More Trouble At Leeds

[philipl]

The bidding is open, Newcastle have just had an offer of £2m for Smith turned down.

Elsewhere, it is generally acceoted that Leeds will not be sold and that they need £5m by Monday.

This Sporting Life article is the best one I have read- the points deduction situation is as clear as mud. Perhaps Birch is deliberately muddying the waters to make the bondholders nervous about precipitate action.

[AndyR]

The bidding is open, Newcastle have just had an offer of £2m for Smith turned down.

Will they be able to turn this down once the administrators are in, especially given that the transfer window only runs to the end of the month??

As I understand the 5-8million is only to cover interest payments etc not to service any of the debt

[Tango]

If Leeds go the way of Dundee they may have to release players if they cannot sell them, or sell them dirt cheap (E.g. Rae to Rangers).

BTW does anyone know what is happening with Parma, they seem in a similar predicament to Leeds - huge debts brought about by their sponsor/owner going bankrupt and in need to offload players?

[Philly Rover ®]

Soccernet article

Interesting article.  It doesn't really state anything new, but it does make the point that relegation will basically spell the end of the club as we now know it.  If the club can stay out of administration and scrape out of the bottom three, the author thinks that Roman Abramovich: The Sequel (but with different characters) will come to their rescue.

[dave birch]

Surely, If Leeds can't (or don't) pay their players, then that is breach of contract. I'd assume that the players would then become free agents.

Anyone else got any thoughts?

[LeChuck]

From what I've heard and read, Leeds are trying to get the players to agree to pay cuts in the same way that Leicester did with their players.

I don't think they'll just stop paying wages without the players consent, however if they did I think you are right in saying they would become free agents...but only after a certain amount of time (a month, I think).

[stuwilky]

Surely, If Leeds can't (or don't) pay their players, then that is breach of contract. I'd assume that the players would then become free agents.

Anyone else got any thoughts?

They would eventually but I suspect it would have to go through court, just because one party breaches the contract it doesnt necessarily terminate the contract.  Footballers contracts might be different though as I know some other aspects of law dont apply either.

[RevidgeBlue]

Surely, If Leeds can't (or don't) pay their players, then that is breach of contract. I'd assume that the players would then become free agents.

Anyone else got any thoughts?

They would eventually but I suspect it would have to go through court, just because one party breaches the contract it doesnt necessarily terminate the contract.  Footballers contracts might be different though as I know some other aspects of law dont apply either.

It does if it's a serious or fundamental breach going right to the heart of the contract. Non payment of wages for any sort of period would probably constitute this.

The Sporting Life Article is interesting in that it seems to imply that despite the deadline Leeds are not under any particular pressure from the creditors, and the only way they will go into administration is as a tactical move to avoid the possibility of being docked 10 points under Nationwide rules.

This corresponds with my view on the matter that as is generally the case, the creditors will be only too glad to accept something rather than nothing.

[philipl]

Different creditors, different interests.

Given the creditors effectively control whether there is an administration or not and therefore have a big clout over the administrator, the creditors probably see some value in spinning this one out to make sure they get the deal they want BEFORE the administrator goes in. So long as someone kicks a ball round Elland Road for the next 25 years, the yanks will get their £60m back through their lien on gate money and season ticket sales. The mortgage boys from Jersey will probably assume effective control over the contracts of the players they have mortgages on. The Inland Revenue who are now owed £7m are the wild card. I guess Trevor Birch has allowed that debt to happen as it creates the wild card which doesn't make administration a pushover for the yanks and mortgage boys.

[jim mk2]

Tomorrow's Independent reports that the Sheikh has come up with the £35 million necessary to save Leeds.

[modes98]

Tomorrow's Independent reports that the Sheikh has come up with the £35 million necessary to save Leeds.

I think it has some ridiculas way that leeds would have a transfer budget of £15million!  

[Dave S]

I don't believe there is a rule on deduction of points if a Prem club goes into administration but there would be a requirement for the other clubs to decide on expulsion. In the dod-eats-dog world of the Prem, is it realistic for clubs not yet mathematically safe not to vote Leeds out?

You are right.

Radio Five tonight reported that a nine point deduction for Premiership teams going into receivership/administration would come into effect next season.

NOT affecting Leeds IF they go into admin this year as no rule yet applies.

[philipl]

jim, that is either an incredible scoop by The Independent or they have bought the Sheikh's eye wash.

This is the Guardian's article on the Leeds situation and the Times and Telegraph are similarly pessimistic. Birch being in Manchester talking to insolvency specialists doesn't tally with the Sheikh's offer or perhaps he was being prudent.

If the Sheikh is going to make a £35m cash injection and bid for all the shares at the same time (presumably for a penny each), all he has done is take over the priviledge of paying off the rest of the £50m of debts- £60m if he is going to spend on players in the transfer window.

It is not a rescue but a standstill and nobody other than a fanatic would touch contributing to such a scheme. Under the Sheikh, Leeds would survive the remainder of the season paying the creditors falling due and they might avoid relegation this summer, but that would be about it.

Their economic fundamentals would still look the weakest in the Prem by far with a relegation dog fight against a backdrop of continuing financial crises the best they could hope for next season.

[LeChuck]

I don't believe there is a rule on deduction of points if a Prem club goes into administration but there would be a requirement for the other clubs to decide on expulsion. In the dod-eats-dog world of the Prem, is it realistic for clubs not yet mathematically safe not to vote Leeds out?

You are right.

Radio Five tonight reported that a nine point deduction for Premiership teams going into receivership would come into effect next season.

NOT affecting Leeds IF they go into admin this year as no rule yet applies.

If that's right then Leeds should go into administration straight away and get the advantage whilst it's still available (just like Leicester last season).

I don't want to see Leeds go out of business, they deserve all the problems they're having now for over-spending but it would be a shame to see such a big club go from the league completely.

[SouthAussieRover]

As alluded to by Phillip The Telegraph

are reporting that Leeds would be prepared to go into administration after taking legal advice that they would not incur a points deduction.

Sorry but I can't log into the site to link to the full article.

[Jimbo]

On Reuters this moning

08:22 16Jan2004 RTRS-Bid hopes send UK soccer club Leeds' shares soaring

   LONDON, Jan 16 (Reuters) - Shares in English soccer club Leeds United Plc <LUFC.L> soared on Friday on renewed hopes that an Arab sheikh would buy the club, enabling it to stave off the threat of administration.

   The Mirror newspaper said that Sheikh Abdulrahman bin Mubarak Al-Khalifa has raised 35 million pounds ($65 million) to buy the club and invest a substantial sum in new players.

   Leeds shares were up 1.25 pence, or 40 percent, at 4.375 pence in early morning trade, giving it a stock market value of around 15 million pounds.

   Leeds is struggling under debts of around 80 million pounds and faces a deadline of January 19 to strike a deal to avoid entering administration.

£35 Million only scratches the surface of the debt, but if he can make a deal with the bond holders they they may escape

[Finch]

If he has to raise the money then he's not loaded.

Who'd be a Leeds fan eh?  Better them than us though.

[Alan75]

Leeds could get two more weeks to find a buyer as they seek to stave off the threat of administration.

BBC

[Paul]

A few shares in Leeds plc might be a decent punt? £500 would buy around 11,500 shares. Every time they go up by a 1p you'd make £115.

Once bought ASDA shares at 23p. Only decent bet I've ever made.    Any way back to Leeds.

[Hughesy]

A few shares in Leeds plc might be a decent punt? £500 would buy around 11,500 shares. Every time they go up by a 1p you'd make £115.

Once bought ASDA shares at 23p. Only decent bet I've ever made.    Any way back to Leeds.

So for £500 you would get 11,500 shares??

How much are they per share?

[Alan75]

Doesnt look like Monday is now the deadline.

[Paul]

Hughesy - Leeds plc shares are currently selling for 4.375p. They have been as low as 1.25p.

Remember the value of your investment can go down as well as up.

[Tom Pringle]

Doesnt look like Monday is now the deadline.

Well there's a suprise

[Hughesy]

Hughesy - Leeds plc shares are currently selling for 4.375p. They have been as low as 1.25p.

Remember the value of your investment can go down as well as up.

Would that not give you 21,875 shares then??

[stuwilky]

Hughesy - Leeds plc shares are currently selling for 4.375p. They have been as low as 1.25p.

Remember the value of your investment can down as well as up.

Would that not give you 21,875 shares then??

Go one Hughesy, tell me how to double your money like that, I sure need it.

50000 / 4.375 = 11,428 shares.

But it is a bit of a false figure anwyay cos youd have to pay dealer chrges and everythign else but anyway.  Hughesy tell me your trick.