Quite unbelieveable really.
The bit about 13 other investors looking at the books and walking away,whilst Bates took 4 days and presumably not looking at the books is astonishing. £33 million mortgage. Ridsdale mark 2. I wonder what our friend Starry makes of it?
January 22, 2005
Bates quick to ring changes in Leeds takeover
By Ashling O'Connor
GERALD KRASNER, the departing chairman of Leeds United, yesterday praised the "wonderful fans on all levels" as he sold the struggling Coca-Cola Championship club to Ken Bates. Yet there was little mutual admiration as details of the deal were kept secret amid continued uncertainty about the long-term financial future.
Bates, the former Chelsea chairman, confirmed that he had bought 50 per cent for an undisclosed sum and would replace all but one member of the board. The new directors include Mark Taylor, his lawyer, and Yvonne Todd, a former Chelsea finance director. Peter McCormick, a former Leeds director
and sports lawyer, will be a consultant. Peter Lorimer, a former player and a present director, will remain, as will Kevin Blackwell, the manager.
Bates's investment, through a Geneva-based fund, is believed to be £10 million, but it is not clear where the money is going. Leeds have debts of about £24 million and punishing liabilities extending to 2026 under the terms of a settlement with bond-holders struck in March last year. The pension funds, led by Teachers in the United States, loaned £60 million
during the reign of Peter Ridsdale and have set up a demanding repayment schedule to recover some money without sending the club into administration.
According to secret documents obtained by The Times, the next payment of £1.4 million is due on February 28. This "league performance amount" is owed annually until 2008 and rises to £2.5 million in the Premiership. An additional one-off payment of £5 million is owed on promotion.
The complex financial web at Leeds deterred 13 potential investors before Bates, who has not conducted any formal due diligence. Rival consortiums spent months with bankers and lawyers picking over the books to find black holes.
Bates, who made at least £17 million from the sale of Chelsea to Roman Abramovich, negotiated the deal in four days. The terms were finalised at 2.27am yesterday, ending his ten-month absence from football.
His surprise move scuppered a rival offer of £15 million from a local
consortium led by Norman Stubbs, a property developer. It is understood that they were ready to complete the deal this Tuesday and are "devastated" at the turn of events. "The good guys were coming over the hill," a source close to the consortium said. Another source described the Bates sale as "the blackest day for Leeds United".
Krasner, who is staying on temporarily as an adviser, declined to say who owned the other half of the club. The shares are thought to be spread among the outgoing directors, who will be bought out at a later date. Bates was not able to buy more than 50 per cent without incurring a substantial payment to the bond-holders.
Krasner and his fellow directors will continue to have money tied up in Leeds. They have agreed to leave loans totalling £4.4 million in the club for four years. A debt of £620,000 to David Richmond, a shareholder and former director, is repayable immediately. Richmond was unpopular among
fans because of his family's association with Bradford City, which twice went into administration. He stepped down from the board last summer, but documents seen by The Times reveal that he remained a consultant at a rate of £17,000 a month.
His contract, fixed until February 2007, will earn him a total of £442,000. Melvyn Levi, another director, has been charging a consultancy fee of £10,000 a month, plus performance-related bonuses. His contract, which expires in September, is worth at least £180,000.
The revelations will leave fans with a sour taste. "This would only be a good day if someone was taking over the club and being transparent about where the money was going," John Boocock, chairman of the Leeds United Supporters Trust, said. "Is it to the club or into other people's pockets?"
Krasner said the sale to Bates was in the best interests of Leeds.
"This deal ensures the medium to long-term survival of the club," he said. Bates's first move was to pay an overdue tax bill of £1.2 million from the sale of Elland Road to Jacob Adler, a Manchester property developer. The Inland Revenue is owed £2.3 million. Bates is expected to buy back Elland Road, which incurs annual rent of £1.4 million, and the Thorp Arch training
facility from Adler.
Sources suggest that he may take out a £33 million mortgage to reacquire the land and be left with some working capital. He could then sell shares in Elland Road to the fans.
"I recognise Leeds is a great club that has fallen on hard times," Bates said. "We have a lot of hard work ahead of us to get the club back to where it belongs. We will also be looking at ways in which the fans can control the football pitch itself."
The bit about 13 other investors looking at the books and walking away,whilst Bates took 4 days and presumably not looking at the books is astonishing. £33 million mortgage. Ridsdale mark 2. I wonder what our friend Starry makes of it?
January 22, 2005
Bates quick to ring changes in Leeds takeover
By Ashling O'Connor
GERALD KRASNER, the departing chairman of Leeds United, yesterday praised the "wonderful fans on all levels" as he sold the struggling Coca-Cola Championship club to Ken Bates. Yet there was little mutual admiration as details of the deal were kept secret amid continued uncertainty about the long-term financial future.
Bates, the former Chelsea chairman, confirmed that he had bought 50 per cent for an undisclosed sum and would replace all but one member of the board. The new directors include Mark Taylor, his lawyer, and Yvonne Todd, a former Chelsea finance director. Peter McCormick, a former Leeds director
and sports lawyer, will be a consultant. Peter Lorimer, a former player and a present director, will remain, as will Kevin Blackwell, the manager.
Bates's investment, through a Geneva-based fund, is believed to be £10 million, but it is not clear where the money is going. Leeds have debts of about £24 million and punishing liabilities extending to 2026 under the terms of a settlement with bond-holders struck in March last year. The pension funds, led by Teachers in the United States, loaned £60 million
during the reign of Peter Ridsdale and have set up a demanding repayment schedule to recover some money without sending the club into administration.
According to secret documents obtained by The Times, the next payment of £1.4 million is due on February 28. This "league performance amount" is owed annually until 2008 and rises to £2.5 million in the Premiership. An additional one-off payment of £5 million is owed on promotion.
The complex financial web at Leeds deterred 13 potential investors before Bates, who has not conducted any formal due diligence. Rival consortiums spent months with bankers and lawyers picking over the books to find black holes.
Bates, who made at least £17 million from the sale of Chelsea to Roman Abramovich, negotiated the deal in four days. The terms were finalised at 2.27am yesterday, ending his ten-month absence from football.
His surprise move scuppered a rival offer of £15 million from a local
consortium led by Norman Stubbs, a property developer. It is understood that they were ready to complete the deal this Tuesday and are "devastated" at the turn of events. "The good guys were coming over the hill," a source close to the consortium said. Another source described the Bates sale as "the blackest day for Leeds United".
Krasner, who is staying on temporarily as an adviser, declined to say who owned the other half of the club. The shares are thought to be spread among the outgoing directors, who will be bought out at a later date. Bates was not able to buy more than 50 per cent without incurring a substantial payment to the bond-holders.
Krasner and his fellow directors will continue to have money tied up in Leeds. They have agreed to leave loans totalling £4.4 million in the club for four years. A debt of £620,000 to David Richmond, a shareholder and former director, is repayable immediately. Richmond was unpopular among
fans because of his family's association with Bradford City, which twice went into administration. He stepped down from the board last summer, but documents seen by The Times reveal that he remained a consultant at a rate of £17,000 a month.
His contract, fixed until February 2007, will earn him a total of £442,000. Melvyn Levi, another director, has been charging a consultancy fee of £10,000 a month, plus performance-related bonuses. His contract, which expires in September, is worth at least £180,000.
The revelations will leave fans with a sour taste. "This would only be a good day if someone was taking over the club and being transparent about where the money was going," John Boocock, chairman of the Leeds United Supporters Trust, said. "Is it to the club or into other people's pockets?"
Krasner said the sale to Bates was in the best interests of Leeds.
"This deal ensures the medium to long-term survival of the club," he said. Bates's first move was to pay an overdue tax bill of £1.2 million from the sale of Elland Road to Jacob Adler, a Manchester property developer. The Inland Revenue is owed £2.3 million. Bates is expected to buy back Elland Road, which incurs annual rent of £1.4 million, and the Thorp Arch training
facility from Adler.
Sources suggest that he may take out a £33 million mortgage to reacquire the land and be left with some working capital. He could then sell shares in Elland Road to the fans.
"I recognise Leeds is a great club that has fallen on hard times," Bates said. "We have a lot of hard work ahead of us to get the club back to where it belongs. We will also be looking at ways in which the fans can control the football pitch itself."
