Leeds United: five key questions answered
Guardian 18/3/14
What does the conviction of prospective owner Massimo Cellino mean for the takeover of Leeds United?
Is Massimo Cellino now likely to be barred from taking over?
Yes. The agriculture magnate and owner of Serie A club Cagliari has a signed contract to buy 75% of Leeds United from the club's current owners, Gulf Finance House, a bank in Bahrain. He has now been convicted by a judge in Cagliari of criminally evading €400,000 of import tax due in Italy on his yacht, Nelie. The Football League's "owners and directors" test, formerly the "fit and proper persons" test, bars people from becoming directors or 30% owners of a club if they have "unspent convictions for offences of dishonesty". It therefore looks very likely the Football League will bar Cellino from taking over.
Will he appeal if he is barred by the Football League?
His lawyer in Sardinia, Giovanni Cocco, said he considers the verdict "unjust" and they will appeal. Cellino is also very likely to appeal against the Football League if it bars him and his company, Eleonora Sports, from taking over. Sources close to Cellino cite three grounds: that the conviction itself is being appealed, that anyway this tax conviction in Italy should not be classed as "an offence of dishonesty," and that Cellino himself is a minority shareholder in Eleonora Sports, which is owned by his family trust. The chances of such an appeal succeeding do not look convincing.
What happens to Leeds now, as Cellino has already put money in?
Cellino has paid more than £2m into Leeds to pay the club's ongoing losses, principally on players' wages, since he agreed an exclusive period of negotiation. GFH did the same when they negotiated with Ken Bates to buy Leeds in 2012 and David Haigh, still the club's managing director, formerly a GFH executive, paid in around £2m before his takeover bid with a businessman, Andrew Flower, collapsed. If Cellino and the Eleonora Sports takeover is blocked, GFH will have to fund the club again, and look for another buyer.
Could Leeds United now go into administration again?
GFH and Haigh say this will not happen. GFH have spent around £40m buying Leeds from Bates and funding its £1m monthly losses since, and they would lose all that if the club went into administration. Although they are reluctant to fund the club any more, as a bank they say they do have access to money, and will keep Leeds going until another buyer can be found.
Why do such episodes always seem to happen to Leeds?
Still considered one of English football's truly big clubs in fanbase, history and potential – and Champions League semi-finalists as recently as 2001 – Leeds United have never recovered since their financial collapse the following year. The club's then chairman, Peter Ridsdale, famously lamented "We lived the dream," and the club's fate since has been a fans' nightmare. Bates took the club into insolvent administration in 2007, thus leaving £35m creditors substantially unpaid, yet after that the club made losses again and fell into financial difficulties. GFH took over, decided they do not want to keep funding losses, and say they had no firm offers from anybody with the money to buy the club until Cellino arrived. Now, that deal looks to be scuppered, for unpaid tax in Italy over a yacht called Nelie.
What does the conviction of prospective owner Massimo Cellino mean for the takeover of Leeds United?
Is Massimo Cellino now likely to be barred from taking over?
Yes. The agriculture magnate and owner of Serie A club Cagliari has a signed contract to buy 75% of Leeds United from the club's current owners, Gulf Finance House, a bank in Bahrain. He has now been convicted by a judge in Cagliari of criminally evading €400,000 of import tax due in Italy on his yacht, Nelie. The Football League's "owners and directors" test, formerly the "fit and proper persons" test, bars people from becoming directors or 30% owners of a club if they have "unspent convictions for offences of dishonesty". It therefore looks very likely the Football League will bar Cellino from taking over.
Will he appeal if he is barred by the Football League?
His lawyer in Sardinia, Giovanni Cocco, said he considers the verdict "unjust" and they will appeal. Cellino is also very likely to appeal against the Football League if it bars him and his company, Eleonora Sports, from taking over. Sources close to Cellino cite three grounds: that the conviction itself is being appealed, that anyway this tax conviction in Italy should not be classed as "an offence of dishonesty," and that Cellino himself is a minority shareholder in Eleonora Sports, which is owned by his family trust. The chances of such an appeal succeeding do not look convincing.
What happens to Leeds now, as Cellino has already put money in?
Cellino has paid more than £2m into Leeds to pay the club's ongoing losses, principally on players' wages, since he agreed an exclusive period of negotiation. GFH did the same when they negotiated with Ken Bates to buy Leeds in 2012 and David Haigh, still the club's managing director, formerly a GFH executive, paid in around £2m before his takeover bid with a businessman, Andrew Flower, collapsed. If Cellino and the Eleonora Sports takeover is blocked, GFH will have to fund the club again, and look for another buyer.
Could Leeds United now go into administration again?
GFH and Haigh say this will not happen. GFH have spent around £40m buying Leeds from Bates and funding its £1m monthly losses since, and they would lose all that if the club went into administration. Although they are reluctant to fund the club any more, as a bank they say they do have access to money, and will keep Leeds going until another buyer can be found.
Why do such episodes always seem to happen to Leeds?
Still considered one of English football's truly big clubs in fanbase, history and potential – and Champions League semi-finalists as recently as 2001 – Leeds United have never recovered since their financial collapse the following year. The club's then chairman, Peter Ridsdale, famously lamented "We lived the dream," and the club's fate since has been a fans' nightmare. Bates took the club into insolvent administration in 2007, thus leaving £35m creditors substantially unpaid, yet after that the club made losses again and fell into financial difficulties. GFH took over, decided they do not want to keep funding losses, and say they had no firm offers from anybody with the money to buy the club until Cellino arrived. Now, that deal looks to be scuppered, for unpaid tax in Italy over a yacht called Nelie.
