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The Yorkshire based consortium that has taken over Leeds United has put together a canny deal to save the club from administration, but whether or not the club is relegated from the Premiership a fire sale of expensively paid players is now inevitable to trim £15m from the wage bill. Although the deal paid off the bondholders, it is estimated that there are still around £20m of debts outstanding. The new owners have put in £5m of working capital which is thought to be enough to keep the club going for a year. It is possible that the Elland Road ground will be sold off and leased back while arrangements are already in place to sell part of the Thorp Arch training complex.
The deal negotiated by accountant and insolvency practitioner Gerald Krasner means that the club's secured creditors (the bondholders and Gerling, the German insurance underwriter for a Guernsey player leasing company) have accepted £15m as a settlement for their £81m of debts. Gerling are now completely out of the picture, but the bondholders could get another £10m in deferred payments. This is perhaps not as bad a deal as it seems as the ground was their only security and they would not have been very popular if they had sold it off. Nevertheless, it is not as good a deal as Leicester City's secured creditors got when the club went into administration in 2002. Teachers of the US, a bondholder at Leeds took over ownership of the Walker Stadium and is leasing the crisp bowl back to the club. Moreover, at Leeds, shareholders including former deputy chairman Allan Leighton, who put in a cash injection not so long ago, will get nothing. The revenue from season ticket sales, which had gone to the bondholders, will now go straight to the club. Leeds also now own outright the contracts of all their players, who will no longer have 25 per cent of their wages deferred, and they will no longer be paying part of Robbie Fowler's salary at Manchester City.
The club's new owners, Adulant Force, have said that five of its directors (all of them except Leeds legend Peter Lorimer) are the only shareholders. Apart from Krasner, they include property developers Simon Morris and Melvyn Helme (who has taken on the role of corporate finance director), entrepreneur Melvyn Levi and David Richmond, the son of the former Bradford chairman Geoffrey Richmond. Aston Villa shareholder Jack Pethey is not a shareholder, but made an unspecified contribution to financing the deal, perhaps in the region of £15m. The parent company of Leeds has been placed in administration. The new owners may have struck a good bargain for themselves given that the club had a turnover of £64m in 2002-3 and could yet survive in the Premiership.
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