The potential purchase of Leeds United from Ken Bates looks close to conclusion. Barring any last minute hiccups in the process, we should start next season with new backing, new investment and hopefully an opportunity to get back into Europe’s most high profile competition.
But whilst many of us have a business plan in mind to achieve that which is basically – Spend £100m on players and their wages, the new owners will have one thing in common with Ken Bates, still. That Leeds United must become truly profitable on the field and off it, or else why invest in it?
The figures and methodology for takeover are as yet unknown to the rank and file of supporters but surely we’re talking an 8 figure sum, with amounts of £40m-£80m casually mentioned in the press and across the multitude of leeds united blogs. Mention of the Middle East of course only seves to whet the appetite yet further. Sheikh Mohammed Al-Makhtoum, The Qatari or Omani, Royals? The mind just boggles.
We’ve often discussed on this site the vast potential of Leeds United as a club, and exploded many times now Bates’ claims of running a tight ship. In summary we have spent the vast majority of our available cash not on playing staff that might get us promoted, but on the facilities that most clubs develop once they are promoted. Consequently those `add-ons’ have become the topsy turvy focus of our business. With no tangible returns and indeed losses from Yorkshire Radio, the Pavilion and other corporate entertainment facilities, the cash situation got yet worse.
With no money to invest in playing staff the picture becomes less rosy still. So what should our potential new owners be thinking of doing? The below points would be a good start.
1. Reduce running costs at Elland Road
So Ken bet the farm on the East Stand, took out a whopping great loan to do it, ditto the pavilion and Yorkshire Radio? Well they haven’t made a profit, and aren’t likely to do so until such time as we return to the top flight or better still Europe. The best solutions are often the most obvious, and the key one here is to plug this leaky cash-flow outwards. Outsourcing the facilities management and catering appear to be on the agenda already with announcements this week. But effectively why not take a fee from an outside party to run these outfits for a fixed period? You may not get your full returns but they take on board some of the risks of a downside. Moreover they may well be more expert than your business in running such facilities andturning a profit. Once they’re making said profits – we’ll re-take control.
Moreover why not, if you’ve got the cash to buy a little time, reduce ticket prices by 50% in the East Stand, and re-open the upper tier? The footfall would vastly increase and if the facilities were opened up to the ordinary fan – they might make something? Better than losing money surely? The upside may mitigate the lost ticket revenue, the stand is only ever half used so what’s lost? It would also send a positive psychological message to supporters – you know? The customers?
2. Pay off the credit Card & Look forwards
Loans cost you interest and they hamper your spending power short and long term. Quite frankly I’d think about a wholesale financial restructure. Not only paying off loans for the East Stand in Full if possible, but building that cost into the mortgaging of Elland Road and Thorp Arch. This is absolutely critical in terms of infrastructure too, Leeds are hampered by their decrepit ground, which now gets overlooked for major concerts and football fixtures in favour of Eastlands, The Stadium of Light, Old Trafford, the list goes on and on. If we owned our ground outright it would be a powerful asset through which to raise surety and finance, it would give us license to develop it too and expand it more easily going forwards too.
The advertisement to other potential commercial partners, not to mention the positive statement made by such a development would be near priceless. Who didn’t cast an envious eye at the new stadiums in Poland and the Ukraine. Nearly 15 years of neglect at Elland Road, and the under-development of what is usually a clubs greatest asset are surely key in any longer term development?
3. Restructure the playing staff
As I write this, Billy Paynter, Adam Clayton, Andy O’Brien, Paul Connolly and Ramon Nunez all remain on our playing staff despite being transfer listed in May. Until they’re sold, they’re dead weight on our payroll. While they don’t move on, to balance the books we need to sell our better players if we want to invest. The squad is imbalanced, and here only money will redress the imbalance of poor investment.
In short, it seems no-one else wants our problems, but they do want our best assets. In Bates-World this is a no-brainer. Sell the players you can get a fee for, and lambaste the manager for keeping the deadwood. A new investor surely needs to understand that mistakes have been made and that as the saying goes – your first loss is your best loss. Pay up the contracts of the players you don’t want, and just get it over and done with.
The YEP reported that Paynter is `determined to fight for his place’ and you could almost hear the collective groans of Leeds fans Everywhere. This cycle needs breaking – and fast. We need players on board who can get us promoted, and to dispense with those who can’t.
4. Invest in the future
Investment into Thorp Arch and the youth set up is vital. This area is going to be hampered by recent legislation surrounding the FA Premier League academies getting first bite of the cherry, notwithstanding we need to be almost as good an option if not better – whats to say a young player and his parents wouldn’t choose us over a bigger club if our facilities were in practice better? If they provided a route to International football? Better still if we ramp up investment into the academy it means we waste less on transfer fees. . Surely that makes sense.
5. Have a plan in place for the season after next
Our biggest weakness the last 2 seasons seems to have been a total lack of a plan B. Promoted from League One? erm do we want to go up or stay in the division – not sure?… lets get some good players, and some average ones and see what works? the season before last of course we decided that nearly getting promoted meant we shouldn’t invest in the squad at all?.. you get the picture. Lets ensure our player contracts are properly revised and players given the going rate for an aspirational championship team, but that players who don’t make the next step can go – for the right price, and that players we want to keep get the mark-up they warrant.
Better still at that point lets ensure the much discussed corporate boxes offer something for everyone. If we dont go up lets ensure our focus is getting up soon, not just investing zip in the squad and hoping for the best from off field revenue, its a mugs game as our last accounts prove.
Better still lets realise that Leeds United are a football team, That’s what drives up our revenues most of all, we win games and get promoted the gate monies increase so do sponsorship revenues, TV Money and lest we forget corporate entertainment money.
Lets listen to the Manager and players on this count, and back them – sensibly, none of us want a boom and bust, and if the last 8 years has taught us anything its that we want our club to be run well, not be a laughing stock.
There is one final point though, and it’s not a priority, its simply a must. Re-connect with your customers. Remember us the 40,000 who used to cram Elland Road full to the rafters. Who drowned out Manchester United Supporters at Old Trafford, who’d follow you to the ends of the Earth. Doing that is easy. Give the customer what he wants. Walk into McDonald’s you want a burger, into Wetherspoons, a Pint. Walk into Elland Road to watch Leeds, and you want to see your team win.
There’s a good passage of dialogue in the Damned United when Brian Clough asks Manny Cussins how he should approach his new job. Our most Successful owner to date tells him `dont lose, the people of Leeds don’t like losing’. Quite.
There is one last thing though on the to-do list. Word has it there’s a dreadful stench of mothballs, lavender, old leather, and that very special odour, that can only be described as `old guy’ you know somewhere between dry sugar puffs and damp cardboard? there will also be a hefty price to pay for the removal of 9 metric tonnes of Werthers Originals from the hospitality suite. I’m stopping now.