http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2007/05/05/sfnlee05.xml
Bates pulls off another trick By David Bond Even for a man of Ken Bates' reputation, his financial manouverings at Leeds United yesterday left the rest of football stunned. While perfectly legal, his latest rabbit out of the hat trick at Elland Road will raise eyebrows across the football world. It was certainly a fast bit of business from a man once described by Aston Villa manager Martin O'Neill as a "footballing cretin". By placing Leeds into administration now and agreeing a deal to buy it back he not only ensured the club start next season in League One with a clean slate but he has unburdened himself of the creditors who have weighed Leeds down on their journey from the European elite to the outer reaches of the Football League. But the move provoked strong reactions from rival clubs, supporters and financial experts who attacked Bates for the move.. advertisement The League may now even be forced to review their rules on administration to prevent clubs from steering around the regulations in such a way in future. And the taxman, who stands to lose the vast majority of the £5million he is owed, is certain to explore ways of ensuring club directors whose clubs go bust in future cannot simply cut and run by calling in the administrators. In fact it was the taxman who forced Bates's hand after issuing a winding up petition against the club. If this had not been paid by June 25 then Leeds would have gone into liquidation. So instead of battling on Bates acted now, calling in KPMG to act as administrators. Yesterday they released a statement which outlined the severity of the new crisis the club were facing. It said: "It was necessary for the club to enter administration as its balance sheet dated Mar 31 2007 indicated debts totalling approximately £35m, with a cash injection of approximately £10m required to continue trading." Of that £35m, Bates and his mystery backers, who control Leeds through offshore companies called Astor Investment, Krato Trust and the Forward Sports Fund, are by far the club's biggest creditors with loans worth £22m. In addition to the monies owed to the taxman it is thought a further £2m is owed to former directors with the rest made up in debts to former players, suppliers and employees. Apart from the football creditors, who must be paid up in full, everyone else, including Bates and his investors, will receive a fraction of what they are owed following the administration. But rather than put the company up for sale to the highest bidder, KPMG have already agreed a deal with Bates which should allow him to buy the club back. Bates set up a new company called Leeds United 2007 Ltd. He then provided KPMG with future funding plans which convinced the administrators that the club's long term financial security was best served by allowing Bates to retain control. The deal, the fee for which has not been disclosed, must still be approved by all the club's creditors later this month and by the Football League. That means other potential bidders such as former West Ham chairman Terry Brown and ex-Leeds director and property tycoon Simon Morris could still launch bids. But Bates, who issued a fresh appeal for new investors earlier this week, said he had been looking for backers since he bought the club in a £10 million deal in Jan 2005 but none had been prepared to show they had the money to help. Despite one insolvency expert describing Bates's latest move as "very sharp practice", KPMG defended their actions, saying it was a common process in company restructuring. "I don't think it's sharp practice," said Richard Fleming from KPMG. "We are one of the biggest accountancy firms in this business. We know our business and we do this day in day out." The Football League said they were "disappointed" that Leeds had gone into administration but would not be drawn on whether they might block Bates' rescue plans. But it is understood chairmen of other Championship clubs are outraged at what Bates has done. and could now press for tougher rules on administration. _______________________________________________ the Leeds List is an unmoderated mailing list and the list administrators accept no liability for the personal views and opinions of contributors. Leedslist mailing list [email protected] http://list.zetnet.co.uk/mailman/listinfo/leedslist The Leeds List - "where never is heard a discouraging word..."
