Leeds United; Know the past to understand the present

Those who cannot remember the past are condemned to repeat itGeorge Santayana


The £1.5m loaned to Leeds United by Massimo Cellino last week is a further addition to the list of liabilities which demonstrate that the Whites owe three of the parties that have attempted to purchase a controlling stake of the club in the past quarter.

It is reported that Cellino’s contribution in anticipation of his likely takeover has been used to meet the wage bill for January and current managing director David Haigh via the Sport Capital group put forward a sum of £1m to cover the wage bill back in November last year.

Leeds United entered administration on 4th May 2007 and was put into Creditors Voluntary Liquidation on 15th February 2008. The joint liquidators agreed 231 claims for unsecured creditors totalling £18,531,050. A second interim dividend of 2 pence in the pound was declared to those unsecured creditors with admitted claims in October 2011, bringing total dividends paid to date to 4 pence in the pound. The liquidators stated at the time that there was unlikely to be any further significant dividends available to unsecured creditors unless Leeds United achieved promotion to the Premier League before the start of the 2017/2018 season. Perhaps more alarmingly for the financial wellbeing of the club was that the same liquidators report stated that an additional £4.75m of consideration will be paid on the condition that the club achieves promotion to the Premier League before the 2017/2018 season.

All the reports coming out of Leeds United is that the club is surviving on borrowed funds. The East stand was redeveloped to the tune of £7m, mortgaging the development against prospective season-ticket revenue. However the season-ticket revenue for the current season was whisked away when Leeds United had to settle with Ticketus for a debt to the tune of £3.3m. The shirt sponsorship deal with Andrew Flowers’ Enterprise Insurance was paid upfront and those in the know suggest it was gobbled up in securing a new deal for Ross McCormack. The fact that Enterprise Insurance served a winding-up petition on the 29th of January which is due to be heard in the High Court on 17th March puts serious doubt on whether Flower’s company will see out its deal which is due to run until the 2016-17 season.

In 2007 Leeds United were deducted 10 points after going into administration and were relegated to League One. If the same situation were to happen today they would slip from 11th to 19th and would sit just 5 points off the relegation zone. We cannot predict what the owners of Leeds United will do, be that current owners Gulf Finance House or potentially Massimo Cellino. Unless a fresh injection of finance is put into the club, the debts will continue to mount.  Cellino’s bid is reported to be £25million but with the casualties of two key sponsors in the form of Enterprise Insurance and Flamingo Land will Leeds United be staring into the breach once again as they did in 2007? The words of Andrew Flowers tick all the right boxes for how this once great football superpower can return to the heights of Champions League Football and give the city of Leeds the Premiership football team it deserves:-

I am a lifelong supporter and sincerely believed that I could make a real contribution towards the goal of promotion to the Premier League and at the same time provide the stability and sound financial governance the club desperately needs.”

Andy Boyde – Sports Consultant