New Leeds United chairman Andrew Umbers is confident the financial restructuring put in place at Elland Road will allow the club to break even at the end of next season. Phil Hay reports.
The job of Leeds United chairman fell to Andrew Umbers at a time of internal strife last week. He accepted the post against the backdrop of a banned owner, a squad threatened by relegation and a club with battles left to fight.
On paper it read like crisis management but Umbers sees the landscape differently. In his view the crisis at Elland Road came last May when, less than a month after Massimo Cellino’s takeover, the Italian was advised to admit defeat immediately and call in the administrators.
Umbers had joined Cellino’s staff that month, asked to help him by “two leading attorneys in the Italian FA.” “At the time, Massimo and I were advised by accountants and other experts that the club should go into administration,” he says.
“Massimo had run Cagliari for 23 years and for the last 15 years, that club made 10 million Euros per annum. He knows how to run a football club. We did a root-and-branch strategic review and we didn’t accept that this football club should go into administration. But the backdrop was pretty awful.”
There are numerous ways of painting the mess in explicit terms. As the club’s most recent accounts show, Leeds – largely under the ownership of Gulf Finance House – lost over £22m in the 2013-14 year. They are presently subject to a Financial Fair Play (FFP) transfer embargo because of it. Loans of more than £20m are owed to GFH, and redundancies last summer were sweeping. Umbers estimates that staffing levels at United have fallen by 37 per cent since then.
“The situation has dramatically improved,” he says. So much so that Umbers expects Leeds to be FFP compliant and out of embargo by the time the summer transfer window opens. Definitely? “Yes. We’ve submitted our FFP analysis. We’re already planning for what we need to do squad-wise for the 2015-16 season.”
Umbers’ projection is that in this financial year, Leeds will lose between £7m and £8m. That figure constitutes a drop of around 66 per cent. He claims that money owed to “cash creditors” has more than halved and says “our objective is to finish the 2015-16 season at or around break even.” Talks about reducing GFH’s loans are well advanced, he claims. “That will mean our debt is minimal.
“If you have a club with little debt and which is getting close to break even, it’s an advertisement for the way Massimo has run the business. But also, it’s long overdue at Leeds United.”
It is indeed. Leeds broke even several times while Ken Bates was chairman, often helped by the sale of players, but the past few years have turned the club into a money pit. On top of GFH’s liabilities, Cellino and companies connected to him have loaned the club more than £12m. Umbers says Cellino’s total injection is “over £20m.” Capital or loans? “His cash commitment is over £20m – at a time when the company is still losing money and still restructuring.”
Umbers, a 50-year-old Yorkshireman, was appointed to the board of directors at Elland Road last month. His career history shows a spell as managing director of Credit Suisse and other senior executive jobs. He was an investment banker for 30 years. But he is recognised in Leeds as the man who helped facilitate the sale of United by Bates to GFH in 2012, claiming at the time that the deal would create “the right legacy to build on the prudent stewardship of Ken Bates.” The reality was very different.
“I was engaged by Ken Bates to try and find a buyer,” he says. “My question would be, why would someone want to sell a club if there were still potential improvements to be made? At the end of the day, GFH were the only buyer that came forward. And Ken Bates decided to sell.”
Umbers says he is reluctant to “apportion blame” to previous regimes for the problems Cellino took on. “The ironic thing about GFH is that they didn’t do anything. When you look at their period of management of Leeds, they took over a club and they left it to run itself rather than providing the help it needed. They neither managed nor mismanaged anything.
“But they put cash into the club. They put in real cash. It’s not for me to say why they decided to sell but when you can’t learn how to drive a car, you get a chauffeur. You bring somebody else in. That’s why Massimo was asked to buy the club. GFH were very fortunate in my opinion to find Massimo Cellino. He’s shown how capable he is of restructuring it.”
GFH remain as minority shareholders and still control 25 per cent of the club. Shared ownership is something Cellino seems to tolerate reluctantly. Is the Bahraini bank a worthwhile partner? “With respect, the question is the wrong one,” Umbers says. “They owned a 100 per cent of the club and they only sold 75 per cent. It was their decision to keep 25 per cent. That’s why there’s a partnership.”
Cellino himself is absent from Leeds, banned from running the club until April 10. The Football League disqualified him last week over a tax conviction imposed on him in Italy last March, leading to Umbers’ appointment as chairman. Umbers says his position is permanent.
He talks about the need to re-engage with the local community, claiming the connection was broken by past regimes. The Leeds United Foundation will continue to operate under Cellino. Club officials have met with senior figures at Leeds City Council to discuss numerous issues, including the building of a new training ground. The council’s chief executive, Tom Riordan, wrote a statement of support for Cellino in his appeal against Football League disqualification.
“They supported us on the basis that they’ve had the right representations from us,” Umbers says. “We have massively interesting developments that we’re working with the council on. More about that next month.”
Umbers says that with Cellino absent, Leeds are financially sound. “We have a very healthy cash balance in our bank account.” What is less healthy is United’s league position; 20th in the Championship, five points clear of relegation. Umbers admits that relegation would have severe consequences – “of course attendances would drop, of course commercial income could drop” – but claims the restructuring of the past nine months would guard against collapse. “This club would still be around,” he insists.
For 70-odd days, the ship is his to steer. “It’s a privileged position,” Umbers says, “and what we’re trying to do doesn’t take six months. It takes a minimum of two years. To start with you have to put in the hard yards and make the club financial viable.” In his opinion, Leeds are on that course.