Leeds United for sale: The story so far… TSS March 20, 2013 Leeds United 27 Comments 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.