THE SUN
http://www.thesun.co.uk/sol/homepage/sport/football/6724603/-Leeds-Fans-United-chief-reveals-takeover-plan.html
Leeds Fans United chief reveals takeover planMassimo Cellino is ready to sell Leeds to the fansEXCLUSIVE by TOM BARCLAY
published
14 minutes ago
LEEDS fans are plotting an ambitious bid to buy their club from Italian owner Massimo Cellino.
In a wide-ranging interview, SunSport’s Football League reporter TOM BARCLAY spoke to Leeds Fans United’s chief executive Dylan Thwaites, 49, to discuss the group’s plans.
Tom Barclay: What’s your background?
Dylan Thwaites: I’m chief executive of Leeds Fans United and I’m a retired entrepreneur who built an internet marketing business and sold it. I’m a lifelong Leeds fan.
TB: I heard Cellino wants £30million for the club?
DT: These things kind of run away with themselves. He has agreed to sell to us at cost.
The only auditable cost we can see is off the Companies House which is the £30m of equity that he has put into Leeds.
There is going to be more than that. That will be audited. We are only going to pay the cost he has put in which will be a specific audited figure that we can show on due diligence that he can demonstrate has gone into Leeds United and can be accounted as a genuine figure.
The £30m is the stuff at the Companies House that has absolutely clearly and unambiguously been put in by Cellino.
That’s your starter but there is other stuff which I’m sure would come out in due diligence.
Leeds want the club back in the fans' hands
Leeds want the club back in the fans' hands © Reuters
TB: What figure would you expect in the end?
DT: It might be £40m. It’s one of these where there might not be any additional stuff.
The implication of what a lot of people have been saying is that there are other parts to it.
Because he has agreed to sell it to us at cost, that’s easy to verify. If it’s there, it’s auditable. If it’s not there, we don’t have to pay it — that’s the figure.
The other thing to bear in mind is that would be the maximum figure that we would pay because if Leeds were relegated, had problems with debt or legal issues, it might not be worth the ‘at cost’ figure. In which case, we wouldn’t use our shareholders money and engage.
It gives us a maximum figure which is helpful with planning.
TB: Are there any concerns with debts? Have you seen the club’s accounts?
DT: We’ve created a structure that allows us to buy the majority share that we know we can meet the funding requirement. We’re comfortable with that.
We’re literally ready to start due diligence tomorrow morning but we can’t incur any costs until we have the written exclusivity signed up because there would be no point us doing this if there were other parties who could jump in and take the deal off us at the last minute.
He’s said he would give us exclusivity but we need it in writing to professionally proceed.
We’re ready to go the next morning with due diligence as soon as that is signed.
Leeds United boss, Steve Evans
Leeds United boss, Steve Evans © Reuters
TB: Where has the money come from? How does it break down?
DT: The money is not there in the bank although we can get it. It’s just investors to underwrite against it being there if we need proof of funds.
It comes from four sources. The firstd layer of which is the Community Benefit Society (CBS) — where 99 per cent plus of fans will invest into.
This will have lots of power over the legacy and heritage issues of the club so the club name can’t be changed, the colours, the kit, the badge, the stadium name and location. None of these things can be changed without the approval of the CBS shareholders — the mass of Leeds fans.
There will be thousands of people putting in from £100 up to £10,000 each. That would be forever, so whoever is to own the club, the fans would have control over that — the heritage and legacy of Leeds United.
The second layer up is the Leeds Fans United who will be wealthy Leeds fans investing directly into that. This is people who can put hundreds of thousands or millions in as Leeds fans.
We’re not seeking to have a high net-worth Leeds fan as a primary person within that.
The club will be owned fully by Leeds fans and the heritage is protected by the CBS and the rest is owned by wealthy Leeds fans.
If that doesn’t create the possible funds needed to buy Massimo out at cost, we then have a structure of debt from Leeds fans. This is a single group of high-net worth Leeds fans lending money interest free, but it would carry a premium when we return to the Premier League.
So they might have a million debt free but they would get a million and a half back when we get back to the Premier League. This is a really effective way of changing the debt of the club because we are not paying massive interest payments and we’re paying it off at a time when we have access to massive sums of money.
If there is still a funding gap after that, then we have institutional investors to fill that gap with normal commercial debt.
Going forward with working capital, we would have the option of bringing in one of the third-party potential acquirers. We originally set ourselves up as a minority interest but because Massimo insists on selling only to Leeds fans and wants to sell the whole thing to us, we’ve had to come up with this majority scenario.
But what we could do down the line is create new equity where people who would then be buying into the club wouldn’t be buying the club from existing shareholders and the money going out to new owners. The money would be coming straight in as new equity to Leeds United and properly financing for anything we want to do going forward.
TB: Who are the wealthy Leeds backers?
DT: We have about 80 people on our database who have declared interest in backing Leeds at the £100,000 mark and upwards. Obviously not all of those will fulfill on that and some may be prepared to put debt in rather that equity. Some may want to wait until we acquire Elland Road — which is something we would look to do early on.
But in terms of the names, as you’d expect, I can’t find any one of these who would want to put their head above the parapet. Most Leeds fans are aware of the high net-worth Leeds fans in and around the club. There are a lot of wealthy Leeds fans because of our heritage of being so good in the 70s who are now at the top of their companies and looking to put money back into the community.
Russell Crowe has been linked with a takeover of Leeds
Russell Crowe has been linked with a takeover of Leeds © Getty
TB: What about Russell Crowe?
DT: He falls into the category of a high wealth Leeds fan. If he wants to invest we would love that.
I think his last stated position was that he looked at taking the whole of Leeds United but couldn’t commit the time to do that. It’s a question of whether he would like to take a part and not have a role in the running of it. He’s been more than welcome. He would be great from a publicity point of view but frankly we view him as the same as other high net-worth Leeds fans.
We see the structure being that the owners set the strategy but a management team does the implementation. We think it is a more normal and healthier way of running a big business.
Then you don’t get that day-to-day interference. The club is run by fans who set the strategy and a management team implements that strategy.
TB: How much have you raised from fans investing?
DT: In the 24 hours after we announced that Massimo had agreed to sell to us, we took as much money as in the 24 hours when we opened the fund back in April. There’s been a big surge.
What I’ve noticed that is different about this particular surge is there are a lot more high net-worth people who have come forward and said they are interested in investing with us.
We’re over £500,000 now.
TB: Would you look to buy Thorp Arch as well as Elland Road?
DT: Thorp Arch is slightly different. There’s an easy win from cash-flow point of view at Elland Road. We can refinance it that we can save about a 1million a year in rent versus interest payments so it makes sense to do that as soon as possible. Elland Road is a specific case. With Thorpe Arch we don’t know enough yet because we need to see the contracts to see if it offers the same opportunity or not.
TB: How do you keep raising money after the initial takeover to make Leeds sustainable?
DT: Elland Road is an example of a million a year of extra cash flow created by simple moves. All the fan-owned clubs we have talked to have increased everything from receipts to revenues. In the case of Leeds, things like not having a shirt sponsor and corporate hospitality stand out. These are things that a lot of the corporates don’t want to get involved in at Leeds at the moment because it is not a happy group of fans so why would you want to associate your brand with that? But once you have a happier group of fans, these things really start to come through. In itself, having those changes can create a lot more income to Leeds. Plus there is the experience we bring to the table as entrepreneurs.
TB: What have you made of Cellino’s time in charge?
DT: We can see that there is £30m of equity that has gone in. The rest of it with debts we would have to see after due diligence.
Leeds were champions of England as recently as 1992
Leeds were champions of England as recently as 1992 © News Group
TB: Would you need convincing of Steve Evans if you took over?
DT: It’s not something for us to get involved with in terms of a comment. We’re looking a fan ownership rather than the specifics of the team and the team right now.
TB: Why will it be different under your organisation?
DT: When we’re talking about the CBS shares, they are going to have control over the legacy, heritage and financial stability of the club. That gives you a degree of control that fans have never had. The majority shareholder will be Leeds fans who have the same vested, common interests as every other fan.
TB: Would you worry about Leeds fans having trust issues?
DT: All indications are that we have absolutely massive support. All the organised fan groups are in support of us when you could imagine they might not want us treading on their toes. When people run online polls we get 90-95 per cent support for us.
The time has now come for fans to be a little bit more in control of their clubs and we’re going to be the first club to do that which will be great.
TB: How long will it take to complete a deal in a best-case scenario?
DT: The CBS minority share stuff can be completed within five weeks. The other stuff will take about three months, from exclusivity being signed tomorrow until completion. We’re seeing Cellino’s lawyer again tomorrow.
