Takeover Edges Closer, Chairman Speaks. TimPM October 7, 2012 Leeds United 46 Comments GFH Capital’s David Haigh, who has taken a short break from social-media site Twitter, was at Elland Road again yesterday as Leeds defeated Barnsley 1-0 to record 10 points in our last 4 games, and our first clean sheet since the opening game of the season. And Leeds’ current chairman and majority-owner Ken Bates once again took to his programme notes and radio station to update fans on his side of the takeover deal. Writing in the Barnsley programme notes, he said: At the last home game, with the consent of the potential buyers, I did all I could to update the fans on the current investment situation. Needless to say, this led to further speculation, rumour and social media comment. I revealed that representatives of the potential buyers were with us at the game. [GFH Capital were forced to release a statement to the Bahrain bourse as a result of intensified rumours rumours.] As a result of the statement, the focus has turned to them rather than the club with the media poring over their credentials and trying to second guess matters that they probably have not even considered yet. This is not a slight at them, because one important issue remains outstanding, the transaction is not complete! There are many contributing factors as to why it is not complete, save to say, it will only be complete when all parties are happy. This is not about financial return for the shareholders, it is about making sure that the club prospers both on and off the field in the future. […] The confidentiality provisions have been both a challenge and a frustration to everyone, but while we are at an advanced stage there are still matters to agree, so the YEP’s headline (headlines sell papers) of “BATES WILL GO IF DEAL IS DONE” could well be premature in all circumstances, because until everything is agreed and the board comfortable, at all levels, nothing changes. Mr Bates also took to the radio to give some extra opinion. Talking to LUTV/Yorkshire Radio, he said: I think the real problem is [GFH Capital’s] lawyers. I’ve done hundreds of deals, and I don’t understand what the delay is. … I understand that GFH Capital want to do a deal, and we’re happy to do a deal with them. … I wonder if [the lawyers] realize that they’re not acting in their clients best interests. But it’s very difficult, because things turn up in the paperwork and we say ‘that’s not in the agreement header, so why is it in there?’ I think part of the problem is that lawyers sometimes work on their own initiative rather than on instructions. By GFH’s terms, this isn’t a big deal, so I don’t know what the holdup is. But all I can say is, fans: don’t blame me. With the takeover circus descending on Elland Road once again, journalists inevitably got scraps of information BBC Leeds were told that lawyers were not holding up the takeover as Mr Bates suggests, “but are being diligent”, and that lawyers were in the “final throes” of the deal, ensuring everything was ready for long-term investment in the club, “after a non-leveraged buy-out”. Meanwhile GFH Capital’s David Haigh told The Sun’s Andrew Haigh (no relation) that the deal is on track, and in the “closing stages”. The YEP were also told by a source at GFH Capital that the deal was “in a good place”. BBC Leeds’ Adam Pope suggests that there was a “convivial atmosphere between Ken Bates & David Haigh”. Fans with a good view of the chairman’s box suggest David Haigh took his usual seat at the front of the box, but moved to sit with Mr Bates’ upon the chairman’s invitation. I love LUFC Pleased there has been a shift forward from all the ‘media’ misreporting from various parties. Both KB and GFHC seem to be ‘cordial’ with each other, Lawyers stating deal is in “final throes of completion” & David Haigh saying “deal is in a good place”. Ideally it would be just great if both parties released a joint statement giving the best fans in the world a “rough timescale” for completion. But I’m not an impatient lad ….. I’ll give them 4-6 weeks; ha ha! Col Neil Warnock got it right when he said we’ll still be talking about this takeover at the end of the season. I’m sick to death of hearing same old headlines that its nearing completion. Yaaaawwwnn!!!!!! luke Am i the only one worried by the companys (gfh) record. When you search them online they do not look like a company with the wealth or a good track record. It all seems a bit fishy to me. I hope to god i am just being paranoid. Thoughts please, i would love some replys to convince me i am wrong. Luke MOT anythinggoeshere its not GFH that are buying the club, it’s GFH capital, two different companies Will23 Two different legal entities, correct, but 100% related. The relevant first question *is* whether the funding for the deal, and then the subsequent investment in working capital and playing staff, dependent on the financial position of the group. If so, be worried, very worried. If not, the relevant second question is, how is the subsidiary funding the deal: existing cash reserves, or by a bond issue secured on GFH Capital, or any LUFC assets (of which there are none to speak of). If debt financed, and yet they deny this, then be worried, very worried. The third relevant question is then, if funded from existing cash reserves, is this from GFH’s own profit reserves generated from other deals over the company’s lifetime, and which were not distributed as a dividend (to the bank parent company) but retained within the subsidiary business for investment in new opportunities, or is that NEW cash. If new cash then we have a fourth question: what is the source of that NEW cash and given we know the parlous state of the parent company that NEW cash is more than likely from external parties for the sole purpose of the LUFC acquisition. It cannot be cash raised on new shares in GFH shares since it is 100% owned by the bank and if not debt financed then it must be sourced from third parties for the specific purpose of funding this particular deal. A fifth question then follows if third party funding: what is the structure of the arrangement by which these third parties have provided GFH Capital with the necessary NEW cash to fund the deal (and also susbsequent cash needs)? GFH Capital have stated there is now consortium. Correct. A consortium implies a number of strategic partners with a direct interest in the club under a new legal holding company in which all parties invest. GFH Capital’s statements to date do not preclude the involvement of indirect third parties through GFH’s own balance sheet. Will23 It would seem those of asking questions on the deal are being voted down in our posts! It amuses me. Dc All valid questions Will23. I want change more than anyone else but I do want this club to go from the frying pan into the fire. I would hope that all of these questions will get answered in time. Irving08 Perhaps it is time for those of us who are concerned about these matters to take space in the YEP for an Open Letter on these questions. LUST is not the right forum. Col It’s pretty obvious that GFH don’t have a pot to piss in because they’re quoted as saying they hope to eventually buy back the ground. If they had serious finance behind them then this would be a priority. I, like most fans know nothing about GFH but they can’t be any worse than Bates. The sooner Bates disappears the better. Will23 Yes they can be worse than Bates. Supporting the deal just because it will see the end of Bates is no reason to support the deal. We need the facts and GFH are reluctant to provide them hiding behind a confidentiality agreement. Ron GFH Capital could be called We Hate Leeds Capital for all I care, because these guys are merely a front for a couple of Arabs with more money they know what to do with (alas they are spunking cash on a Football Club). I’d be very surprised that now the Bahraini exchange has been dragged into it with GFH’s statement that these guys will end up being dodgy, not unless Bahrain is trying to ruin their reputation as a business-friendly place. Lawyers are nit-pickers who are paid by the hour, so I for one am not shocked it has dragged on. Wake me up in January when it actually matters if we have money to spend or not. In the interim, I’m very happy with our points haul in recent weeks and we’ll be even stronger after the break when Green comes back in and the new striker deal should be done. We’ve much to be happy about fellow fans and not without some bad luck along the way (McCormack, Green and Norris injured thus far). Byram has been a revelation and Diouf has paid off enormously. Chins up lads. henrymouni The thing is that we can ask as many questions as we like, on here. Of course no one has to answer them. We are not selling the club. As long as GFH satisfy KB and his solicitors, that is all that counts. TimPM Given some of the fake email addresses submitted here ‘no to islam’ for example, I’d question what axe some of these people have to grind. I notice some of these people complaining about Bahrain’s king have mercifully pissed off now that they’ve done their research and worked out he has nothing whatsoever to do with the deal. —————— Vancouver White I’m a Business Broker here in Vancouver, and the current delays with the lawyers does not surprise me at all. I’ve worked on many deals over the years where you have a willing buyer and a willing seller, and as soon as the lawyers get involved the shit hits the fan. The problem is, ‘Billable Hours’. Lawyers are paid based on the hours they work, and more hours they work, or the longer the deal drags on, the more they earn. I have worked on deals in the past that dragged on for months and never closed because the lawyers put the fear of God into one of the parties to the transaction, however the lawyers still earn that fat fee. I do believe this deal will close, but hearing Bates’ comments I can completely relate to what is going on here. It really should be up to GFH to take control of their lawyers and get things wrapped up. On another note, why was the attendance so low yesterday? After this good run of form and a Yorkshire derby i would of expected 26,000+ at the game. Are there still so many boycotting bates? Darren Oakley Attendance probably low because of Leeds rhinos grand final me thinks Irving08 There was a very big walk-up – felt a bit like the old days, in this respect. Barnsley didn’t bring that many, possibly due to the price of the seats in the West Stand. expensive. Colin Yes, we are boycotting Bates. Leeds were easily the highest attended matches in the Championship by a long way. Not any more. Others are close and Sheff Weds are getting bigger gates than us. Ken’s business model ain’t working too well. The message is loud and clear. A half empty stadium is half empty for a reason. That reason is Ken Bates. Irving08 Colin. My sense is that you are only speaking for a small minority of ‘fans’. atI think most of the present core fan support is turning up and, if you had gone on Saturday, you old find that it was was in good voice too. Ticket prices must undoubtedly deter more casual attendees, some away supporters and potential ‘core’ fans on low incomes. The stadium did not actaully feel half full on Saturday: fans were well distributed in all areas of the ground, except the upper tier of the East Stand. As for the business model, it may not be working well enough, but independent analysis seems to be quite impressed by the amount of commercial income we geenrate. Finally, Sheffield Wednesday have always been able to rival us for gate size, when we have been playing at the same level – and no doubt their prices are lower; which is one aspect of the ‘model’ that does require a rethink. henrymouni Good points Irving. We are the 7th most expensive club in England. Average season ticket prices April 2012:- TOP TEN!!!! Cloggers! Arsenal – £1,470 Spurs – £1,245 Chelsea – £1,000 QPR – £774 Liverpool – £757.50 Man U – £741 Leeds United – £681 Fulham – £659 West Ham – £638 Ipswich £619!!! Irving08 My impression is that baby boomers such as myself don’t pay over the odds – I paid £21 on Satrday which was about the same as I paid for a ticket for a concert in the evening at Leeds Town Hall – nor do chidren’s tickets seem especially expensive: it is the adult others who appear to pay a lot… henrymouni Vancouver White. The teams results are better just now, but until KB departs the fans will stay away. If the deal falls through, and we still have KB as owner, we are going nowhere. Our team are giving 100% under NW, but we lack class in many areas, and we do not have enough quality for promotion. Iriving08 I think you are making it seem too hard by saying ‘many areas’. We lack (1) a zippy forward – not a winger as such – and/or another quality ‘big’ man, (2) another central defender as cover for Pearce and Lees. A more creative midfielder might be on your list, though not on mine: I think a combative midfield that gets the ball to the front men is enough – and as I said, it is where we need reinforcements. But I think we can go a long way on what we have now – a clever mix of talented youngsters and some more experienced players with character and not negligible ability. This is how Don started after all. henrymouni If the manager knows the squad is lacking all over the pitch, and so do most fans, how come you don’t Irving? The manager praises their effort, not their talent. The manager is hoping to hang on near the play-offs until the January window. “a clever mix of talented youngsters ..” you mean the Tom’s? The rest are miles from first team football. Aidy is not a youngster, and is too hit and miss. We have fluked our way to most of the points we have gained. We robbed Barnsley, who should have won 4-1. “I think a combative midfield that gets the ball to the front men is enough ” I would agree IF we had a midfield who could get the ball and feed the front men. Barnsley gave them the run-around and so do many other teams. For seven years we have been told our squad is good enough, and that you don’t need to spend etc. and look where we are. TimPM We’ve done great with our current squad, and it wouldn’t be fair to dismantle it, but I do (and I think Warnock’s said) we need 3-4 very good additions. But our current lads have done really well. —————— henrymouni They certainly have, and some more quality players like El Hag will bring them on leaps and bounds. NW deserves a lot of credit for his man management skills. He has had to change his plans, and let a lot of his main targets go, for lack of the board’s (KB) support. My point is that we have been lucky up to now with some results, and unlucky with injuries. NW has said we are a mid-table team as things stand. Onward and upward. Irving08 But certain lads – presuambly some of those to be brought in – will not want to sit on the bench, so it has implications….think Grayson in the second season back…. TimPM Yes, and certain lads will not want to stick around in a team not good enough to go up. “Pughy” might sulk… I’d be more concerned if Rody or Ross did. —————— Irving08 Fitting McCormack in to the successful formation Warnock has recenlty hit upon will not be easy……and he made it clear that he ‘s not happy on the bench….interesting one. Irivng08 The manager does not say we are lacking all over the pitch; fans don’t speak with a single voice; talented youngsters = Byram, White (old at 20 !), Lees; we have earned our points, not fluked them; don’t understate how far sheer hard work and team spirt can get you; Barnsely were pretty, but ineffective; no-one is saying we don’t need to spend anything.. and don’t be so grudging ! henrymouni Irving you are being silly again. You sound more like Bates every day.We are lacking at the back and front, and maybe in the middle. Where else is there? We have worked very hard but that is never enough for promotion – ever. We have been very lucky. Barnsley were ineffective because they missed many easy chances. We hardly created anything. I am talking Barnsley here. We were at home. Irving08 I think we do have quality, not enough yet to be certain of a top 6 position, but not too far off either. henrymouni Irv’ Unless we are top six, we might as well kiss the season goodbye now! I think NW & the ‘new owners’ will be targeting top two!! Will23 Henrymoaney…hard work can easily compete with quality at this level this season over 46 games. I think there are no teams in the Championship who have the quality that is consistently optimised week in week out, but there are many hard working teams we will face. The differential is expected to be slight this year between finishing top half/bottom half. henrymouni Willywonka. Hard work cannot compete with quality and hard work combined. All the best teams have quality AND hard work, not one or the other!! Unless we add quality to our hard work we will not get promoted. deano just read Bates statement ( representatives of the potential buyers ) that means GFH are the buyers but acting for other investors,,,,, Irving08 Wouldn’t it be in our best interests if Bates were to remain until we got in the Premiership when we would have a better chance of getting a better ‘class’ of owner than the ones who are currently the focus of our discussion ? Warnock has shown how to put together a side – a judicuous mix of experience and talented youth with no jumpy 24-5 year olds – on not much money. We are short only of a zippy front man and a reserve centre back. Surely funds could be found within the current set-up – or by some sort of fan subscription – for these ? Which leads me wonder why Ken wants to sell now ? Irving08 Errm delete first ‘better’ – Warnock’s distracting (and charming) me. Colin What do you mean by fan subscription? We give enough already! Irving08 ‘Subscription’ was being used loosely for a medium term loan !. TimPM Irving: why should fans pay extra (on top of some of the highest prices in the country, and I think THE highest price LUTV service) to facilitate Mr Bates staying, when it was his decision to allocate funds elsewhere in the first place? You and your “sense” seem out of touch at best. —————— Irving09 The aim is not to facilitate Bates staying but to prevent us by default being bought by owners whom we might prefer not to have. No reason why anyone should have to pay anything, of course. But I lost a fair amount when we were a plc, now I coudl get a return !. I am quite happy to be out of touch if being in touch means Bates, at all costs, must go now. But of of course no-one is saying that are they ? TimPM How ridiculous sarcastic barbs look when they completely miss the mark! How’s your boycott of Leeds if Warnock joined us going? Oh, right, you’re singing his praises now… —————— Irving08 I agree, sarcasm is not my forte; but then neither is accurate reporting always yours. I think you are confusing Warnock with Diouf: on the former, I said long ago that I had an open mind, and never once said I would boycott due to him. Who would notice anyway ? Regarding Diouf, I shared the general distaste, but showed weak resolve. Colin ‘Wouldn’t it be in our best interests if Bates were to remain until we got in the Premiership?’ IMHO, Quite frankly, no it would not. He needs to be out and he needs to be out now. mrbigwheels I am beginning to wonder at/ask the question…. What the hell is actually going on at LUFC off the playing field?… We will be getting ”don’t blame me”, from GFHC this week, to counter the KB saturday speech and then there are still Americans hovering around. Wish someone would be a little more honest and stop treating us fans like mushrooms. johnnywow I have done a few deals in my time. I don’t blame the lawyers (no, I am not one, even worse, I am an accountant), the delay is more than likely as a result of stuff not disclosed at the time a deal was struck “subject to due dilligence”. Good business practice would have been to disclose material facts and included these in the heads of agreement, but then we are talking KB so odds on he has not told the full story. As I have said before, KB risks the buyer walking if he keeps resisting warranty clauses in the sale and purchase agreement.