Leeds Try To Wipe The Slate Clean - 05/05/2007

Leeds United have gone into administration, hoping to get rid of their accumulated debts of £35m while allowing the existing owners to effectively retain control. They have been penalised with a ten point deduction, but as this applies to this season when they are effectively relegated anyway, they can start next season with a clean slate. This suggests that the automatic ten point deduction, although it has bitten hard on clubs like Rotherham and Scarborough, does not always stop the use of administration as a reorganisation device. Administrator KPMG has already agreed to sell the club to a newly-formed company led by chairman Ken Bates. The sale of the club is subject to approval by its creditors by a Creditors Voluntary Arrangement. Among the creditors are the Revenue and Customs who issued a winding up petition are reported to be owed £6m and are likely to get 10p in the town, so part of the cost of the reorganisation will in effect be borne by taxpayers. Leeds United supporters who have bought season tickets for periods as long as twenty years will also lose out. Institutions from which the board arranged funding such as Forward Sports Fund will collectively lose over £22m. Nevertheless, Ken Bates has called for a cash injection of £10m as the club struggles to overcome the legacy of the controversial Ridsdale era.