http://www.timesonline.co.uk/tol/sport/football/championship/article1749970.ece
Leeds down but not yet out as Bates buys time for recovery Rick Broadbent It sounds like a fancy piece of footwork to surpass anything that Leeds United’s players have managed this season, but Ken Bates, the chairman, prompted talk of a phoenix rising even as the club was sinking a division. On a day of high drama in West Yorkshire, Leeds’s relegation to Coca-Cola League One was confirmed when the club were placed into administration. It meant that they incurred a ten-point penalty, but Bates had negotiated a “prepackaged phoenix” deal with KPMG, the appointed administrator. A new company headed by Bates, called Leeds United Football Club Ltd, will assume control of the club, subject to agreement of the creditors and the Football League. “The important thing now is not to view this as the end but the beginning of a new era,” Bates said. “The financial burden of the past finally pushed the club into administration, but this action brings to an end the financial legacy left by others that we have spent millions trying to settle.” Those comments came after Peter Ridsdale, the former chairman whose spending regime sparked the financial problems, had said that people should stop harking back. It emerged yesterday that Leeds’s debts were as high as £35 million and that they needed to find £10 million to continue trading. Revenue & Customs had also issued a winding-up order for £5 million, which could have forced the club into liquidation. Although entering administration confirmed Leeds’s relegation to the third tier of English football for the first time in the club’s history, the timing was good because it means that the team can start next season with a clean slate. Bates said that he is looking for investment and launched a withering attack on time-wasters. “We have followed up every approach received but refused to deal with unnamed consortiums represented by third parties, if indeed they ever existed,” he said. “We have always required proof of funds first, whereupon they often disappear.” Richard Fleming, of KMPG, said that the deal with Bates had been the only one on the table. However, Simon Morris, one of the directors who sold the club to Bates two years ago, was finalising a bid for the club to include an arena and entertainment complex at Elland Road. Yesterday’s developments took Morris, a property developer worth £69 million, by surprise. The deal still has to be passed by the club’s creditors via a Company Voluntary Arrangement this month and a source close to Morris said that the door remained open and that Bates’s deal was not a fait accompli. “It has led to the survival of the club and provided a much-needed cash injection,” Fleming said. “That is coming from investors who have been sourced by Mr Bates. The club has been struggling with the historic debt burden and a lot of that will be written off.” Staff at Elland Road yesterday morning said that Bates was in good spirits and it is clear why that was the case. The new directors of Leeds United Football Club Limited are Bates, Shaun Harvey and Mark Taylor, who were directors on the previous board. There will be some who believe that Leeds have gained an unfair advantage by going into administration. Leicester City received the same criticism when they took the administration route with debts of £30 million in 2002. They wiped out much of their debt, including a £6 million tax bill, and were bought for £1.25 million four months later by a consortium fronted by Gary Lineker, the former Leicester player. They were promoted to the Premiership the same season. That moved the FA and the Football League to bring in points penalties, but the fact that Leeds were all but sunk, and the timing of yesterday’s move, renders that punishment meaningless. John Nagle, of the Football League, said: “Given the recent reduction in the numbers of clubs resorting to insolvency proceedings, it is disappointing Leeds United have had to seek the protection of an administration order.” He added that all football debts would have to be settled in full. It was another amazing day at a club that has set the benchmark for soap opera in recent years. With a Las Vegas millionaire threatening to bring Mike Tyson with him as a fitness coach as part of a takeover package, it seemed that there was nothing left by way of surprises. However, when Dennis Wise, the manager, cancelled his prematch press conference, it was clear that something was developing. Bates said that those who will suffer the biggest financial loss are institutions who arranged funding – Astor Investment Holdings, Krato Trust and Forward Sports Fund (FSF). Collectively, they will lose £22 million. “The shares in Leeds are owned by FSF, who would welcome serious investors to help make this club financially strong again,” Bates said. Bates asked KPMG to advise the club on Monday and it discovered that the £5 million tax bill would have forced the club into liquidation if it remained unpaid by June 25. Fleming said: “This agreement has been reached quickly to maximise the possibility of survival of this major football club, to minimise uncertainty for all the club’s stakeholders and supporters and to allow the club to plan ahead for next season.” Gone for broke Leeds United went into administration at 3.15pm yesterday, incurring a ten-point penalty and confirming their relegation to Coca-Cola League One. However, Ken Bates, the chairman, had negotiated a deal with KPMG, the administrator, to buy back the club immediately. It means that most of the club’s £35 million debt will be erased in one fell swoop. An additional bonus for Leeds is that the ten-point penalty will not be carried over to next season. The big losers are Leeds’s creditors, who include investment funds that had loaned millions to the club, and the Inland Revenue. _______________________________________________ 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..."
