billy bremner  statue at Elland Road (Large)A year end report published by Gulf Financial House, the parent company of Leeds United owners GFH Capital, made clear the firms intention to sell Leeds United on swiftly, leaving Whites fans to mull the possibilities of another takeover saga.

Here we’ll try to breakdown the statement to see what facts we can actually deduce from it, before moving on to the more speculative stuff that followed.

The club IS for sale

In GFH’s year end report, the investment bank classify Leeds United as a “held-for-sale” asset, an accounting term which is quite clearly defined as follows;

  • The owners are committed to a plan for sale
  • The asset (Leeds United FC) is available for immediate sale
  • The sale is highly probable within 12 months (by the end of 2013)
  • The asset (Leeds United) is being actively marketed for sale at a reasonable price

A majority stake appears to be for sale

While GFH Capital previously claimed they only wanted to sell a minority stake, their parent company seems to have other plans.

“The Group has an active plan to sell its stake in LUFC Holdings Limited, and accordingly, the asset and liabilities acquired were classified as held-for-sale and presented in the consolidated statement of financial position.” GFH Year-End Report

The wording of the above suggests GFH plan to sell all of it’s stake in Leeds United FC, but they could retain a minority stake in the club. Classification of ‘held-for-sale’ requires that GFH plan to sell the controlling stake only (not 100%) –

“An entity that is committed to a sale involving loss of control of a subsidiary that qualifies for held-for-sale classification under IFRS 5 shall classify all of the assets and liabilities of that subsidiary as held for sale, even if the entity will retain a non-controlling interest in its former subsidiary after the sale.” – Deloitte 

Put simply, GFH must classify the entire club as held-for-sale, even if they plan to retain a minority stake (<50%).

GFH expect to make money from the sale of Leeds United

Gulf Financial House believe they paid a good price for Leeds United, valuing the club at more than the £22m they paid for it. Their year-end report states that there was “pressure on [the] sellers (Bates et al) to exit their holdings” adding that “LUFC promises to be a high yielding investment opportunity, which GFH is successfully placing with its investors.”

So, another takeover is “imminent” then? (The speculative) 

This being Leeds, I wouldn’t hold your breath, though some people believe GFH-C are already in talks with potential suitors and this could be a relatively speedy process (by Leeds United’s standards at least).

It’s worth noting that Leeds United pointed Reuters towards an article in which Salem Patel said a minority investor is all the owners were looking for, and very little – except the year-end report – seems to deviate from that script. Only last month the owners released a statement revealing a takeover bid had been rejected, so they can’t be in too much of a hurry to offload.

GFH-C have never denied they plan to seek investment, but the suggestion they plan to “flip” the club has been left hanging a little. Perhaps GFH are merely keeping their options open and the held-for-sale classification has been used until they have investors in place and the firm are happy with their current position.

Maybe GFH-C themselves don’t yet know whether they’ll be minority, majority or non-existent shareholders when this all comes to an end? While Plan A may well be to sell a minority stake, wouldn’t it be foolish to rule out a complete sale altogether? If the right offer comes in, everything has it’s price.

Of course, it could well be that GFH-C are indeed planning a speedy exit, or that GFH and GFH-C are reading from different hymn sheets. Either way, whatever scale of investment GFH-C are looking for, with the obstacle of Ken Bates no longer an issue, I’m sure there’ll be plenty of interest in a club of Leeds United’s stature.

Unfairly criticised? 

A lot of criticism has been aimed at GFH-C in the wake of this news, but aren’t we being a little unfair?

It’s clear from the club’s accounts and from the underlying tones of GFH’s Year-End report, that the club was in dire straits under Ken Bates. While some fans seem uncomfortable with the thought of an investment bank buying and selling their club for profit (despite the fact, that’s what investment banks do…) it seems to me that things could have been a hell of a lot worse if they didn’t.

Falling attendances, desperate loans taken out against season ticket sales, severe cashflow problems – these are all indicators that the club was heading down a very dark path (again). While GFH-C may not turn out to be the saviours some had hoped for, they should at least be credited with rescuing us from a much darker fate by freeing the club of Ken Bates, attempting to build better relations with fans, lowering season ticket prices and supporting the club financially during their time here.

Football has always been a game of great contradictions. When a club is up for sale, fans go out of their way to stress the money-making potential their club holds but the second someone capitalises on it, there’s outrage.

If GFH-C can find us a suitable owner while also making themselves a few quid in the process, everyone’s a winner. Especially Leeds United, because we’ll have already demonstrated the potential profits through GFH’s sale, further strengthening our case that Leeds is a good club to invest in. And most importantly, we’ll still be free of Ken Bates.

  • Sickofit

    So here we go again. Ken bates is still at the club to the end of the season and then will be the club president we were told. So therefore he still has something to do with the club and we are not free. He has ruined out club and there is now a potential for him to buy it back which would be catastrophic. If GFH fail to sell, there is potential eventually for the club to yet again go into administration and guess who will be standing by to buy it for next to nothing again….. Yep you guessed it uncle Kenneth!! It stinks and the fans are sick of it. Sick if the quick bucks been made, sick of the secrecy, sick of the lack of investment, sick of a squad built on the cheap and sick of the manager that just plays this crazy long ball game every time. JUST SICK OF THE CIRCUS THAT IS LEEDS UNITED!!!

    • TSS

      Bates role is nothing more than a figurehead position, he has no power whatsoever. Why people remain so caught up on that is beyond me.

      As for ending up back in admin, I don’t think there’s any risk of that whatsoever. There may have been had GFH not come in when they did though, our accounts were looking very bleak.

      • old goat

        Two good articles and good info. Thanks,
        Now calm my paranoia…..
        I’m still trying to figure out why Bates would want to remain President unless it’s part of a devious plan none of us have yet figured out. Sure, on the face of it this is a ceremonial position rather than a nuts and bolts management one but why?? He’s not local and has no emotional attachment to the club. His status as a tax exile means he’s very limited on the amount of time he can spend in the UK cozying up to the media and a few rich punters. If he needed the money as badly as he apparently did you’d have thought he’d have cut and run “to pursue other opportunities” or somesuch. Can’t work it out.

        • TSS

          It’s to annoy fans. That’s how petty and vindictive the man is.

      • Vinnie

        I remember Salem Patel saying in an interview that in the deal to buy the club, Ken Bates will not be able to buy it back at any time. We have no cause for concern of a second reign of The Fuhrer. (touch wood)

  • At this moment in time LEEDS UNITED are a joke. Entering our 21st year without winning anything and our 11th year out of the prem.. Big club?? was once, many years ago but so were Preston, Blackpool, Bolton.. LEEDS are now an average championship team

    • thelaughingllama

      I thought football was a game to enjoy. If all you care about is winning competitions then your in it for the wrong reasons.

      • spellz

        wow this comment has had several vote ups so I need to reply, listen Lama football is a game to enjoy if your playing in the park or having a kick around with the kids but this is professional football where fans dont cough up £30 a ticket to watch a group of men have fun.

        As fans we want success whether for bragging rights, pride, to see talent come through our gates, to watch the club hopefully grow to be one of the biggest in the country or to be in the history books whatever your reason but one things for sure if you are on a 100k+ wages and you play for lets say our past rivals Man utd, I really doubt Fergie is signing players and saying to them you go out there and do the best you can but if you dont win any competitions for the forthcoming years the main thing is make sure you have fun, bizzare how some of our fans after having not won anything in a couple of decades have just lost the passion to see our incredible clubs name back in the bright lights and writing all the headlines but instead just believe it is acceptable to watch 11 men who hoof the ball to each other crack on with it as long as they are having a laugh, get real will you ffs.

      • henrymouni

        “I thought football was a game to enjoy”

        So did I but I am a Leeds United supporter, and have had little to enjoy for 10 years!!
        Football is a business.
        Winning is the first priority or you may get relegated.
        It is difficult to play badly and win! Don’t we know it.
        The more you win the better supporters like it.
        The ‘winning teams’ usually play the best football and attract the best players.
        EVERYBODY cares about winning!!
        Going to a wembley final, & playing in Europe is a result of winning!

    • sad but true

  • Seanyblack

    And as they’re a Middle Eastern investment bank we can still hope for some rich Arabs!!!

  • Hope

    At least we have next season to look forward to……imagine how boring it would be if we had billions and won every game…..MOT, Leeds United will get there, with our support, keep the faith…..

    • Matthew

      Although no ones asking for billions, how would winning every game(mostly) be boring? We’d end up in the Champions League, a league I would love to see us in, even if we don’t win it, more for the experience if anything.

  • henrymouni

    Well, what a surprise – not!!
    They are flipping us after all.
    They lied from the outset, and let you down TSS!
    You met them and they convinced you they were in for the long haul!!
    I was heavily criticised for ‘doubting ‘ them.
    None of it made any sense.
    It does now!

    • TSS

      I never met them. I had the opportunity to, but couldn’t make it due to work.

      As for letting anyone down, I don’t see how they have? They said from day one they were seeking investment, nothing’s really changed, has it?

      Whether they leave tomorrow or not is irrelevant, they cleared Ken Bates out of the way and have done right by Leeds while here. I think some people are overreacting personally.

      • henrymouni

        Well they did say they had bought Leeds, with the object of ‘marching on together’ as they put it, back to the Premier League.

        They did say they were NOT looking to sell, but wanted to bring investors into Leeds as minor shareholders.

        They did NOT get rid of Bates – he is still here, and may be with us for many years as President.

        Their track record in business is worst than Ken’s – almost!

        Ken promised that he would only sell to people with the means to take the club on. Plonker!

        If you think that this is progress, TSS, you have been replaced by an android!

        • spellz

          All very good points Henry.

        • TSS

          They actually said they wouldn’t rule out a majority investor, but the ideal situation would be someone taking around 30%. You – like many other fans – are totally twisting what was said.

          Enough with the Bates nonsense already, he’s a figurehead, a position he insisted on to complete the deal. He’s a petty, vindictive man who knew this would annoy the likes of you. Meaningless, powerless position. Bates HAS gone. He owns 0% and as such, has no influence whatsoever.

          How so? Aren’t you criticising them for making a profit on LUFC? Surely that’s a good business deal? Make your mind up…

          Ken sold because he’d royally fucked up and the club were going under again (check the accounts), had GFH not come in we’d be in serious trouble right now.

          Progress is getting rid of Ken, a club who now has the cashflow to operate on a day-to-day basis, cheaper tickets and better communication with fans.

          If GFH have found someone better place to take Leeds United forward, then fair play to them. In six months they’ll have achieved something Bates failed to do in 8 years! Had they not turned up in the first place, we’d still be stuck with that idiot now, heading towards another relegation and another 8 years of his BS. Oh, and Byram would be nearing the end of his contract and heading to Norwich.

          • henrymouni

            I am twisting nothing.
            They are flipping us, and are trying to make a profit out of a sinking ship.
            Piracy would be closer to the mark.
            We have been lied to for so long by Bates that anyone would seem better. Even GFH.
            IF (your word) they find a rich buyer we will all be happy.
            IF IF IF!
            Anything that Bates is involved has to stink!

          • kev raunds

            I agree,been saying for months about a statement of intent from our so-called owners,tell us the truth for once.

  • Lee B

    I don’t understand why people are surprised or even disappointed with this.

    At the beginning GFH-C approached KB with a view to buy LUFC on behalf of a rich middle-eastern gentleman who wished to remain anonymous. KB refused and insisted on doing any deal direct.
    GFH-C then came back with an offer of their own, saying they had dropped the mystery bidder and were going it alone. The sale then went through.

    As far as I’m concerned, the original deal is still in place. GFH-C are still brokers, but they’re doing it with their own money rather than the eventual buyer’s.

    This was never going to be a straight-forward process, but if the plan goes according to plan we will have the rich benefactor that we were originally meant to, KB rides off into the sunset, GFH-C ride off into the sunset and a new dawn begins for LUFC.

    At least that’s the plan…

  • DUBLIN LUFC

    Better hope they find a buyer sooner rather than later. Can’t see them throwing money on signings this summer if there planning a exit. Unless theres a buyer with real money interested they could drag this out till the end for the best price leaving us with a skeleton squad for next season. Sound familiar?

  • damn good article that !

  • mrbigwheels

    Three clear options here then and ‘the bank’ have strategically laid out the routes to achieve any of those, in their accounts.

    Sell either 100%, 51% or 30%. What is wrong with any of this?. They have clearly stated they are seeking wealthy investors to achieve any of these percentages.

    Pretty clear to me that bankers like to make money and that must be good for all concerned. To make money requires skill, patience and some nerve.

    Many fans will not grasp this type of ownership, (just flick through the YEP comments on this subject, you’d think there was a war on), and are continuing to view the ownership with a high degree of apathy. scepticism, mistrust and woe because we’ve been conditioned to that by Bates for eight long years.. That is understandable but until this volatile element take on board the fact that ‘the bank’ have a meaningful purpose, are a different breed of owner and in fact need the Club to be successful to make them a very good return on their investment, then we will go nowhere no matter who is managing the Club, who plays for it, or who owns the ground. At THE MOMENT…. it is irrelevant, the season is basically over with few games to play.

    What is relevant, imo, is to centre on what GFHC have done to add value and prospect to what now is revealed, (yes it’s in the GFH report), the creeky ship LUFC was in early December, about to roll over and sink.

    Reduced ST pricing, Cash flow support through the summer and autumn, Watch Leeds for less and some cash support for new team players. Prudent measures that all offered and continue to offer value and prospect.

    Oh… and the takeover process seems to have silenced and exiled the previous owner into the hills of obscurity…shielding everyone from further financial and verbal abuse.

    The Club needs income to pay the monthly bills, surely that is in a big part… is down to us the support. I’m confident ‘the bankers’ will find Capital to protect their investment whatever percentage they may sell on. GFHC now need to make a statement of intent in the next six weeks to join the customers together to a greater degree and build on the solid approach of the last thirteen weeks

    This is a fabulous Club, the millstone has lifted, seize the day. Support the Club with a clearer raised head. Perhaps I’m just banging mine and still in awe of kicking a ball around with Johnny Giles when I was 14 at school in Harrogate. Was hooked for life.

    • henrymouni

      “Perhaps I’m just banging mine and still in awe of kicking a ball around with Johnny Giles when I was 14 at school in Harrogate. Was hooked for life”.

      Yes – maybe you are.
      The whole takeover by this new GFH, created to be SEPARATE from their bank, is a sham.
      Their track record is well documented!

      I could not get my head round the fact that GFH never outlined their future plans for us. This would have helped season ticket sales. But they could not, of course, as they did not have any.
      Banks have wrecked the world economy, and look after themselves, before their customers.
      They are the LAST people we should trust.
      They kept Bates & NW, to keep things ticking over, while they put their plan into operation.
      They invested in the club because they had to protect their investment, short term.

    • mylifeinleeds

      We knew from the offset that GFH were in it for the money (what business isn’t?) and that they were looking for investors to come on board. I don’t think for one minute that GFH are looking to sell right now, they would be stupid to. What I think will happen (for what it is worth) is that they will get an investor, who will purchase a medium sized stake with the aim of putting money into the club to purchase players, buy the stadium and training ground and more importantly get us into the Premiership THEN and only then will GFH sell up their majority stake and keep a small stake in the club.

      Realistically this season was always going to be a transitional one. I’d like to think that we will get a good manager (Adkins, please) and work towards getting into the Premier League next season – what needs to happen is that the investors need to be in place ASAP so that we don’t have another farce that we have had this season.

  • Here’s my thoughts: ALL clubs are for sale. Apart from perhaps a supporter owned club, then all of them are pretty much on the market, albeit for the right price.
    GFH-C have 2 options: Keep a majority share of the club (ie. sell less than 50%) or Sell 100%. There’s no point in GFH-C holding a minority share.