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Leeds United: Deadline looms for Thorp Arch transfer

Published on Monday 12 October 2009 08:14

Leeds United remain optimistic that Leeds City Council will complete its purchase of Thorp Arch on time, with the full backing of the Football League.

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United have confirmed their training ground must be in the hands of the council by Thursday afternoon to comply with the buy-back clause they have on Thorp Arch and expect that schedule to be met in a deal which would end any lingering uncertainty about their future use of the state-of-the-art complex.

The council has agreed to purchase Thorp Arch from Barnaway Ltd – the company which bought the property from United for 4.2m back in 2004 – and rent it to the club, but the proposal has a number of hurdles to clear before it can be officially signed.

Leeds City Council has been performing due diligence on United's finances and was continuing that process towards the end of last week. Should it be satisfied by the information it receives, the local authority's plan to buy Thorp Arch would then require the blessing of the Football League.

League approval is an essential part of the agreement, described by the council's joint leader, Andrew Carter, as a "deal-breaker" and "non-negotiable".

The Football League, however, is unlikely to provide that permission until it is entirely satisfied that questions about the identity of United's ownership have been addressed.

The League's board wrote to Leeds last week asking for clarification over the individuals behind Forward Sports Fund (FSF) – the off-shore company which holds a 100 per cent shareholding in Leeds – after reports alleged that chairman Ken Bates claimed in error that he was one of the club's owners.

The allegations raised the question of who ultimately controls the League One club and whether United's owners have passed the Football League's fit and proper persons test.

The directors and beneficiaries of FSF, which gained control of Leeds after a Bates-led takeover in 2007, have never been publicly named.

Leeds City Council also wishes to see confusion over the ownership of United resolved before it proceeds with the purchase of Thorp Arch, though the need for rubber-stamping by Lord Mawhinney's organisation was a factor before the League made its demand for fresh information from Elland Road last week.

As part of the agreement reached between United and the council, it is understood that Leeds intend to use a portion of the central income they receive from the Football League as financial security, helping the club to guarantee their future obligations to the council.

League One clubs receive around 640,000 annually from the League, raised through television, sponsorship and other commercial agreements, with the money paid in instalments.

A spokesman for the League said: "We understand that part of the security package included in the agreement would see the club assigning part of its central income from the Football League as security.

"Requests of this kind from clubs are not uncommon."

United chief executive Shaun Harvey has vowed to comply with the Football League's demand for clarification about the club's owners and said he was aware of a request from the council for similar information.

"The question's been asked in different quarters and it's become an issue," Harvey said.

"I understand that the council have asked for information (about United's owners) and we're looking to provide it within the parameters that the club are restricted to.

"It's fair to say that we'll be dealing with all the parties involved in this – the League and the council – at the same time."

Asked whether he feared the matter of ownership might hinder or threaten the council's deal to buy the training complex, Harvey said: "I don't. We as a club are optimistic that it will go ahead as planned."

The council is committed to the Thorp Arch deal – Coun Carter expressing his belief that it will "be okay" – but the local authority will abandon the plan if the League is unwilling to sanction it.

Coun Carter said: "It's not a case of us approaching the Football League to ask them to check the deal over. From the very start, the Football League was always required to give its approval.

"For reasons of commercial confidentiality I can't discuss the finer details, but the Football League's approval was always part of the deal that's on the table.

"That was the case long before the issue of United's ownership came up, and that part of the deal isn't negotiable. But I have to say that I think it will be okay."

Leeds presently pay in the region of 486,000 a year to rent Thorp Arch from Barnaway Ltd and the buy-back clause negotiated when the property was sold five years ago by the Leeds board, headed by ex-chairman Gerald Krasner, is in its final throes.

The original option was set to run until October 10, 2009 – last Saturday – but the deadline was recently extended by five days with the agreement of Barnaway director Jacob Adler.

Writing in his programme column before Leeds' Johnstone's Paint Trophy tie against Darlington, Bates said: "Leeds City Council have agreed to fund the purchase of Thorp Arch and completion will take place by October 15."

Harvey said the five-day extension was agreed specifically to assist Adler, who was otherwise engaged in the lead up to October 10.

Harvey said: "It wasn't an extension that we requested. The original date clashed with a religious holiday and it would have caused the landlord a problem.

"He was happy to work towards the 15th instead, as we are, and the date was amended accordingly."

The council has negotiated a 14-year lease period with Leeds for Thorp Arch, after which time the club will have the option to acquire the complex.

United will also be able to buy back the land at an earlier date if they raise the necessary funds.