white that the buyers in question “have the financial resources to support the club and will have no issues in satisfying the requirements of the Football League’s Owners and Directors Test, unlike many of the previous approaches we have had to endure.” It was a fundamental admission, accepting the consortium as fit, financed and responsible purchasers. If that is so then this deal should be ratified without delay, in the best interests of Leeds United. Those interests are not being served by the bizarre status quo.