There are hostile takeovers and then there is the takeover sealed in principle by GFH Capital. No blood was spilled in the sale of Leeds United or none that we can see. As business transactions go, this was friendly to a fault.
The measured tone of Wednesday’s announcement brought to mind the contrasting style of Ken Bates’ ascension to the position of chairman in January 2005. The buy-out he fronted was largely amicable – strangely so given the deterioration of his relationship with the out-going board – but it was also quick; agreed within days and implemented within days.
Bates staged a press conference a week later and a fans’ forum on the same night, controlling both events as men like him do. You knew by then that this was his club, his turf and his call. Farewell to the days of ruling by committee.
In the past week a committee of sorts has re-established itself at Elland Road, for the month ahead and perhaps beyond. The deal struck on Tuesday night did not prompt an immediate transfer of power. That will come four days before Christmas or as soon as the Football League gives GFH Capital its approval. In the meantime, the difference from the outside is unlikely to be discernible.
In a radio interview on Wednesday morning, Bates claimed that “nothing will change” as a result of the takeover and he is understood to have given the same message to United’s players and staff at Thorp Arch the following day. It was an odd comment. Change is, by most people’s reasoning, the whole point of a complete buy-out. It is the definition of a takeover. And as GFH Capital cannot fail to realise, there is much about Leeds which those who invest emotionally in the club want to see redressed.
We know already that Bates will retain control until his buyers pay the final instalment of the price agreed for full ownership. The date for official completion has been declared by him as December 21. We know too that he will remain as chairman for the rest of this season, despite the fact that GFH Capital expect to have three representatives on the board at Elland Road by the turn of the year.
David Haigh, its deputy chief executive, has joined already. Salem Patel and Hisham Alrayes will be added next month. Bates aside, there are presently three other directors at Elland Road – Shaun Harvey, Yvonne Todd and United’s former striker, Peter Lorimer. Harvey is expected to continue as chief executive but GFH Capital’s rearrangement of the boardroom will be worth watching. It is the company’s way of depicting a new era and avoiding the impression of a partnership with the old regime.
The retention of Bates as chairman for this season and club president for years beyond was never in GFH Capital’s blueprint. The firm cannot pretend otherwise. It was an unforeseen compromise through which GFH Capital was able to close a deal. The company is entitled to be pragmatic and make its own choices but in the long-term it must act with single, uncontested authority. The mooted purchase price of £52million is more than enough to give it autonomy.
That, more than anything, was the issue with the decision to allow Bates a legacy at Elland Road. His planned appointment as club president sits uncomfortably with a lot of supporters. They could name without thinking other candidates who they see as more worthy or more appropriate.
But the argument reflects the long-standing clash of personalities between Bates and sections of United’s support. It is far less important than the matter of what active input Bates will have once 100 per cent of United’s shares pass to GFH Capital. He can advise and direct but in no way should he be free to dictate. GFH Capital will do itself a favour by drawing a line at the right time.
For now, the firm can simply continue to take small steps. The first three days of GFH Capital’s involvement were not at all disappointing. It provided United with funding on Wednesday morning and two loan signings – Alan Tate and Jerome Thomas – followed the next day. Regardless of whether the injection of cash was used directly to finance those deals, the club made more progress in the transfer market in 48 hours than they made in the previous four weeks. There are few better ways of endearing yourself to an expectant audience.
When the chaos subsides – and doubtless GFH Capital’s staff have been short of time to breathe this week – the public will look for more than that.
Those who take a keen interest in the structure of United’s business are anxious to discover whether this buy-out incorporates the whole of Leeds City Holdings Limited, the club’s parent company, or merely the club itself. GFH Capital’s takeover statement was ambiguous about that, saying: “GFH Capital has finalised the deal for the acquisition of Leeds United Football Club. Following Football League approval, LUFC Holdings Limited, a subsidiary of GFH Capital, will be 100 per cent shareholders.” GFH Capital can also expect to be asked for clarification about who precisely is backing it; in Bates’ words: “a very rich individual, very close to the government of Bahrain.”
The planned repurchase of Elland Road and Thorp Arch is another matter of intrigue. GFH Capital has not yet acquired either property. It intends to buy both but so did Bates when he first became chairman in 2005. Elland Road is subject to a buy-back clause costing in the region of £15million and Leeds hold no legal right to repurchase Thorp Arch after their buy-back agreement lapsed in 2009. Some serious money will be needed to claw back the deeds.
These are fundamental points about which questions will be raised. It is hardly fair to expect GFH Capital to drop everything and lay itself bare immediately but relief at the conclusion of a long takeover will soon give way to a desire to understand what exactly this takeover entails. The devil at Leeds United is always in the detail.