Transfer chaos threatens Leeds
Out came the bunting in Leeds in April when Massimo Cellino purchased the club from outgoing (well basically at that point absent) GFH Capital. The Football League for all their input and general stalling had their decision to bar him from being a Director of the club overturned, and it was all systems go.
Well not quite it seems.
Sure Cellino and his family have set up shop in LS11, Edoardo and Ercole are now directors of Leeds, along with Massimo’s accountant Daniel Arty. He’s brought in Benito Carbone as a consultant. But to be frank Leeds United is either a Journalists wet dream right now – or their worst nightmare. Daily, something new comes out of the club, perhaps sometimes hourly, none of the news coming out though is about the players we might be adding to the squad, pre season or our Manager’s future.
As Carbone put it last week they are focusing on the economic dimension right now.
To summarise as best we can..
Cellino was frank in his exchanges with the Leeds United Supporters trust when he met them now 2 weeks ago. The club – nett – is losing £1m per month. He was (and we presume remains) concerned about the wage bill at Elland Road versus income.
Ken Bates messed that up by mortgaging season ticket income for 2 seasons to Ticketus, GFH Capital it seems didn’t really help matters much by borrowing sums to plug up that hole. Sums which are repayable in some cases to either themselves or their associated businesses, namely what they put in they were only ever going to get back – in addition to a sale price.
Winding up petitions have been an issue, HMRC, Andrew Flowers and Sports Capital have all had these filed against Leeds United. Cellino has settled all bar one (the latter). The nett effect of that challenge sadly has been the freezing of the clubs main bank account. Cellino seems well within his rights to challenge the Winding up petition. Due or not, he cuts an increasingly frustrated figure as he faces up to a complete mess at Elland Road. He seems to have had little in the way of forbearance from the former owners or their associates as he tries to accomplish this. Certainly an opportunistic air surrounds the latter winding up petition.
Cellino has had to carry out a full business structure review at Leeds, and has asked questions which quite frankly none of us really want to face up to. Can we afford to run the academy? Can we afford to sign new players? On the face of it – no. Not if we carry on as we have before.
In the similarly dark days of Ken Bates lest we forget, this was the structure put in place post-administration. Yes that’s right, this came from a clean slate 7 years ago! With our major structural debts wiped out!
In some respects the apparent financial chaos at Leeds is the answer to the question many of us asked during Bates’ tenure, namely – where has all the money gone?
For Cellino to consider redundancies on the scale he has at Leeds and to challenge the amounts of rent we pay on Elland Road and Thorp Arch is telling. He has moved from I will buy Elland Road back next week to not being allowed to buy it from the nebulous Teak Holdings. Lesser men would by now have either asked for help from outside investors or else put the club back up for sale. But Cellino really is up to his neck in it now, before he can even consider selling this Vauxhall Viva, hes got to put a new engine in it, wheels, tyres, seats.. You get the picture.
In addition to all of this its widely reported today that he has in principle agreed to sell Cagliari to a group of Americans for a reported £67m (subject to a planning permission being granted for the Club’s new stadium). He’s been very clear already though. That money is not a green light for Leeds United to behave like the proverbial drunken lottery winner, the structure at the club has to be fit for purpose, lean and deliver tangible value. All things that GFH Capital promised.
The backdrop to much of these machinations is the ongoing presence of GFH Capital and IIB on the board at Leeds United. As 25% stakeholders between them, and with Salah Nooruddin still Chairman they retain an active voice in the running of the club. Cellino’s assertions over their running and financing of the club is hardly likely to sit well though with them. If the press are to be believed Salem Patel and Nooruddin have been absent from Elland Road for several months. Nooruddin apparently does intend to return to Elland Road, but oh to be a fly on the wall at that first board meeting..
But with a club allegedly earning £100k a day but spending £200k where do transfers come into it?
Leeds have shed c£3m-£4m of wages with the release of Varney, Brown, Pugh, Diouf and Ashdown, they’ve also released the likes of the Turners, Tiesse, Ariyibi and Lenighan from their books too.
The likely upcoming sales of the likes of Peltier, Kenny, Morison and Norris will only make that number greater, but they are not the answer long term to our financial difficulties.
It is all too visible that Leeds have simply not moved in the transfer market yet. With a frozen bank account, and an inability to sell season tickets online that task looks all the harder. Just how on earth did the club get into such a mess?