Leeds United: Cellino’s bid looks to have hit the buffers

Massimo Cellino.
Massimo Cellino.
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Sports lawyer Richard Cramer feels Tuesday’s Italian court verdict leaves the Football League with only one option – to reject Massimo Cellino’s takeover. Phil Hay reports.

Shaun Harvey, the Football League’s chief executive, is abroad on business in the Far East but the governing body has given no indication that it will fail to keep to the timescale set for a decision on Massimo Cellino.

The League predicted last Thursday that Cellino’s takeover of Leeds United would be approved or rejected within 10 days and it is working towards that deadline still after Tuesday’s court ruling against the Italian.

A short holding statement is all the League has issued in the wake of Cellino’s conviction for tax evasion in Sardinia, a reflection of the fact that the organisation’s handling of this takeover is more public and complicated than most it has processed.

The League did not have a representative present in court when the judge, Justice Sandra Lepore, handed down a fine of more than £500,000 to Cellino and ordered the confiscation of the yacht at the centre of the case. The governing body will rule on whether he complies with its Owners and Directors’ Test once it receives documentation about the verdict.

Cellino plans to appeal and, in the opinion of his Italian lawyer, Giovanni Cocco, should be considered innocent until that appeal is exhausted. But a sports lawyer in Leeds, Front Row Legal’s Richard Cramer, said Tuesday’s court verdict was likely to leave the Football League with no alternative but to reject Cellino’s takeover.

“I’ve seen the comments about him being innocent while an appeal is heard but in reality he’s been convicted of tax evasion,” Cramer said.

“It’s a guilty verdict in a court of law on a charge that can’t be considered insignificant. The fine isn’t insignificant either. Tax evasion in this country often leads to disqualification as a director so that sort of conviction would most likely kill any takeover by a British individual.

“There’s a lot of debate about how good or effective the Football League’s tests are but the people who run the League will be thinking about the competition’s integrity. They’ll be asking themselves what it would say about their rules and regulations if they turn a blind eye to this. In the light of Tuesday’s verdict, I’m struggling to see how Cellino can pass.

“Before the League’s board or lawyers say anything final, they’ll want to gather the information from court and go through it carefully. It might be that there’s some mitigation, some aspect of the case we’re not aware of, but the charge was tax evasion and tax evasion is fraud. You’d assume there’s only one outcome here.”

Cellino is believed to have employed the services of Mishcon de Reya, a major London law firm, shortly after agreeing his 75 per cent buy-out of Leeds, and his UK-based legal team have held discussions with the Football League in the 48 hours since Tuesday’s court decision.

The Italian has been keenly involved at Elland Road during the past two months, offering loans to the club and attending several of their league matches, the most recent at home to Bolton Wanderers on March 8.

United have signed Jack Butland and Connor Wickham in the interim and Cellino was seen by current owner Gulf Finance House as the answer to the problems of a club who are thought to be losing around £1million a month. It was widely agreed that his offer of £25m for a 75 per cent stake – with a further £10m paid to GFH if Leeds win promotion to the Premier League – was a very good price which others would struggle to match.

“The League will be under pressure from his legal team to let the deal go ahead,” Cramer said. “They’ll be making strong representations and pointing out that he plans to appeal. I’d guess that they’re also demonstrating the financial commitment he’s shown to the club already.

“Quite what his level of influence at Leeds has been I can’t say but he looks from the outside like a de facto owner. He’s given that impression himself. He’s been quoted as saying that he’s put money into the club to help them operate and there doesn’t seem much doubt that Leeds need money.

“This is the dilemma for the League. On the one hand they might feel that the tax conviction means Cellino fails. But on the other, Leeds can probably argue that they’ll have problems if the League say no to him. He does seem to have money and he might well have a viable business plan going forward. But when it comes down to it, the League’s rules have to be applied strictly or they’re not worth the paper they’re written on.”

It was suggests on Tuesday that Cellino might circumvent the Owners and Directors Test by resigning as a director of Eleonora Sport Limited – the company he is using to buy Leeds – and installing another family member in his place.

The Football League’s rules, however, are also applied to shadow directors – people who are not a named as directors of a company but effectively control it in the background. The regulations also allow the League to test anyone with a shareholding of less than 30 per cent “in accordance with whose instructions the board of the club are accustomed to act.”

“I don’t see any of that working because it’s been very obvious in everything Cellino’s said that he’s behind this takeover and he plans to call the shots,” Cramer said.

“Shadow directors are directors in the League’s eyes and it would stretch credibility to say that someone else in the Cellino family is taking over but Massimo’s got nothing to do with it. It seemed to me that the League was concerned about his past convictions anyway but clearly they were spent or overturned. Now he’s got another which is new and unspent. That might blow everything off course and the League will be very careful now. This takeover is playing out more publicly than any I can remember.”

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