Ken Bates' career traced change in football from game to big business - Guardian 27/7/13
Abrupt departure as Leeds United president brings to an end an often controversial five decades in the sport
David Conn
Ken Bates was famously portrayed in the 1960s classic The Football Man, by the Observer's Arthur Hopcraft, as the epitome of a new, dynamic, commercial club chairman – raising prices at Oldham Athletic, urging football to see itself as a business. If his abrupt departure one month into an agreed three-year stint as president of Leeds United on Friday finally brings his five decades in football to an end, Bates's extraordinary career can be said to trace the arc of the game's changed relationship with money.
A tax exile in Monaco – having sold Chelsea to Roman Abramovich in 2003 and Leeds to the Bahrain-based Gulf Finance House (GFH) in December – Bates received the news that his presidency had been terminated by hand-delivered letter, while on holiday in Italy with his wife, Suzannah.
Speaking to the Observer from there, Bates said he had been sacked by GFH from his role as club president. He said this was after he committed Leeds United, for the next three years, to paying for a private jet to fly him from Monaco to Leeds whenever he needed. The cost to the club of the contract with the corporate aeroplane charter company 247 Jet is thought to be about £500,000 over the three years.
Bates argued it was unfair and "ridiculous" to be sacked for committing the club to the private-jet contract. He said it was saving the club money because it was in pounds sterling, not euros, and he had been advised that, as a director in June, he did have the power to bind the club to the contract.
Bates said his arrangement with Leeds included "certain expenses" that had not changed in the eight years that he was there. That is understood, from sources who have seen the club's accounts, to have included travelling by private jet between Monaco and Leeds at the club's expense. That service from 247 – which offers, according to its website, "total flexibility, security and privacy" with "no long tedious check-in procedures" – is understood to have latterly cost the Championship club Leeds around £120,000 a year.
Bates always said from 2005 that he did not own Leeds, who had serious financial difficulties when he arrived, dating from the era of "living the dream" under the former chairman Peter Ridsdale. Instead, he said, he had been appointed chairman by anonymous investors in offshore funds who held Leeds via the Forward Sports Fund, registered in the Cayman Islands and administered in Switzerland. In 2011, after concerns raised by a parliamentary select committee that the Leeds owners were unknown, Bates announced he had bought the club from the unnamed investors, via his company, Outro, registered in the tax haven of Nevis.
He was never paid a salary, a point he and Suzannah emphasised, but he confirmed he was paid expenses as the Leeds chairman. According to the sources, these also included €6,000 (about £5,000) a month office expenses in Monaco, paid by the club. Asked about that, and the private-jet contract, Bates declined to confirm details or precisely what the money covered, but said his expenses had not changed for the eight years he was at Leeds.
"GFH knew what my expenses were when they did due diligence and they signed them off," he said.
It is also understood that a deal done in December 2011 with a company, Lutonville Holdings Ltd, connected to Outro, by which Lutonville paid £3.2m for preference shares, involved a regular payment by the club to Lutonville. Leeds paid a "set-up fee" of £100,000 to Lutonville for the £3.2m, which was used to repay creditors, principally Caddick Construction. They were paid £10m by Leeds for developing the centenary pavilion and conference and banqueting facilities in the Elland Road east stand.
Under the terms of the agreement, Leeds United paid Lutonville a "monitoring fee" of £40,000 every quarter. When Bates sold Leeds to GFH in December, the £3.2m preference shares were repaid at £4m, an £800,000 profit. Leeds United's published accounts state that "Lutonville Holdings is a related party by virtue of its connection to Outro Limited". However, Bates said Lutonville is not in fact his company. Of the monitoring fee payment, he said he could not comment because he did not have the details in front of him.
The Leeds accounts are also understood to reveal the high cost of legal disputes fought by Leeds during Bates's tenure as chairman. He pursued a former director, Melvyn Levi, for £190,000 that Bates claims is owed from 2005 – which Levi denies, saying Leeds owed him £1.4m – and lost an action for harassment Levi brought after statements about him in Bates's chairman's programme notes and on the club-owned Yorkshire Radio. The fees for Carter Ruck solicitors, paid by Leeds United, are understood to have amounted to £1.26m between 2010 and 31 May 2012. It is unclear what they relate to.
Leeds are facing the new Football League season still with financial difficulties, which GFH told the Guardian in February is due to Bates having mortgaged two years of season-ticket money for £5m, forward sold the Elland Road catering contract for £2m and borrowed £1.5m from the club sponsor to help pay the £10m cost of the building work. Bates insisted that was a good decision, which many fans believed came at the expense of strengthening the team. "We built 4,000 corporate seats and that is where you make money," Bates said.
He argued that the cashflow problems Leeds faced after he sold the club to GFH was not due to the building work, but to GFH, who had effectively been in executive control since June 2012. He did not expand on which GFH decisions taken, or expenses incurred, had caused the need for a cash injection since the takeover of between £13m and £15m.
It is thought that further money, close to £10m, will be required to keep Leeds going financially with a Championship squad this season. Bates, who argues he has transformed Leeds since 2005, claimed that GFH had struggled to pay the club's wages in March and he said he had "arranged" for Lutonville – although not his company – to lend the club £1m. Bates said this £1m should have been paid back at the end of June, and had not been, so he is planning to sue for it. He also warned that he is likely to sue over his departure as president, which he and Suzannah argued was "unfair".
GFH told the Observer they have signed confidentiality agreements with Bates and so declined to comment on any of it, including the reasons for his tenure as president being so suddenly terminated. Thus a near 50-year career in the people's game nears its final destination, for one of England's most notable football men.
David Conn
Ken Bates was famously portrayed in the 1960s classic The Football Man, by the Observer's Arthur Hopcraft, as the epitome of a new, dynamic, commercial club chairman – raising prices at Oldham Athletic, urging football to see itself as a business. If his abrupt departure one month into an agreed three-year stint as president of Leeds United on Friday finally brings his five decades in football to an end, Bates's extraordinary career can be said to trace the arc of the game's changed relationship with money.
A tax exile in Monaco – having sold Chelsea to Roman Abramovich in 2003 and Leeds to the Bahrain-based Gulf Finance House (GFH) in December – Bates received the news that his presidency had been terminated by hand-delivered letter, while on holiday in Italy with his wife, Suzannah.
Speaking to the Observer from there, Bates said he had been sacked by GFH from his role as club president. He said this was after he committed Leeds United, for the next three years, to paying for a private jet to fly him from Monaco to Leeds whenever he needed. The cost to the club of the contract with the corporate aeroplane charter company 247 Jet is thought to be about £500,000 over the three years.
Bates argued it was unfair and "ridiculous" to be sacked for committing the club to the private-jet contract. He said it was saving the club money because it was in pounds sterling, not euros, and he had been advised that, as a director in June, he did have the power to bind the club to the contract.
Bates said his arrangement with Leeds included "certain expenses" that had not changed in the eight years that he was there. That is understood, from sources who have seen the club's accounts, to have included travelling by private jet between Monaco and Leeds at the club's expense. That service from 247 – which offers, according to its website, "total flexibility, security and privacy" with "no long tedious check-in procedures" – is understood to have latterly cost the Championship club Leeds around £120,000 a year.
Bates always said from 2005 that he did not own Leeds, who had serious financial difficulties when he arrived, dating from the era of "living the dream" under the former chairman Peter Ridsdale. Instead, he said, he had been appointed chairman by anonymous investors in offshore funds who held Leeds via the Forward Sports Fund, registered in the Cayman Islands and administered in Switzerland. In 2011, after concerns raised by a parliamentary select committee that the Leeds owners were unknown, Bates announced he had bought the club from the unnamed investors, via his company, Outro, registered in the tax haven of Nevis.
He was never paid a salary, a point he and Suzannah emphasised, but he confirmed he was paid expenses as the Leeds chairman. According to the sources, these also included €6,000 (about £5,000) a month office expenses in Monaco, paid by the club. Asked about that, and the private-jet contract, Bates declined to confirm details or precisely what the money covered, but said his expenses had not changed for the eight years he was at Leeds.
"GFH knew what my expenses were when they did due diligence and they signed them off," he said.
It is also understood that a deal done in December 2011 with a company, Lutonville Holdings Ltd, connected to Outro, by which Lutonville paid £3.2m for preference shares, involved a regular payment by the club to Lutonville. Leeds paid a "set-up fee" of £100,000 to Lutonville for the £3.2m, which was used to repay creditors, principally Caddick Construction. They were paid £10m by Leeds for developing the centenary pavilion and conference and banqueting facilities in the Elland Road east stand.
Under the terms of the agreement, Leeds United paid Lutonville a "monitoring fee" of £40,000 every quarter. When Bates sold Leeds to GFH in December, the £3.2m preference shares were repaid at £4m, an £800,000 profit. Leeds United's published accounts state that "Lutonville Holdings is a related party by virtue of its connection to Outro Limited". However, Bates said Lutonville is not in fact his company. Of the monitoring fee payment, he said he could not comment because he did not have the details in front of him.
The Leeds accounts are also understood to reveal the high cost of legal disputes fought by Leeds during Bates's tenure as chairman. He pursued a former director, Melvyn Levi, for £190,000 that Bates claims is owed from 2005 – which Levi denies, saying Leeds owed him £1.4m – and lost an action for harassment Levi brought after statements about him in Bates's chairman's programme notes and on the club-owned Yorkshire Radio. The fees for Carter Ruck solicitors, paid by Leeds United, are understood to have amounted to £1.26m between 2010 and 31 May 2012. It is unclear what they relate to.
Leeds are facing the new Football League season still with financial difficulties, which GFH told the Guardian in February is due to Bates having mortgaged two years of season-ticket money for £5m, forward sold the Elland Road catering contract for £2m and borrowed £1.5m from the club sponsor to help pay the £10m cost of the building work. Bates insisted that was a good decision, which many fans believed came at the expense of strengthening the team. "We built 4,000 corporate seats and that is where you make money," Bates said.
He argued that the cashflow problems Leeds faced after he sold the club to GFH was not due to the building work, but to GFH, who had effectively been in executive control since June 2012. He did not expand on which GFH decisions taken, or expenses incurred, had caused the need for a cash injection since the takeover of between £13m and £15m.
It is thought that further money, close to £10m, will be required to keep Leeds going financially with a Championship squad this season. Bates, who argues he has transformed Leeds since 2005, claimed that GFH had struggled to pay the club's wages in March and he said he had "arranged" for Lutonville – although not his company – to lend the club £1m. Bates said this £1m should have been paid back at the end of June, and had not been, so he is planning to sue for it. He also warned that he is likely to sue over his departure as president, which he and Suzannah argued was "unfair".
GFH told the Observer they have signed confidentiality agreements with Bates and so declined to comment on any of it, including the reasons for his tenure as president being so suddenly terminated. Thus a near 50-year career in the people's game nears its final destination, for one of England's most notable football men.