After long and tortuous negotiations, the sale of “Leeds United” finally was completed yesterday. As the new owners, GFH Capital, announced:-
GFH Capital has today been unveiled as the new owners of Leeds United Football Club following completion of the acquisition on Thursday night.
The announcement was made at a press conference at Elland Road on Friday where GFH Capital Board Director, Salem Patel and the company’s Deputy CEO, David Haigh revealed their plans for the club.
The Dubai-based bank finalised the deal following an initial 33% investment on 21st November. Patel and GFH Capital Managing Director Hisham Alrayes will join the club’s Board of Directors in the coming weeks alongside Haigh who took up the position earlier this month.
Acknowledging the backing of Leeds United fans during the takeover, David Haigh said: “We are delighted but also honoured and proud to be the new owners of Leeds United Football Club. Over the past few months we have received more than 4,000 emails of support and have been overwhelmed by the positive reaction of fans during the process.
“We see this as a huge opportunity to revive the fortunes of Leeds United both on and off the pitch. The atmosphere on Wednesday night against Chelsea was sensational and we look forward to bringing more of the same to Elland Road in the future.”
Salem Patel said: “We are looking forward to a bright future, this is a fresh start for the football club and we welcome all fans, both old and new, to Elland Road starting this Saturday against Middlesbrough.
“From a business point of view this is an exciting investment and also an exciting opportunity for GFH Capital and we are looking forward to Marching on Together.”
Neil Warnock, Manager of Leeds United, said: “This is a massive day in the history of Leeds United Football Club. I’ve had some very encouraging conversations with GFH Capital and it’s great news that the deal has now been completed.”
It is good to see the new owners mentioning one of our regular commenters, Marching on Together!
GFH purchased 100% of the club’s parent company, Leeds City Holdings Limited, on Thursday.
The deal, one that does not include the purchase of the Elland Road Stadium or Thorpe Arch training complex, is understood to be £44m, plus £8m of investment. “It was a lot of money,” was all that was said on the subject by Salem Patel, one of three GFH directors to have joined the club’s board along with David Haigh and Hisham Alrayes. Haigh, a lawyer, Leeds fan and GFH’s deputy chief executive, said: “We have had some fantastic confidentiality agreements in place over the last few months so we cannot discuss that right now.”
If £44m is accurate then Bates, who owned 73% of a club he placed into administration in 2007, clearing its debts, stands to receive close on £32m. As he is resident in Monaco and he owned Leeds via a company, Outro Limited, that is registered in the tax haven of Nevis, he is exempt from paying capital gains tax as an exile.
GFH is owned by the Bahrain investment bank Gulf Finance House, supported, according to Bates, by “a very rich individual who is very close to the government of Bahrain”. Though no name has been forthcoming. “I am glad that question has been asked,” Haigh said. “We are very transparent. We are a Dubai-based, regulated bank owned by a Bahrain-based, regulated bank that is listed on four stock exchanges [Bahrain, Kuwait, Dubai and London]. So when it comes to transparency over where the money comes from, who are our investors, who are our shareholders and directors, it is very clear and it is incredibly transparent.”
Haigh admitted that re-connecting with fans who have turned away from Elland Road was a key requirement for the club under GFH. He also stated: “We have bought the club with cash. There is no debt.”
GFH has bought the holding company that owns Leeds United Football Club but not the stadium and training ground that were sold off following the club’s financial collapse and relegation from the Premier League. Patel, however, said: “Any club would love to own its own stadium. Currently Leeds United do not own their stadium or training facilities but it is part of our plan to buy them both. I am not at liberty to put a timescale on it.”
He added, “Leeds is a great club with history, pedigree and a fantastic base on which we can build. We looked at a number of clubs but Leeds was the most attractive for these reasons. It is obviously going to take investment [to return to the Premier League] and we would not have bought a club like this if we were not prepared to make that kind of investment. We are not going to be spending crazy money like others have done. It is going to be sustainable.”
So we have a Championship club being sold for an estimated £44 million. This price does not include the ground or training facilities.
What have GFH bought?
They have acquired the players, “goodwill” and “history” and the company’s rights to income from prize money and ongoing sponsorship. They have no issue with TUPE, as the players are still employed by the same company – rather it is the ownership which has changed. There is no question of Leeds today being a “new club” in place of Leeds yesterday. This was not a sale involving an insolvency.
Unlike the purchases of Manchester City and Chelsea, which seem simply to be huge vanity projects, one imagines that GFH are here to make money. Agreeing to fund £8 million of investment as well as paying £44 million to buy the “club” seems to emphasise that.
However, they are not going to spend “crazy money” and, similar to Mr Green at Ibrox, boast of having no debt.
Presumably the only way in which they can make a return is by getting to the Premier League and being successful there. However, it will take significant progress to achieve a return on an investment of over £50 million!
These money men clearly see there is cash to be made by owning a football club, and Mr Bates, the seller, is proving this be departing to his Monaco home with over £30 million profit.
One wonders whether GFH ever looked at Rangers? After all, as we have seen with Mr Green’s consortium, they whole assets, including ground and training facilities, were sold for £5.5 million.
I wrote some time ago about Crystal Palace acquired by Mark Goldberg in the late 1990’s for £25 million, but without purchasing the ground. He managed to end up in bankruptcy within a year. Presumably GFH will exercise restraint to avoid such a fate striking their vehicle owning Leeds.
People with cash still see that money can be made from football. Is this akin to the 1849 California Gold Rush – where many speculated all they had; most lost everything; and a few became richer than Croesus?
Can all the money men be wrong? (Silly question, as anyone who has watched the banking industry over the last few years can testify!)
I like the new deputy CEO’s reference to “fantastic confidentiality agreements” – a phrase which I suspect has never been written before!
Leeds United fans now embark on another roller-coaster ride in an effort to regain lost glories. Can it do it? Can GFH make money?
Have the markets woefully undervalued football teams again? And might this sale price for Leeds assist BDO if they pursue the issue of “gratuitous alienation” of the assets of Rangers Football Club by the administrators?
Only time will tell!
Posted by Paul McConville