Leeds United: Fans group target bid for GFH shares

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Newly-rebranded Leeds Fans LLP are aiming to raise £10m by inviting fans to buy £100 stakes with the ultimate target of taking over Gulf Finance House’s stake in Leeds United. Phil Hay reports.

Supporter-held stakes in English football clubs are relatively rare and inevitably hard-earned but the path leading to investment of that type always starts somewhere.

A movement which is gathering pace in Leeds began with a small gathering of 15 fans on December 22. Last Saturday, a second meeting at the Leeds Sports Centre attracted 200 supporters in person and drew 500 more to an online broadcast of the event. The plan at the heart of this is simple in theory and highly ambitious in nature: to raise £10m and purchase a minority shareholding in Leeds United.

At the outset, the group behind the fledgling scheme took on the title ‘Together Leeds’, the name of the consortium led by Mike Farnan who tried and failed to buy United around Christmas in 2013. Farnan – the former Sunderland, Sheffield United and Manchester United International employee – passed the name on last month, along with a Twitter account with 5,000 users.

This week, Together Leeds has been rebranded as Leeds Fans LLP, a limited liability partnership which will invite supporters to become partners of the group by purchasing £100 stakes. A total of 100,000 stakes are being created and individual fans will be able to buy a maximum of 1,000 at a cost of £100,000. Each stake carries one vote.

“It’s a way of making sure the scheme is inclusive,” said Dylan Thwaites, the businessman fronting the project. “We don’t want a situation where one supporter puts in £5m and effectively controls everything. That’s not the point of this. We want as many supporters involved as possible. It’s no good simply giving authority to the richest person in the room.”

Thwaites anticipates that Leeds Fans LLP will begin selling stakes next month. The group has no set timescale for fundraising but it has a fixed target for future investment: the 25 per cent stake in Leeds controlled by the club’s former owner Gulf Finance House.

GFH has managed a minority shareholding since it sold 75 per cent of United to Massimo Cellino last April. The Bahraini bank owns around 10 per cent itself and looks after smaller stakes belonging to Bahrain’s Islamic Investment Bank (IIB) and ex-Leeds chairman Salah Nooruddin. Its equity entitles it to two seats on the club’s board.

GFH’s record at Elland Road is chequered to say the least. As owner it ran up substantial losses during 16 months in charge. Since selling Leeds to Cellino, the bank has been a cause of irritation for the Italian and their relationship frayed amid disagreements over loan repayments and capital injections. GFH has little or no credibility among United’s fanbase but opinion over Cellino is more divided, as Thwaites found at the initial Together Leeds meeting in December.

“We’re targeting the non-Cellino stake because that seems to us to be the poisonous element,” he said. “What we don’t want to do is create is another faction.

“At the first meeting there were pro-Cellino fans, anti-Cellino fans and fans who were fairly ambivalent about him. It doesn’t help us to split the fanbase. What we all agree on is that it’s in the club’s best interest for GFH to go.

“GFH only seem to be creating hurdles and obstacles. They don’t seem to be contributing anything. By our calculations they’ve probably made a profit on their original takeover so selling to us would be a financial bonus.”

As an organisation, Leeds Fans LLP has not been in touch with GFH about the possibility. It has not spoken to Cellino to gauge his enthusiasm for supporter investment either.

“We’re still in the process of finalising the Leeds Fans set-up,” Thwaites said. “It would have been inappropriate and unprofessional to approach anyone before everything was in place and the group had the authority to do so.”

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GFH was asked if it was open to the idea of selling shares to fans and in a statement, GFH Capital CEO Jinesh Patel said: “GFH is well aware of the (Together Leeds) group.

“As things stand, GFH has no plans to sell its holding. It remains committed to support the best interests of the club, as demonstrated by the fact that it has recently injected a further £5m.”

Leeds Fans LLP will be managed by a board of seven executives. Thwaites - a 49-year-old entrepeneur who lives in Huddersfield and sold his marketing business Latitude for £55m in 2007 - will be one of the seven and has agreed to head the project. Farnan attended both meetings but does not intend to be part of the executive board.

“This isn’t a vehicle for specific individuals,” Thwaites said. “Mike will help us with contacts and advice but he won’t be an executive. All of the executives will be other Leeds fans.”

Thwaites said that on the back of Saturday’s meeting - a meeting which included a speech from former Leeds striker Allan Clarke - around 100 supporters came forward to offer what he called “specific skill sets” - marketing and PR expertise and experience in fundraising. The group plan to allocate each board executive a ‘shadow network’ of qualified fans to help the investment scheme to grow.

Their plan is not free of some major challenges. The most significant are the terms of the Share Purchase Agreement reached between GFH and Cellino last year. The document expressly states that Cellino must have first refusal on any shares which another stakeholder tries to sell. In simple terms, if Leeds Fans LLP successfully negotiate a deal with GFH, Cellino has 45 days in which to take up that deal himself. The 58-year-old is currently banned from running United by the Football League but that suspension ends in little over two months’ time; too small a window realistically for a supporter-funded investment offer to materialise.

The initial target of Leeds Fans LLP could ultimately be Nooruddin. The businessman is believed to be keen to part with his minority stake and last January, as Cellino’s takeover drew close, a relative of his contacted the Leeds United Supporters Trust (LUST) offering to discuss the sale of shares.

“There are all kinds of possibilities and potential difficulties,” Thwaites said. “We’re very honest about that.

“It’s true that Cellino does have the right to buy the shares first, though it would leave a bit of a sour taste if we agreed a deal and he bought them. But even so, I still think we’d be in a far better position than we are now if Cellino owned 100 per cent of the club.”

Thwaites’ view and that of others around him is that raising funds for investment in Leeds is a logical strategy regardless. “If we have £5m or £10m behind us, it means that as supporters we’re ready to mobilise if an opportunity presents itself,” he said. “In the event of shares becoming available or, God forbid, a situation like administration arising, we’ll be in position and not starting from scratch.”

Thwaites said that all money raised from the sale of stakes would be held securely and transparently in a UK bank account. “Really, I want a level of transparency where every single transaction the group completes is detailed and explained to our partners,” he said. “There will be costs but at this stage they’ll be minor - setting up a website and so on. I’d like to think that if we raise enough money, the interest on the funds will cover those costs.”

The probability of the scheme amassing £10m is difficult to gauge. Thwaites said the highest total raised by fans of an individual club was around £3m by FC United of Manchester. “I’d like to think we could do better than that,” he said.

“I look at it like this: for the Doncaster play-off final (in 2008), 75,000 Leeds fans applied for tickets. The outlay on the day for travel, tickets and everything else must have been about £200 a head. That’s the equivalent of £15m on one play-off final, on one game involving the club.

“We asked the question of the first 50 people who signed up for the second meeting ‘how much would you pledge?’ The total came to about £250,000. Obviously we’d have to get the pledges in practice but I honestly think the idea of raising £5m-plus is realistic.”

The group’s motivation comes back to one thing: that in all the years of crisis and stagnation at Elland Road, United’s support has been the only constant and credible feature. “Leeds are a family club but the biggest and most loyal section of that family doesn’t have a voice,” Thwaites said. “We can’t influence the club. Not properly.

“We have to accept that no-one is going to charitably give us a voice. We’ve got to stand up and get to a position where we can get one for ourselves. Part of the crux of making Leeds successful is mobilising the fanbase and no-one at the club has succeeded in going that for 10, 12 years now. This is a way of changing that.”