LUST seek investment in Leeds United
Marching On Together 8/10/13by Shields53
Leeds United Supporters Trust are seeking to purchase a stake in Leeds United Football Club. Trust chairman Gary Cooper says he is encouraged by progress they have been making over the past few months to put the trust in a position to make their dream happen. One of the first steps is to adopt rules laid out by the Financial Conduct Authority and the trust anticipate they will meet these requirements in time to for the membership to vote on the adoption at their special general meeting early next year.
Fan involvement in clubs is not a new thing but has certainly come to the fore in recent years. Out of the 190 supporters trusts in the country 73 have a fans representative on their clubs board. Swansea City Supporters Trust have owned 20% of Swansea City since 2001 and have been instrumental in their rise though the leagues. Other high profile fan owned clubs include Portsmouth FC and Chester FC. In todays world of clubs overstretching themselves financially supporters groups are becoming increasingly involved in bringing clubs out of administration, re-launching clubs or providing fan owned alternatives to existing foreign owned clubs.
The idea first formed with the trust when GFH were in initial discussions with Ken Bates to buy the club. The trust discussed the idea of raising funds to make an investment in the club or perhaps to assist in the repurchase of Elland Road. Chairman Gary Cooper said;
“The plan’s grown legs and the Trust have devoted endless hours to dotting the i’s and crossing the t’s with the FCA. It’s been an exhausting process. The model rules strictly lay out what the Trust can and can’t do and we need to adopt those rules before we go forward. Any funds raised would be asset-locked – in other words, ring-fenced for a specific purchase.”
The trust would aim for a 10% stake in the club, given the purchase value this would mean an investment of around £2 million. The investment would be sourced from individuals within the fan base who are perhaps not rich enough to invest directly in the club but could pledge a significant amount towards the trusts aims. The trust have already had pledges for a significant amount and have sought advice from Leeds City Council and the Leeds Credit Union.
The relationship between the supporters trust and the club have become stronger than ever recently with representatives of the trust having meetings with chairman Salah Nooriddin and CEO Paul Hunt. Leeds United are not obliged to engage in a fan-share scheme but a £2 million investment is a significant amount when GFH are still actively seeking strategic partners. Perhaps the time could not be better for fan involvement and investment in Leeds United?
Is this the right move for the supporters trust though? GFH are an investment bank and they are managing the club as a strategic investment. Their partners so far have been other investment banks and individuals who have a track record in financial and property investment. The trust would certainly want something for their investment; guarantees that their money would be used for a specific purpose, purchase of Elland Road or player investment or possibly a fan becoming a director or board member. Would these guarantees be contradictory to GFH’s plan for the club.
Also what exactly would the trust be purchasing a stake in? Would it be the club or some kind of investment fund which owns the club managed by GFH? This also raises questions around what would happen when GFH come to capitalise on their investment and sell the club. Provided that these questions can be answered and GFH give the trust the guarantees they are looking for then I can see fan involvement as only good thing.