A leading expert in sports law believes Leeds United are headed for a change of ownership after the club revealed that potential investors are in line to undergo the Football League’s Owners and Directors Test.
Richard Cramer, a partner with Leeds-based firm Front Row Legal, said a buy-out of the Championship side was “highly likely” on the strength of a statement revealing that an unnamed group are carrying out due diligence at Elland Road.
Leeds have been in talks with potential investors for several weeks – discussions encouraged by the worrying shortage of transfer funds which were hampering the close-season plans of manager Neil Warnock – and the club have taken a big step towards a takeover by entering into a period of “exclusivity” with one party thought to have links to the Middle East.
A statement from Leeds read: “Our discussions with them have left us very comfortable that they have the financial resources to support the club and that they will have no issues in satisfying the requirements of the Football League’s Owners and Directors Test, unlike many previous approaches we have had to endure.”
The Football League’s Owners and Directors Test – formerly the Fit and Proper Persons Test – is carried out by the governing body on any individual acquiring a shareholding of 30 per cent or more in any of its 72 member clubs.
At present, Leeds are owned by their chairman, Ken Bates, who bought a 72.85 per cent stake in Leeds little more than a year ago.
The need for the would-be investors to undergo the Football League’s test suggests Bates – chairman at Elland Road for the past seven-and-a-half years – is ready to sell a sizeable and potentially controlling interest in United.
Cramer told the Yorkshire Evening Post: “Getting to the due diligence stage usually means that a deal is agreed in principle but remains conditional on the prospective buyers making all the necessary enquiries into the financial state of the business.
“Without being on the inside, my reading of this would be that they’re 90 per cent there and the fact that we’re into the realms of the Fit and Proper Persons test suggests we’re definitely talking about a takeover if everything goes to plan.
“It seems to confirm that Bates is ready to sell.”
Signs of progress behind the scenes at Elland Road were apparent last week when deals to sign Adam Drury and Paul Green ended a near two-month wait for new additions to Warnock’s squad.
Warnock planned to recruit as many as four players before the end of May but prior to last week a shortage of funds restricted him to the £500,000 capture of centre-back Jason Pearce – a deal agreed on May 4.
Warnock is in the middle of a short holiday but could return to work in the coming days to find his situation and transfer pot vastly improved following United’s latest announcement.
Leeds have entered into a confidentiality agreement and said they would “not be making any further announcements in the near future.”
The Leeds United Supporters Trust welcomed the latest statement, with chairman Gary Cooper telling the YEP: “The Trust believe this is an extremely positive development.
“We hope now that the club will act as swiftly as possible and in the best interests of Leeds United to give Neil Warnock the best opportunity to sign who he wants in the transfer window before the new season starts.”
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