1 Our time at last? - Part 3 Cup
highs and League lows - Results
and table - printer friendly version
Besides playing success, for Leeds United the 2009/10 season
will be remembered for a number of behind the scenes controversies.
At the beginning of June 2009, former United director Melvyn
Levi commenced libel proceedings against chairman Ken Bates in
London's High Court.
Levi's barrister, Simon Myerson QC, told the judge, Sir Charles
Gray, that problems arose following Bates' purchase of the club
in January 2005 from the Yorkshire Consortium of which Levi was
a member. Myerson claimed that in October 2006 Bates launched
a campaign of defamation, mainly through his columns in United's
match day programme.
Myerson said that Bates published an article on 17 October, claiming
that Levi was a "shyster trying to blackmail Leeds United into
paying him money to buy him off".
A second article, under the headline "The Enemy Within", published
on March 3, 2007, accused Levi of trying to blackmail Bates and
engaging in "scurrilous telephone calls and conversations which
deterred two would be serious investors in the club".
The following week, an article entitled "Why, Mr Levi, why?"
claimed that "Levi frightened off investors and ... and excused
his actions by accusing Mr Bates of being anti-Semitic".
In August 2007, Bates sent Leeds Club Members a letter which
suggested that Levi had "frustrated efforts to strengthen Leeds
United's finances by deterring participants in a rights issue
and putting off would be investors".
Bates' barrister, Ronald Thwaites QC, outlined a number of defences,
claiming that Bates was protected by "qualified privilege" as
the allegations he made were in the public interest. The barrister
claimed Bates' statements were justified, expressly denying that
he was anti-Semitic. He argued that Levi's behaviour in not agreeing
to the sale of the shares was "dishonourable, unscrupulous and
disgraceful", adding that his demands in the autumn of 2005 "amounted
to blackmail". He added that, during a conversation with a potential
Irish investor, on December 13, 2006, Levi tried to deter him
from putting money into the club. Thwaites claimed that Levi's
motive for the court action was in order "to have a quasi public
inquiry about his problems with Mr Bates".
Levi gave evidence that he was acting in the interests of his
company, Cope Industrial Holdings, and there was a legal dispute
over whether or not a call option on United shares had lapsed.
Levi's stance was supported by former United chairman Gerald Krasner,
who was Levi's accountant and leader of the Yorkshire Consortium.
Bates claimed that Levi should have accepted the advice of an
experienced commercial QC, Michael Crystal, who told him that
the call option had not lapsed, but Levi had earlier spoken to
Crystal's brother, a junior but very experienced barrister who
had come to the conclusion that the call option was no longer
Krasner told the judge that he thought Levi's argument that the
call option had lapsed was a "legitimate business tactic". He
added that he had tried to persuade Bates to settle his differences
with Levi in September 2005, but Bates "seemed clear he had no
desire to resolve the dispute... While understandably keen to
protect his interest, Mr Levi did not take a confrontational or
difficult attitude to Mr Bates, if anything, it was the other
way round, as evidenced by my discussion with Mr Bates in September
2005 when he made it quite clear that he was not prepared to meet
Mr Levi with a view to resolving matters."
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Eventually, the club issued new shares, greatly diluting the
importance of the call option. Levi claimed that both Cope and
the Yorkshire Consortium thus lost seven-figure sums.
Levi revealed that he was considering legal action against David
Richmond, another member of the Yorkshire Consortium. Levi claimed
that Richmond gave Bates a copy of Michael Crystal's legal advice
on the call option. "Mr Bates went on to make use of the document
in a way that potentially caused Cope, myself and my other co-trustees
significant financial loss."
Richmond accepted that he passed the legal advice note to Bates,
but insisted that he only did so in an attempt to make peace.
It was not for any financial gain, or because he was favouring
one side over the other, but merely to try and end Levi's dispute
with Bates. "I have got nothing personal against Mr Levi," Richmond
said. "I wanted an end to this situation."
Richmond added that it was very hard to change Levi's mind when
he had set his heart on a course of action, and he hoped leaking
the advice would lead to a solution. "The only way of resolving
it was to bang their heads together, and sort it... This is something
which ... should have finished five years ago."
Richmond also gave evidence about the
Consortium's takeover of Leeds United in 2004, saying he thought
it was "out of its depth". When asked what his misgivings were,
Richmond said, "Everything. The chemistry of the Consortium, it
was clear, wasn't going to be very good. We had taken on something
which was financially too big. It was all wrong."
Levi's business partner, Jersey-based businessman Robert Weston,
also gave evidence. He owned a 75% stake in Cope, and was involved
in the Yorkshire Consortium's takeover of United. Weston said
that, in his experience of dealings with Bates over the last four
years, "this sort of prejudicial allegation is typical of the
antagonistic, emotive and aggressive response I have seen
from him when negotiations are not to his liking."
In relation to the call option, Weston said that Cope had lent
£1.4m to Leeds United and was receiving quarterly interest payments.
Both he and Levi became concerned by September 2005 that the loan
was in jeopardy because security on it had not been perfected
even though the club had an obligation to provide it. It was at
that stage that Weston and Levi entered into talks with Bates,
proposing a number of compromises.
At the end of September, a shares rights issue took place which
diluted the importance of the call option, and the club defaulted
on interest payments to Cope. "The rights issue and subsequent
events were a contrivance, devised by Ken Bates, to avoid paying
the quarterly interest due on the loan notes up to maturity and
to avoid the repayment of the value of those notes when repayment
eventually fell due," alleged Weston. "Mr Bates will no doubt
say that I and/or Mr Levi were deliberately trying somehow to
prevent him from achieving his aim to wholly own and control the
club and to run it profitably for the foreseeable future. Any
such view was, and remains, a patent nonsense, as both Mr Levi
and I would prefer, and would always have preferred, the Club
to be successful under Mr Bates' control and, thus, for all parties
involved to have received a reasonable return for their investment."
When Ken Bates gave evidence, he compared his first board meeting
at Elland Road to a "cross between a Rugby scrum and feeding time
at the monkey house" where champagne was "drunk like water". He
claimed Levi had "played the race card" by accusing him of making
anti-Semitic comments. When challenged by Myerson, Bates replied:
"If people from ethnic minorities have problems, rather than accept
they are wrong, can't do their jobs or are incompetent, it's not
because of their failings, it's because of 'where I'm from'."
Bates denied defamation and claimed Levi blocked the sale of
shares in the club when he had no reason to do so. When Myerson
challenged Bates, saying, "What's really happened is that you
didn't like him, you have abused your position so you can take
things out on that man," Bates replied: "It's not that I didn't
like him - I didn't like his actions and his behaviour."
The judge took a fortnight to consider his verdict and when the
case was reconvened on 2 July he ruled in favour of Levi, awarding
him libel damages of £50,000 and ordering Bates to pay the legal
costs, estimated at £1.5m.
Rejecting arguments that Levi had been blackmailing the club,
Sir Charles said he did not accept that Levi's conduct could "justifiably
be said to have amounted to blackmailing Mr Bates". The judge
said that the description of Levi as a shyster was "substantially
unjustified". And he said that Bates had "failed to justify" allegations
that Levi had acted "contrary to the best interests of the club
or that he deterred would be investors". The judge, though, did
not find that the letter written to the
club's fans was libellous.
CHARLES GRAY'S JUDGEMENT IN FULL
After the judgement, Levi's barrister revealed that in January
2009 Levi had offered to settle the action for £15,000 damages
and an apology, but Bates had declined to accept those terms.
At a Press conference called to discuss the case, Levi said:
"This has been a most difficult and testing four years for myself
and my family. The whole episode has been hugely upsetting to
me. I am delighted and relieved that the judgement recognises
both that upset and that the action was not financially driven.
The judgement vindicates my decision to pursue this action and
to stand up for myself. The action had nothing to do with Leeds
United, to whom I wish only success. It was brought to stop Mr
Bates continuing to libel myself and my family. I have been and
will remain a lifelong Leeds United supporter."
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A week later, the Guardian's David Conn, a long term critic of
Ken Bates and the lack of transparency in his business dealings,
aired his views.
"Bates had retired to the tax haven of Monaco after selling Chelsea
to Abramovich, and he told the court in Levi's libel action what
his motivation was for returning to football just 18 months later,
aged 73, to take control of Leeds. It was, he said, a similar
situation to that of Chelsea in 1982: 'Hopelessly insolvent; it
did not own its ground, but was a big club, and there was a chance
to rebuild it.' It was Bates' opportunity for a last hurrah, a
defiant final success at a club whose enormous potential had been
sapped by mismanagement, but the course of his time at Leeds United
has not run smoothly at all. The judgment in the libel trial,
which runs to 28 pages, can be read as a narrative of events at
the club which had sunk into financial meltdown.
"Melvyn Levi was one of the Yorkshire Consortium ... who opted
to have a go at rescuing Leeds as it teetered at risk of going
completely bust. They were not hugely wealthy by the standards
of the international rich list currently taking over English clubs,
and they personally put around £4m into the club, in loans, to
try to stabilise it. They sold Mark Viduka, Paul Robinson, Alan
Smith and all other high-earning players they could; sold and
leased back Elland Road and the Thorp Arch training ground...
none of it was enough to stay financially afloat and stave off
demands for unpaid taxes from HM Revenue and Customs.
"Bates arrived in January 2005 offering to provide investment
in the club which was then desperately needed. In the course of
the trial, Bates confirmed that he personally put no money in.
Leeds were bought not by Bates, but by a fund registered in the
Cayman Islands and run from Switzerland: the Forward Sports Fund,
FSF... Bates said he 'did not know' who the investors were in
FSF. The fund had been marshalled by Bates' associate, Patrick
Murrin, an accountant in Guernsey, who Bates said had helped him
with his financial activities in offshore places for 30 years.
"By the time Bates took over at Leeds, Levi and Weston, and two
members of the Yorkshire Consortium, had put significant amounts
of their own money in. Levi and Weston, the judgment says, had
loaned £1.65m, via their company, Cope, into the company which
owned Leeds United itself. Bates agreed that his company, which
would take over from the Yorkshire Consortium and hold the shares
in Leeds, would repay £207,000 immediately to Levi, then £1.4m
fully four years later.
"For technical reasons, both sides agreed that the Yorkshire
Consortium would transfer half their Leeds United shares to Bates'
company immediately, and the other half after 12 May 2005... After
that, Bates' consortium had to formally call for the Yorkshire
Consortium to transfer the other 50% of the shares over, and Bates
had to do that, exercise the call option, by 31 May 2005, after
which it would lapse. When he did call for the shares, Bates had
to provide a guarantee that the Yorkshire Consortium's outstanding
loans would still be repaid, together with a valid legal opinion
from suitably qualified lawyers that the guarantee was indeed
"Bates agreed that while Levi and the two other Yorkshire Consortium
members were still owed money by his company, they would each
be entitled to three tickets to the directors' box and boardroom
for every home match, and a car parking space at Elland Road,
and one ticket for every away game.
"Mark Taylor wrote to Krasner on 19 May 2005, saying he wanted
to exercise the call option for the Yorkshire Consortium to transfer
... the other 50% of their Leeds shares. Taylor asked Krasner
to send him a draft of the guarantee for the repayment of the
Yorkshire Consortium's loans... this was done on 27 May 2005.
However, it was not until July 5 ... that Taylor sent to the Yorkshire
Consortium the draft legal opinion which was required by the agreement.
Even then, according to the judgment, it had a page missing.
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"Levi said in his evidence ... that he became concerned about
whether his and Weston's £1.4m outstanding loans really were being
guaranteed by these arrangements. His lawyers advised him 'there
are risks associated' with it, and on 4 August 2005, Levi's solicitors
told Mark Taylor that, as it was all complex, they were going
to ask for full legal advice from a barrister.
"It was during this pause ... that Bates, and Shaun Harvey, Leeds
United's chief executive, suddenly moved to take Levi's match
tickets away from him and ban him from Elland Road. On 17 August,
Harvey wrote to Levi, claiming that at a pre-season friendly at
Harrogate Town Levi had criticised Bates and said he was opposed
to the new board. Harvey's letter concluded that the board had
been left with no alternative but to take away Levi's tickets
to home and away games and his car parking permit.
"Mr Harvey added ... that he was compelled to inform Mr Levi
that he would not be welcome at club matches either home or away
and that Mr Levi might consider himself banned from the stadium
and the surrounding area controlled by the club. Levi said in
court that Harvey's letter 'came as a complete and utter shock,
since he had made no criticism of Mr Bates nor insulted him or
the club.' Andrew Thirkill, Harrogate Town's deputy chairman,
who had been Levi's host at the game, wrote to Bates saying Levi
had made no such comments.
"Three weeks after the match, Kevin Blackwell ... had provided
Bates... with a statement saying Levi 'had made many derogatory
remarks towards the club and had said that he was going to make
it as hard as he could for Mr Bates...' Blackwell gave evidence
at the trial to say he 'had no recall of Mr Levi making any personal
statements against Mr Bates' and that Levi's comments were mostly
about the club.
"Sir Charles Gray did rule on this question, about whether Levi
did in fact make derogatory remarks about Bates and the club at
that Harrogate game, and he ruled that Bates had encouraged Harvey
to blow the incident out of all proportion, quite deliberately,
to engineer a ban of Levi from Elland Road.
"Levi continued to take legal advice about whether he was obliged
to transfer the shares to Bates. The advice conflicted, one barrister
saying the option had lapsed, but another, Michael Crystal QC,
ruling that, despite
the delay from Bates' side, it was still valid and Levi should
still transfer the shares. However, the judge said Crystal appeared
to have been unaware that even then the necessary satisfactory
legal opinion, to confirm repayment of the loans was guaranteed,
had not been received. Sir Charles ruled that, in fact, the call
option had not been validly exercised by Bates, because even by
September 2005 no satisfactory legal opinion had been provided.
"In the libellous articles which Bates wrote in the match programmes
many months later, in October 2006 and March 2007, he repeatedly
said that the call option had been valid and Levi had been duty
bound to complete. It was Levi's failure to do that, specifically,
which led to Bates writing that Levi was 'a shyster' trying to
'blackmail the club'. Yet in an extraordinary revelation at the
trial, it emerged that Mark Taylor had himself taken advice from
a senior barrister, David Philips QC, who said he was 'not optimistic'
that the call option was valid. Philips believed the prospects
of Bates being able to argue that it had not lapsed 'at well below
50%'. Yet still Bates repeatedly attacked Levi, in print, for
not transferring the shares.
"Instead, Levi had approached Taylor in early September to seek
a settlement, and he was most concerned not with the money but
getting his tickets for Elland Road reinstated. Weston was keener
to make sure their loans would definitely be repaid, and he took
over the negotiations with Taylor, acknowledging in court that
he also looked to take 'modest financial advantage' of the situation.
Weston put to Taylor that as the call option had lapsed, they
would still transfer the shares over in return for Levi having
his tickets reinstated, their loans being repaid immediately,
and for 10% of Leeds United being given to them. Taylor rejected
that, telling Weston he was being greedy. Weston said in his evidence
that the conversation, on 9 September 2005, was 'amicable,' he
told Taylor he was open to a counter offer - making it clear,
in other words, that this was a negotiation - and Taylor had said
he would talk it through with Bates and come back to Weston.
"Instead, Bates made his move a week later, on 16 September 2005.
Bates and Taylor had considered raising new money for Leeds by
holding a rights issue... Instead, they decided to issue 2.5m
new shares in Leeds United, the club itself, directly to FSF.
FSF would also convert £2m of their loans into shares in the club.
"That was agreed in a telephone call on ... 22 September 2005.
The effect of it was to make FSF 94% owners of Leeds United. Bates'
other company, which owed Levi and Weston the £1.4m, now had just
4.5% of the club. The Yorkshire Consortium's 50% share was reduced
to 1.5%. By doing this, Bates' company skipped free of having
to repay Levi and Weston their loans, because it no longer owned
the club and had no other assets.
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"The judge agreed with that view of what Bates and Taylor had
done: 'I am not persuaded that Mr Bates has established that it
was the dispute with Mr Levi which caused the rights issue to
be abandoned,' Sir Charles ruled. 'Rather it was the decision
of Mr Bates, assisted by advice from Mr Taylor, that FSF should
purchase shares in [Leeds United] instead. Blaming Mr Levi was
a convenient strategy for them.'
"Bates blamed Levi for the rights issue being abandoned, for
not transferring the shares over and accused him of acting against
Leeds' interests in other ways in articles in three match programmes
which Sir Charles ruled were false and libellous. The first that
Levi complained of was written by Bates ... on 17 October 2006...
Bates wrote in his chairman's notes about the fact that Levi had
not executed the call option: 'Regular readers of this column
will recall that [Levi] refused to transfer the shares to me claiming
that I had not exercised the option to acquire them, despite both
his solicitors and barrister telling him that I had.'
"The second article on which Levi sued Bates for libel was contained
in the programme of 3 March 2007... Almost 18 months after the
events, Bates raised the issue of the call option again... 'FSF
complied with all the requirements [of the call option] and duly
exercised the option on the due date. Levi claimed that the option
had not been validly exercised and refused to transfer the shares…
I understand that [Levi's father] was highly respected and a pillar
the local community. He must be turning in his grave at the antics
of his offspring. Leeds United need further investment and FSF
are quite happy to welcome further participants. However, for
some time Melvyn Levi has been making demands which are little
short of blackmail. His behaviour, including telephone calls and
conversations, some of which are totally scurrilous, have deterred
at least two would be serious investors from proceeding. Some
of his remarks are so serious that they have been reported to
the police. This unpleasant and dishonourable man will not succeed
in his attempt to obtain money in an unscrupulous way … Perhaps
you would like to ask Mr Levi some questions and ask him to justify
his behaviour which is damaging Leeds' prospects of advancement.'
The programme then printed Levi's home address. In court Bates
was asked why he printed Levi's address, what he thought might
happen. He answered that he thought Leeds fans might 'write letters'
"The third article Levi complained about was written a week later,
in the programme on 10 March 2007... First there was a series
of questions, including: 'Why did you refuse to complete the share
option in 2005?' And 'Are you trying to blackmail me into paying
you money to go away?' He also blamed Levi for putting off a potential
investor, he claimed, with £100m in the bank, from investing in
the club. This time Bates pointed out that Levi's telephone number
was in the phone book.
"In court, Myerson, acting for Levi, persistently took issue
with Bates about the fact that these articles were written so
long after the discussions had taken place over the call option,
which Bates had resolved, back in September 2005, by means of
new shares being issued to FSF. Myerson put to Bates that he had
written the articles to deflect Leeds' fans attention from how
badly Leeds were faring, heading for relegation and administration,
under Bates' chairmanship. Bates denied that, claiming he was
still frustrated by Levi's conduct even then.
"Myerson also focussed on Bates' comment, in the 10 March 2007
article, that Levi's father must be 'turning in his grave at the
antics of his offspring... Mr Bates, that is a thoroughly unpleasant
thing to have written,' Myerson said.
"During the pause before Bates answered that charge, Levi, in
court, sitting on one of the public benches with his wife beside
him, was blinking hard. Bates replied: 'I think it is a reasonable
speculation.' Sir Charles asked him what he meant, what was a
reasonable speculation. Bates replied: 'That his father must be
turning in his grave.' Myerson then asked: 'Do you have no reflection
or consideration over the last two and a half years that makes
you want to say that is going a bit too far, and you are sorry
for saying it?' Bates answered: 'I suppose with the benefit of
hindsight I regret saying it. I thought it, and still do, but
perhaps I shouldn't have written it.'
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"Sir Charles Gray's judgment on this series of events at Ken
Bates' Leeds between his 2005 takeover
and the club's relegation, and administration, in 2007, was unequivocal.
Levi, he found, was not blackmailing the club, not indulging in
scurrilous or dishonourable behaviour, had not deterred potential
investors whom Bates had been talking to. The description of Levi
as a 'shyster' was 'substantially unjustified.' Concluding, the
judgment says, 'I cannot accept that any of the … publications
complained of are defensible as being fair comment. I say that
because what Mr Bates wrote in those articles was riddled with
"Making the award of £50,000, plus costs, Sir Charles ruled that
it reflected: the 'gravity of the libels: the allegation of blackmail
is particularly serious'; the fact that the libels were repeated
'on several occasions over a period of 10 months'; the fact that
Bates sought 'unsuccessfully to justify his statements about Mr
Levi and continued to do so in a public trial lasting many days...
Perhaps most important of all,' the £50,000 award took into account
'the obvious distress and injury to Mr Levi's feelings caused
by the libels. In this regard, I take account of the gratuitous
inclusion … of Mr Levi's home address in Leeds and the reference
… to his home telephone number being in the telephone book which
was in effect an invitation to Leeds fans to pester Mr Levi.'
"So far, Bates has issued no apology for the words he used, or
retraction of any of the allegations he made in those match programmes,
which the judge found to be grave libels. Instead, Bates issued
an unbowed statement, saying he was 'disappointed in the judgment,
some aspects of which we find rather extraordinary,' and saying
he is considering an appeal."
In October 2009, Bates was refused leave to appeal. The decision
came at a time when other issues were preoccupying the club's
The Thorp Arch training facility was sold by the previous board
to Manchester-based property developer Jacob Adler and his Barnaway
company in October 2004 to raise much needed funds and the club's
option to re-acquire the facility was due to expire shortly.
United approached Leeds City Council in August 2009 to lend them
the money for the £5.8m repurchase. The club's poor credit rating
made it almost impossible for them to secure a normal commercial
loan and they asked the Council for help.
Phil Hay reported on the story for the Yorkshire Evening Post:
"The clause expires on October 10, 2009, after which point the
club would have no right to purchase the property near Wetherby.
It was widely anticipated the recent sale of young midfielder
Fabian Delph to Aston Villa, allied with the £4.5m profit posted
by Leeds in the last financial year, would provide sufficient
acquire Thorp Arch, but the plea to the Council indicates the
club do not expect to be able to raise the necessary amount before
"Leeds pay an annual rent of almost £500,000 for Thorp Arch,
a sum which increases by three per cent each year and would continue
to do so until their lease expires in 2029.
"The Council is exploring two possibilities - to offer Leeds
a loan to secure the complex or to buy the land itself and negotiate
a new lease with the club, along with an extended buy back clause."
Negotiations with the Council went on for weeks. On 1 September,
it was reported that the Council's executive board had rejected
the option of a loan, though they were still considering whether
to buy the facility themselves. On 17 September, senior councillors
voted to buy the facility and lease it to United. The following
press statement was issued.
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"Any deal would secure use of the training facility for the Olympics,
the 2013 and 2015 Rugby World Cups, and the 2018 Football World
Cup, along with increased Leeds United community activity across
the city. At a meeting of the executive board last month members
agreed to investigate whether it was appropriate for the Council
to be involved in the matter. At that meeting it rejected any
possibility of a loan being made to the club and asked officers
to examine an alternative option where the Council borrow money
to buy the facility and then lease it back to Leeds United."
The deadline for completion of the deal was deferred to 15 October
to provide more time for United and the Council to complete the
final outstanding details of the arrangement.
On 16 October, the news was released that the deal had collapsed,
thanks to what the Council termed 'uncertainties'. The club's
official website carried the following statement.
"Leeds United Football Club did not exercise the option to purchase
Thorp Arch before the 23:59 deadline on the 15th October. The
club will remain a tenant of Barnaway Limited for the next 20
years under the terms of the current lease. The club's use of
Thorp Arch during that period will remain unchanged from our current
"Discussions continued with Leeds City Council until the deadline,
however the Council were not able to provide the club with an
unconditional letter of commitment to purchase Thorp Arch and
then lease it back to the club. This meant that if the club was
to have exercised the option the club would have been at risk
of completing the transaction in 28 days time without the guarantee
of funding. That
was a £6m risk the club was not prepared to make.
"It is the club's belief that the conditions that the Council
sought to attach to the offer could all have been satisfied before
the expiry of the 28 days, however as they were not all in the
gift of the club therefore it was decided not to proceed."
Ken Bates: "We've been in negotiations for three months, but
these have dragged on inevitably because of the way any council
works... Things weren't being resolved as quickly as they might
have been up to last week when obviously the deadline started
coming up. We kept trying to put pressure on to get the outstanding
matters resolved, but it was like dragon's teeth. As soon as one
problem was solved up came two more, and some of them were a bit
nonsensical to put it mildly, without going into details.
"I think it wasn't helped by the fact the Council employed a
firm of outside lawyers who have to justify their existence...
It came to a situation at 4pm on Thursday afternoon where we were
faced with 13 demands, most of which could have been raised weeks
or even months ago and we only had seven hours to solve them all.
This wasn't helped by the fact that their lawyers weren't there
on Thursday night and Paul Rogerson (Council CEO), the poor man,
was left there until midnight trying to cope on his own without
any back up or assistance from his side.
"The deal had moved as they inevitably do to a bit of extra protection
here, extra cover there, community use which wasn't a problem,
and use for the 2012 Olympics and the 2013 and 2015 Rugby World
Cups, some of which was contrary to the covenant which was in
the covenants when the land was bought from the Council in 2000
and we weren't prepared to take a risk.
"We had to sign unconditionally with Jacob Adler by 11.59 on
Thursday night and the Council still wanted to give their agreement
with a number of 'subject to...' We weren't prepared to take that
risk. So, I sat down and evaluated the options of accepting the
conditions or not, and unfortunately the financial requirements
of the Council had grown so much it became very much touch and
go whether it was really an advantage to the club. I decided at
11.40pm it wasn't up to the risk because we couldn't find Adler
£5.8m in 28 days time and we would have been relying on the Council
to keep their half of the bargain. It wasn't worth periling the
club after all the hard work we have put in over the last five
Fans demanded to know why the club were unable to fund the purchase.
Ken Bates blamed high running costs and the instalment terms on
the Delph transfer. Among heavy outgoings was a yearly rental
bill for Thorp Arch and Elland Road amounting to £1.9m. Council
Tax and utility bills added another £600,000, while a wage bill
of a little over £6m was not only the biggest in League One but
also comparable to "an awful lot of Championship clubs".
He added, "This is an expensive football club to run and we didn't
have the money... We have had to pay money to McAllister and Staunton,
and for bringing in Simon Grayson. We have also spent £500,000
on getting planning permission to redevelop the East Stand. When
that is completed, it is something the club will benefit from
for years to come. Buying Thorp Arch with our own money wasn't
an option because we didn't have the money to do it."
On the fee received for Delph, chief executive Shaun
Harvey added: "You don't receive 100% of the fee up front. People
see a headline figure of £6m but that is not what we actually
receive straight away. Bradford (who sold Delph to Leeds at the
age of 11) got their share and still have some to come."
On 4 December, the Guardian's David Conn reported on another
"The Football League is expected to declare within days that
it knows who Leeds United's owners are and that those people are
'fit and proper' to be in charge of the club.
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"League sources indicated last night that the League One club
has provided significant detail and supporting documents to demonstrate
to the League's satisfaction who the individuals are behind Leeds'
complex offshore ownership. The League's new policy, outlined
by the chairman, Lord Mawhinney, at a meeting of clubs yesterday,
is that all clubs must identify to the League who their owners
are, and they must be passed as 'fit and proper'. However, the
policy does not extend to the League requiring this information
to be made public.
"The League asked Leeds a series of questions about the club's
ownership after the Guardian revealed in September that the Leeds
chairman, Ken Bates, had revised his account of who owned the
club. The revelations were made in a court action in Jersey, where
Leeds are suing a company, Admatch, whom the club claim owes them
£190,000. Admatch is defending the action, counter-claiming that
it is owed £2m by Leeds.
"In evidence to the Royal Court of Jersey in January, Bates'
solicitors said FSF … ultimately owned Leeds. The solicitors said
Bates and his long-term financial advisor, Patrick Murrin, owned
one management share each in FSF. Mark Taylor, Bates' lawyer,
said subsequently that these were the only shares in FSF, therefore
Bates and Murrin were its joint owners. Then in May, Bates swore
an affidavit to the Royal Court, stating that that previous information
had been 'not correct' and it had been 'an error on my part' to
say he was FSF's joint owner. The sworn statement attached a letter
from investment brokers in Geneva, Château Fiduciaire, which said
they were the administrators of FSF. That letter clarified that
there were in fact 10,000 shares in FSF, that Bates did not own
any and nor did any Leeds director."
On 12 February, the Yorkshire Post reported: "Football League
chiefs last night confirmed that Leeds United's owners have passed
its fit and proper persons test. Elland Road officials were contacted
by the League last year to clear up the mystery of who is in ultimate
charge of the League One club. FSF, a company registered in the
Cayman Islands, own United but their shareholders are anonymous.
United chairman Ken Bates is understood to be FSF's UK representative,
but, as he revealed in a sworn affidavit to a Jersey court last
May, he does not have any shares in the company.
"The League are now satisfied Leeds comply with all regulations,
though supporters remain in the dark as to who owns the club due
to no details being made public. A League spokesman said: 'The
Football League has concluded its enquiries regarding Leeds United's
Fit and Proper Persons Test documentation and has addressed the
issues raised with the club. Following further information from
Leeds, the League is now satisfied that the club is compliant
with Football League regulations in this area.'
"Under League rules, club directors, anyone owning 30 per cent
or more of its shares, or anyone 'who exercises direct or indirect
control over the affairs of the club' must declare themselves
to the League and be passed as a fit and proper person."
David Conn continued his campaign on 4 March: "The ownership
of Leeds United ... has been rooted in a tour of offshore tax
havens ever since Ken Bates arrived as chairman in 2005. Documents
filed at Companies House in December name three offshore organisations
and a lawyer based in Monaco as holding the shares in Leeds, but
the individuals who ultimately own the shares have never been
publicly identified. That remains the case even though, following
an inquiry, the Football League has now said it is satisfied with
the information Leeds have provided on their ownership, and that
Leeds comply with the rule that club owners be passed as 'fit
and proper' people.
"The League has made great strides on governance and financial
regulation under the seven-year chairmanship of Lord Mawhinney,
who retires later this month. But requiring clubs to publish their
owners is, to date, a step too far. For that to become a League
regulation a requisite majority of clubs would need to introduce
a rule, and according to League sources there is currently 'not
the appetite' to do so. The current system, therefore, is that
Mawhinney himself and three senior League executives receive and
scrutinise ownership information from a club. The supporters still
have no right to know, unless a club choose to tell them.
"The offshore entities involved in the ownership of Leeds have
emerged in various episodes since 2005. The company which took
over the majority ownership of the club from the former regime
led by the
chairman, Gerald Krasner, was FSF, then registered in the Cayman
Islands, and administered from Switzerland. Bates, himself resident
in Monaco, said in May last year that he does not own shares in
"The Companies House documents name the entities which now hold
the Leeds shares and suggest they have a story to tell, with £2.2m
being invested in the club by them in June 2008. More than 70%
of the shares are still owned by FSF, whose address is given as
60 Rue du Rhone in Geneva, the office of Château Fiduciare, the
company which administers the fund. FSF was formed and registered
in the Cayman Islands from January 2005, but on 31 March last
year, was struck off the register.
"Peter Boatman, of Château Fiduciaire, who was named last May
as a director of FSF, confirmed this week that he has passed the
League's fit and proper person test, which applies to directors
and 30% shareholders of clubs... He added that all information
about Leeds' ownership had been supplied to the League's satisfaction,
and that with Leeds now stabilised financially ... questions about
who ultimately owns the club will be seen as unwelcome criticism.
'The situation at the football club has improved immensely which
is very satisfying when some clubs are in serious financial trouble,'
he said. 'We have never denied information to the Football League
and although I cannot confirm or deny who the shareholders are,
the only thing I can say about the structures we control is that
they are all above board.' Asked who the shareholders actually
are, Boatman replied: 'It is not necessary for you to have that
"The second Leeds shareholder registered at Companies House was
the Homer Trust, with an address also at the Geneva office of
Château Fiduciaire. Another offshore company, Outram Investments
Limited, registered in Tortola, the British Virgin Islands, invested
£2m, the bulk of the 2008 cash injection. The fourth shareholder
listed is Donald Manasse, a corporate lawyer with offices on the
Boulevard des Moulins in Monaco. Contacted by the Guardian this
week, Manasse said he was pleased that the League had passed the
Leeds ownership as 'fit and proper'. When asked who ultimately
owns the shares, he declined to confirm whether he holds the shares
on his own behalf or for somebody else.
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"The League launched its inquiry in October after the Guardian's
revelation that Bates had revised his account of the shareholdings
in FSF in a court case Leeds are bringing against a company, Admatch,
in Jersey. Leeds claim Admatch owe them £190,400, while Admatch's
owner, Robert Weston, claims he was owed £1.43m by another Leeds
United company which went bust in 2006. In January last year,
in response to questions from Weston over the ultimate owners
of Leeds, Bates' Jersey solicitors said that FSF was incorporated
in the Cayman Islands and had two management shares. One each,
they said, was held by Bates and his long-term financial adviser,
Patrick Murrin. Bates' solicitor, Mark Taylor, a Leeds director,
said FSF had no other shares. In the same case in May, Bates himself
swore an affidavit, which
said that in fact the management shares were held by Boatman and
Murrin, not him. The previous statement by his solicitors, he
said, was 'not correct and was an error on my part'. Bates explained
that in 2005 he had approached Murrin to raise money from investors
to support Bates in taking over at Leeds, and Murrin had arranged
for FSF to be incorporated in the Cayman Islands, then it loaned
Leeds an initial £4.4m to keep the club in business.
"The affidavit attached a letter from Château Fiduciaire, which
stated that the actual ownership of FSF was held via 10,000 participating
shares, but Château Fiduciaire said they could not say who owned
those shares: 'It is not the policy of this company, a fully regulated
Swiss fiduciaire, to release information on ultimate ownership
without an appropriate court order, valid in Switzerland.'
"The League announced its inquiry after noting 'recent allegations
made about the ownership of Leeds United', adding that it had
written to Leeds, 'seeking clarification'. The board also announced
that after taking its legal advice about how its fit and proper
person test should work, it would now be the policy of the board
to 'insist that it is informed, with supporting evidence provided,
of the ultimate beneficial owners of all Football League clubs'.
"Leeds did then provide the League with further information,
but no further comment was made until last month.
"So Mawhinney and three senior executives now know and are satisfied
with what Leeds provided about the identity of their ultimate
owners, but the fans and public do not."
On 24 July 2010, the club bowed to the mounting pressure and
published the following, somewhat opaque, statement about the
ownership of the club on its official website.
"Leeds United Football Club Limited ('LUFC'), the company that
holds the share in the Football League, is a member of the West
Riding County Football Association and an Associate Member of
the Football Association. LUFC is a wholly owned subsidiary of
Leeds City Holdings Limited ('LCH').
"LCH has five shareholders, four of these hold 27.15% collectively
with no one of these holding more than 10% of the issued shares.
"FSF Limited (a company incorporated in Nevis) holds 102,000,000
or 72.85% of the issued shares.
"Chateau Fiduciaire SA ('the trustee') is the legal owner of
the shares in FSF Limited. The trustee is a fully regulated Swiss
Fiduciary providing professional trust and corporate services
to clients worldwide.
"FSF Limited has 10,000 shares that are held on behalf of 3 separate
and independent discretionary trusts ('the trusts'). Two of the
trusts hold 3,333 shares each and the other holds 3,334. The
trustee is the duly appointed trustee of the trusts and manages
them independently. The class of beneficiaries in each trust are
entirely discretionary, they are not identical and can only be
identified by the potential nature of any benefit.
"FSF Limited was incorporated purely for the purpose of the trusts'
investments in LCH. These are not the trusts' only interests.
The trusts have no other interest in any football club.
"The trustee has issued two management shares in FSF Limited
that carry full voting rights but no rights to capital or income
to the holders of the management share. The management shares
are held by Patrick Murrin and Peter Boatman on behalf of Ken
Bates. All have passed the Fit and Proper Persons Test.
"None of Messrs Murrin, Boatman or Bates is a member of the class
of beneficiaries of the trusts. The trustee, through the issue
of the two management shares, have placed the management and control
of LUFC in the hands of Mr Murrin and Mr Bates.
"No potential beneficiary of the trusts or their immediate family
may have rights to over 10% of FSF Limited's shares in LCH."
Clear as mud!
Part 1 Our time at last? - Part
3 Cup highs and League lows - Results
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