Leeds United: Takeover deadlock needs to be broken

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Talks between United’s owners GFH and sport capital to try and thrash out a deal for the club have yet to conclude. Phil Hay reports.

The ongoing takeover of Leeds United was portrayed as a neat-and-tidy purchase of a club in good fettle but over days and weeks the mooted change of ownership has become as all-consuming as the last.

There were shades of Neil Warnock in Brian McDermott’s remark that bringing negotiations to a satisfactory conclusion was United’s “number one priority”; more crucial in McDermott’s eyes than the January transfer window. No matter the promises or the money at his disposal, the view of Leeds’ manager is that the club cannot move forward with conviction while uncertainty lingers in the background.

On November 30, when United first announced a deal between owner GFH Capital and a consortium of British buyers, the projected timescale for completion was late December. By late December, sources involved in the process were talking about early January. Early January became the middle of the transfer window, and the window now closes in nine days’ time. Discussions between the two sides have continued unabated this week.

It was inevitable as time ticked by that the delay in completion would beg the question of whether the buy-out had run into trouble. Yesterday it transpired that seven weeks on from their initial announcement, Gulf Finance House – the parent company of GFH Capital – and the firm trying to take control of Leeds, Sport Capital, were wrangling over unresolved issues and struggling to bring the takeover to a head.

Rifts between Sport Capital – a consortium which includes United managing director David Haigh and Andrew Flowers, a senior figure at Enterprise Insurance – and GFH were revealed last week when it emerged that the Bahrain-based bank had opposed and prevented the signing of Ashley Barnes from Brighton, despite the availability of a £500,000 fee needed to complete the transfer.

The decision from Bahrain was a peculiar one in light of GFH’s plan to take a large backward step at Elland Road. The bank announced on Monday that the terms of its sale to Sport Capital would see Haigh and Flowers’ four-man consortium take up a 75 per cent stake with GFH retaining a 10 per cent share. Its statement added only that the deal depended on Football League approval and Sport Capital fulfilling “certain obligations to complete the transaction.”

GFH has been a willing seller for most of the past year and is prepared to relinquish its authority in return for repayment of much of the £30million-plus it spent on buying and running Leeds. Funding from Bahrain has dried up this season and prior to the end of 2013, Sport Capital claimed to have invested around £6million in the club, some of the cash put up for transfers but much of it used to meet day-to-day operating costs including wages. The annual accounts which United will publish before the end of March are expected to show that the club are losing money.

In the circumstances, McDermott was happy to play the long game when he succeeded Warnock as manager in April. At his press conference before last weekend’s defeat to Leicester City, he offered the same message saying: “When I first came here I was told that this was a long-term project. The club wanted me to build the infrastructure, the academy, the training ground and build up numbers at Elland Road.

“That can’t be forgotten and I have to focus on that – until I’m told that they’ve changed their minds and this is now a short-term project.”

He went further after the Leicester loss – United’s fifth in a row, a downturn which has coincided with the takeover delay – by admitting that major work on his squad was likely to take place in the summer, rather than in what remains of January. He has made two signings this month, Cameron Stewart and Jimmy Kebe, but was unable to land Barnes due to boardroom conflict. Suggestions that he is keen to bring in Danny Graham on loan from Sunderland seem unlikely to lead to a third arrival with Nottingham Forest close to agreeing terms with the forward. Leeds are also being credited with a firm interest in Swansea City’s Leroy Lita.

McDermott spoke highly of Haigh’s consortium at the weekend, describing them as “spot on” for the job of running United, but his comments about the delay in the handover of shares from GFH spoke volumes about the uncertainty the saga was causing.

“This ownership situation is so important. That’s the key for me, the key going forward,” McDermott said.

“I would say that the number one priority for the football club now is to get that over the line. I think the people who are coming in to take charge of this club are spot on for it, I really do.

“They think of nothing except the good of Leeds United so obviously from my point of view it’s important that the deal is done as quickly as possible. They’ve got the club at heart. They’ll be really good people moving forward.”

There are obvious implications of failed negotiations between Sport Capital and GFH, not least the question of whether Sport Capital’s members would halt further funding and look to recover the £6million they say they have invested in United. At least one of their payments was a loan, paid by a Dubai-based company for which Haigh acts as a director.

Sport Capital’s offer to GFH is presently the only one which the Bahraini company has accepted. A bid for United worth a reported £7million was submitted by a group featured ex-Manchester United employee Mike Farnan, former Leeds commercial director Adam Pearson, Welcome to Yorkshire chief executive Gary Verity and United legend Lucas Radebe in mid-November, shortly before Sport Capital agreed to purchase a controlling stake of 75 per cent. Leeds rejected the £7million proposal out of hand.

The rival group remain in the background with their own plan to invest in Leeds, though Farnan said on Twitter on Sunday that a “lock-out” by GFH had given Haigh the right to close out his takeover unhindered. Haigh for his part claimed on Saturday night that this week would bring “good news”.

Neither Sport Capital nor GFH made any comment last night.

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