The chaotic fight for control of Leeds United became a two-horse race last night after the club’s managing director, David Haigh, confirmed the collapse of Sport Capital’s takeover bid.
Italian businessman Massimo Cellino and a consortium fronted by Irishman Mike Farnan are pressing club owner Gulf Finance House for a takeover deal with Sport Capital’s troubled attempt to buy Leeds officially dead.
Sport Capital’s bid had been under pressure for a fortnight and looked destined to fail on Tuesday after one of the consortium’s members, Enterprise Insurance boss Andrew Flowers, turned on GFH and attacked the bank publicly for rejecting a reduced offer and opening talks with Cellino.
Haigh, who put together the Sport Capital offer and fronted the proposed takeover throughout, conceded defeat yesterday afternoon, saying the consortium “ultimately didn’t feel able to deliver the financial backing we had hoped was agreed.”
Sport Capital intended to buy a 75 per cent stake in United, with GFH retaining 10 per cent, but their failure to conclude a takeover has left GFH officials to ponder two alternative offers from Cellino and the Farnan-led group.
Cellino – the owner of Italian Serie A club Cagliari – has been discussing investment in Leeds for the past two weeks and he and a number of his associates spent time in the city recently, touring Elland Road and Thorp Arch prior to Tuesday’s 1-1 draw against Ipswich Town.
The YEP revealed yesterday how Cellino had tried to place one of his travelling party, ex-Middlesbrough defender Gianluca Festa, in United’s dug-out for the game, a request which Leeds turned down.
Cellino is understood to be planning to sack current manager Brian McDermott if his approach to GFH leads to a takeover.
But Farnan’s consortium, which includes former Hull City chairman Adam Pearson, Welcome To Yorkshire chief executive Gary Verity, Red Strike Marketing employee Frank Devoy and ex-United captain Lucas Radebe, are pushing GFH for a period of exclusivity which allows them to finalise a buy-out.
That group waited in the background while Haigh and Sport Capital pursued a deal which was first agreed on November 30, but Farnan and his backers are understood to have established formal negotiations with GFH this week.
Farnan’s party made a previous, unsuccessful offer for Leeds three-and-a-half months ago prior to the agreement between GFH and Sport Capital.
Speaking yesterday, Haigh said: “Throughout every stage of the process we sought to keep fans as fully updated as possible on the progress of negotiations.
“I can personally assure each and every supporter that every public statement made regarding the acquisition was made in the utmost good faith.
“Unfortunately, some of the consortium’s backers ultimately didn’t feel able to deliver the financial backing we had hoped was agreed to take the club forward.
“Despite this, the future of this club remains the most important thing to me personally and I remain totally committed to putting the right team and backing in place to ensure that Leeds United can move forward.
“I have met many, many potential investors over the past year and, sadly, while many are keen to talk the talk, they have been unable or unwilling to deliver in financial terms. Nevertheless these talks continue with a number of parties to seek the best possible outcome for Leeds United.”
GFH Capital, the Dubai-based subsidiary of GFH which bought Leeds on the bank’s behalf in 2012, also made its first public comment since November, saying: “We have never made any secret about the fact that our aim has always been to attract investment partners and we are currently speaking to a number of parties regarding the acquisition of shares.”
Haigh, who is a Leeds director and a member of Sport Capital but also acts as deputy chief executive of GFH Capital, plans to remain as managing director of United despite the takeover’s collapse.
But Sport Capital paid around £6m - much of it loaned - to Leeds in advance of their buy-out with the intention of converting some of the cash into shares. It is not clear whether any of Sport Capital’s members plan to call in their loans immediately.
Leeds are known to by under heavy financial pressure and the club expect to post a loss this year. A number of the payments by Sport Capital, at least two of them funded by Haigh personally, were used to cover operating costs and wages at Elland Road.
Flowers broke ranks on Tuesday to accuse GFH of breaching its agreement with Sport Capital by engaging with Cellino and claim that the group initial’s takeover offer had been revised due to unspecified issues arising during due diligence.
Flowers was contacted by the YEP last night but said he was unable to comment for legal reasons.
The deep uncertainty is overshadowing United’s season which continues tomorrow with a West Yorkshire derby at home to Huddersfield Town.
United were hoping to avoid a further bid for top scorer Ross McCormack today, with Sunderland expected to move for the Scot if Stoke City or Celtic follow up initial interest in Stephen Fletcher.
Leeds turned down a £3.5m bid from West Ham United for McCormack seven days ago.