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philipl

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Everything posted by philipl

  1. 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.
  2. 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.
  3. Birch is desperately trying to auction off Paul Robinson today. Unfortunately for him, Calamity James' move from WHam took City out of the bidding.
  4. This is the most optimistic view of Leeds' current predicament I have seen but it also recognises the reality that Leeds United plc is all but dead- the choice is euthenasia or a long painful ending. I cannot see how or why anybody would go for the short term solution- pumping £20m in primarilly to service debt and scheduled loan payments with a gamble on them still being in the Prem come the summer. Interesting to read that Alan Leighton is the only credible saviour when Trevor Birch appeared to support the grievances against him at the AGM. Doesn't seem very credible. The only cogent argument against administration is that the other Prem clubs would take action to ensure their demotion and the consequent loss of £20m income. That is pretty weak and won't stop the biggest creditor from pulling the plug. Even flogging Viduka for £8m (if they can get that price in current market conditions which seems very unlikely) will only pay a proportion of the player mortgage debts and release no cash for the football side. Trevor Birch will prove to be the most brilliant alchemist around if Leeds are not bust by 19 January. There maybe false dawns as various bottom fishers look for value in the dredgings but there is only mud at the bottom of this one.
  5. 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?
  6. Rab C Nesbit meets Wurzel Gummage rover 6 will be disappointed that he's not going anywhere just at the moment (this side of 2008). Anyway, he's too busy sifting through the lists of players released by Scottish clubs who cannot pay their wages to be bothered about the Premiership.
  7. Hughsey and Pabby are spot on. Surprisingly no newspapers have picked up on Trevor Birch's frank admissions to Sky. Birch seems to have swung his attention away from finding a saviour to negotiating with the creditors ahead of the 19 January deadline. My guess is that this marks the end for Leeds United plc. Up until now, Birch had been making upbeat statements about buyers. Quite possibly, the Administrators will now be called in before the 19 January deadline to give them more time to sell players for which any cash can be raised. The Jersey financiers who backed the £21m player mortgages must be looking at close to a dead loss but any of their players still on Leeds' books are certainties to be sold to recoup as much of the cash they have laid out as possible. Either that or they will go on a free to any club willing to do a deal to take over the contract on a "junk" bond basis. I will repeat what I have said before- it is extremely unlikely Leeds will go out of business altogether. Birch presumably is now negotiating with the Premiership to find a formula to protect Leeds membership of the League from cancellation when the administrators come in. Leeds' only future now is as a very low cost base football team throwing off masses of excess income from its huge fan base unless the administrators work an absolute miracle with the American bond holders.
  8. A stark set of numbers from the boys at Football365.
  9. Back to Leeds- Trevor Birch opens the doors. A clear sign that the sale of the club might not be happening and a forlorn attempt to invite players to forego their share of the tansfer booty after the Kewell farce.
  10. Interesting to see that the have a go at anything Dave Edmundson (CE at the dingles) is quoted today as denying that Burnley will go into administration. Well actually, he said that it is an option given they are projected to lose nearly £3m (Kilby's purchase of their assets for £1m will only last four months). Well he said that they have a list of options including donations (from whom?) and administration is the least attractive. The dingles are deep in the soup and have no players, Chaplow excepted (possibly), anyone will pay any money to take off them.
  11. I think it works out that there is a basic £15m for TV rights and being in the Prem so that is the minimum Wolves will receive. Thereafter, its place money and additional TV appearances. The Sky hand out is basically fair- it rewards popularity and success but not excessively. What is skewing economics in favour of the super clubs is - Champs League £12m basic for being in the first round group - Sponsorship worth over £50m a year to Man U - Commercial activities; another £60m for Man U - Gate receipts (but 'twas ever thus)
  12. Bolton must have been teetering on the edge of insolvency. For a mere £2.25m, Mr Davies has acquired about 60% of Burnden Leisure to take his ownership to around 95%. Wanderes are worth around £4m on that basis! £1.75m goes to pay debts which have to be repaid to the Co-op bank immediately and Chairman Phil Gartside has said that he hopes the banks will look more kindly about restructuring the rest of the £38m debt. With Burnden (sorry the Reebok) selling out regularly, Wanderers only hope for financial salvation has to be a high league finish and lots more £500K place monies than theyare used to. I guess Fred Davies knows he writes off the £17m he has put into the club if they go down.
  13. A couple of years ago, the Italian Serie A clubs were paying wages on average double those of the Premiership and earning on average half what a Prem club earns. Not entirely surprising wages are going unpaid. Parma seemed to have got a let off when the Italian state moved in to bail out Parmalat. Now Bank of America have filed criminal charges over an Enron-style black hole, Parma's future is not only very dodgy, it also looks pretty insignificant in the bigger picture. I'll ask again if there are any useful Parma players who would swap the security of lower wage being paid at Ewood for never never land at the Tardini Stadium?
  14. Leeds had their AGM and Trevor Birch has taken the role of Chairman and CEO- always a sign of trouble when nobody wants the top job! Birch says there are delicate negotiations to sell the club but- Prof McKenzie's Chinese friends are seen as a non-starter, and Alan Leighton was castigated for his role as Deputy Chairman during the Ridsdale era and so it seems nobody thought his bid to buy the club as a serious one. The BBC business correspondent makes a Premiership club going into administration one of his top tips for 2004. I wonder which one he has in mind? Meanwhilst Darlington have gone into administration. Their Chairman was upset that the local Council would not allow car boot sales in the car park.
  15. If there wasn't any doubt about Prof McKenzie's true motives, he has paid himself £380,000 for work since March last year. I guess that's one way of getting compensation for holding 4m worthless shares (he is Leeds' largest individual personal shareholder). Another professor at Leeds University has described him as "damaged goods".
  16. Prof McKenzie is stepping down as Chairman at the Leeds AGM on 23 December. Ostensibly it is to enable for him to try to bid for the club with a group of Chinese businessmen but the Guardian openly dismisses that theory. Neither Alan Leighton nor Prof McKenzie exited early enough not to get embroiled in the aftermath if Leeds go into administration on 18 January. If they are assembling consortiums of hard headed businessmen, they would both probably prefer to deal with an Administrator rather than whatever is left of the plc board. On a parallel track, Man City appear to be heading towards trouble. It will be interesting to see if they sell Anelka in January.
  17. The American bond holders, anyone else who has leant money to Leeds and anyone who is owed money by Leeds United as a result of a normal commercial contract (from selling them meat pies to supplying services as a centre forward) has a legal right to expect payment according to the letter of their contract. Leeds' problem is that they cannot pay all their financial obligationsas and when they fall due. The directors believe they can sell the club in such a way that all the third parties I listed above will get paid in full, albeit a little late. So they have negotiated an agreed pause in payments with several creditors and presumably have the backing of their lawyers that they would not be held to be trading illegally or unfairly discriminating against any individual or group of creditors. If Leeds has not been sold by 18 January and if the directors cannot convince the creditors to accept an further extended pause to payments, then any creditor would be within their right to apply for a winding up order which ordinarily would be granted by the Courts within a very few weeks of the application being made. The Americans could do this but so could the man selling the pies if the club owes him money. The fact that any creditor can do this (even the ones you think you have an agreement with), means that the directors would be highly likely to seek protection from the creditors. In the UK, that would mean applying for a creditor's voluntary liquidation if the asset and business situation is unlikely to yield a contiunuing flow of cash or appointment of an administrator by the creditors where there is a business capable of generating cash to meet the creditors' claims. In the case of football clubs, administration is usually the route (Accrington Stanley, Aldershot and Maidstone are the exceptions in England) because there is a continuing income stream from the turnstiles plus several thousands of season ticket holders would become singularly unpleasant unsecured creditors of the club folds mid-season. It is simply not in any of the creditors' interests to close the business down. That said, the administrator'ds job is solely to get the best deal for the creditors- fans and football only matter in so far as they can be used to pay the debts. The amount of power and influence of the creditors depends on the legal strength of their claim. The taxmen come first, then the employees, then the creditors with added security (the Americans have a legal claim over all assets and the next 25 years' gate receipts) and the man selling the pies and his like come last. Those creditors with claims over specific assets might apply to the Courts to seize those assets. It might be that the administrator will be faced by the mortgage companies which financed the acquisition of certain players applying to the Courts to take control over those players away from Leeds so they could sell their contracts seperately themselves if they believe they will get more value that way. Creditors can sue the administrator. So you can be sure that whilst negotiating hard with the Americans to try to get them to take a reduced deal for the good of all creditors, the administrator will in reality do nothing without the agreement of the Americans. They hold more than 50% of the debt, a fixed and floating lien and the first rights to the next 25 years' of ticket sales. Hope this helps.
  18. Leeds made an announcement to the Stock Exchange that they are in talks with possible purchasers yesterday. I would not read too much into this. The rules of all Stock Exchanges require member companies to disclose any possible merger or acquisition activity immediately. These rules are to prevent markets being distorted by different groups having access to different information and creating gains or losses accordingly. In most situations the directors get involved in shadow dancing with virtually nothing on paper or electronically in order to keep preliminary discussions secret at the most sensitive and potentially advantageous time. In Leeds' case with administration looming, the board will have rushed out the statement as quickly as they possibly could to try and engender an auction atmosphere. It is quite possible that they may have little more than an e-mail saying: "Dear Prof McKenzie, I am trying to put a consortium together to buy your beleaguered club, please can I have a copy of the sale memorandem and here is the signed confidentiality agreement." More significantly, Peter Wilkinson, the Leeds supporter worth a reported £400m who was seen as either a potential buyer on his own or a lynchpin in any supporters' led consortium has declared he has no interest in buying any stake in Leeds. As I have already speculated (and many others have now done so in writing), Leeds have probably seen the last of Alan Leighton so the number of serious bidders is.... er??? A note to Revidge, the American bond holders have secured a string of legal claims over Leeds current business and their gate revenue for 25 years to come. If Leeds go into administration, the job of the administrator is purely to get the best possible deal for the greditors in their rank order of seniority. It isn't going to be pretty but probably all the debts will get shaved but for the Americans, the opportunity exists for them to receive a delayed but reasonably secure payment from running the club with the cost base of a club with gates of 15,000 whilst knowing that actual gates in the Nationwide are probably going to average 25,000 over the next 25 years. That would generate them £6m a year (assuming £30 per ticket) which will repay £60m principle with interest over some 18 to 20 years. Finally, O'Leary might have some sort of agreement arising deferring his claim for £2m from Leeds. Or, Leeds have shown him the books and he has concluded they are so bad that there is no way he will get his money this side of administration and has gone for the kudos of being magnanimous in public at no cost to himself. If Leeds go into administration, he could be a ranking creditor as a former employee depending on how his contract was structured. Either way, it will be interesting to see which Leeds players end up at Villa Park in the January fire sale. Alan Smith to be playing alongside Vassell?
  19. Congratulations to Jason on this week's column. Well written, well balanced and agree 100%.
  20. We are now into a period of rumour, counter-rumour and perception managing. Trevor Birch has made a good start by suggesting four consortia are looking to bid whilst a story hit the papers yesterday suggesting that the American lenders would accept £25m to go away. The latter is moonshine and the former is highly suspect. The "bidders" The Leeds-mad sheikh rarely goes to Elland Road and has no money of his own so its unlikely his mates would strike anything than a very hard deal if they put their money in. You have to be sceptical. Alan Leighton has left it late to resign and generally has divulged very little about his rescue package. It seems he has now raised £4.5m- a drop in the bucket given Leeds apparently had to negotiate £5.8m to cover their cash requirements from 4 December to 18 January on a current operating basis. You have to be sceptical. The supporters consortium has appeared from nowhere, seems to consist of unknown names and has not raised a penny yet. You have to believe in voodoo magic to give this one any cxhance of success. Apparently a guy who made £400m out of freeserve is expected to bid. Again he also has been too quiet to be credible. Coming back to that £5.8m- that was apparently the money they had to raise simply to survive five weeks with the Christmas gates coming within this time frame as well! This suggests that Leeds cash absorption requirement is still £50m a year and with all gate money going to America, no wonder they are in the soup. The £5.8m was raised from four different places in what reads like a cowboy mix and match set of deals. Trevor Birch either works a miracle by 18 January or the administrators will step in. In the meantime, the people who provided the mortgage finance on the players must be readying to act if, as seems likely, the payments to them are not honoured. Perhaps one or more players will end up having his registration permit reviewed.
  21. ... and Leeds do not own their ground, their training facility or even, nowadays, a goldfish.
  22. Leeds have been given breathing space by the Americans until 18 January. Significant choice of date. It allows the existing board time to try to sell sufficient players and do deals with the player mortgagors and gives an administrator almost two weeks to sell off the first team squad before the window closes if the existing board fails. As for rescue packages, Leighton's consortium currently consists of him on his own and £2.2m- literally incredible for a man so well placed to step down from the board and not have all the funding ready. The contradictory messages coming out of Dubai probably mean that somebody has the dream of owning a Prem club but neither has the technical know-how nor the gritted determination to follow-through to make it happen. So, prof MacKenzie's comments on today's events has convinced 92er to anticipate a possible Leeds revival which I find a very untealistic proposition. My gut feel is that the Americans are backing themselves to come out on top of the spoils from an administration in which all other creditors receive a pittance and are also excluded from participation in any upside generated by a new owner of Leeds.
  23. When the terms of the loans and mortgages Leeds entered into became widely known, I would think any Leeds fan with half a brain (having forfeited the other half in being a Leeds fan in the first place) would want to top him or herself. A Leeds supporting billionaire would have surfaced by now and no self-respecting high net worth business-oriented individual would want to go anywhere near this mess. The American fund providers have secured a fixed and floating lien over all the club's assets and got some additional little bonuses in terms of first call on all revenue for the next 25 years just for good measure. If Leeds go into administration, it is tantamount to the existing management saying they can no longer cope and handing over the club to an accountant to manage the business solely in the interests of the creditors. If they do this, it does prevent the existing directors from being charged with illegal trading if they exit whilst creditors or Company House inspectors can see they avoided incurring any new liabilities with no realistic expectation of them being honoured as they fall due. The fact that interest payments have been waived for a month means that Leeds must be perilously close to this point and in any business other than a football club, would probably have gone beyond the point the Directors can legitimately remain in charge. I have no doubt that Alan Leighton is genuinely willing to put £2.2m into the club and that he is genuine when he says he wants the freedom to organise a buy-out from outside but your average cynical city person would neither say nor write what they really think about his resignation from the board to day. In any "arrangement" (administration, liquidation or receivership), the Crown takes precedence over disposal of assets for taxation bills outstanding. When the taxes are paid (usually a per centage discount is negotiated but the Crown will certainly play hardball in such public circumstances with so many highly paid employees and self-evident bad management to blame), the American funds will be left to call all the shots with the security terms they imposed over the club's current and future business. No sale or settlement by either the current directors or a replacement administrator can be achieved without their say-so. With the 25 year charge over all income from future ticket sales, that is a pretty hefty controlling interest which any potential purchaser from the administrator would need to negotiate with. It is quite possible that Leeds would not come out of administration for a very long time as no purchaser would want to carry that albatross and the Americans would be mad not to extract full value from the amazing deal Ridsdale gave them. Whilst in administration, the administrator would have a legal obligation to funnel the first (and currently all) spare cash back across the Atlantic. Lets face it, the mortgage holders over the players and all other creditors except the Americans are now in as sticky and hopeless a position as the Leeds fans and are likely to be negotiated away by the administrator to close to zero value. The problem the fans have is that they are too numerous and too loyal for the good of the football-future of the club under the likeliest scenario the American lenders are looking at. A very significant cash surplus could be generated by a club with the equivalent of Burnley's cost base footling away in Divs 1/2 with 25,000 average crowds (Sheff Weds are pulling 20,000+ going nowhere in Div 2). This is undoubtedly the safest way of ensuring the Americans get their investment cash plus interest returned over the next 25 years. After being suckered by Ridsdale's promise of perpetual Champions' League success, who could blame them for now selecting an option with no dependency on performance of the football team? Perhaps the administrator would attempt to argue duress or incompetence when the American deal was structured but I could not see a Court agreeing to setting aside the loan terms on such grounds. In short, Leeds are stuck. The other options of calling in a receiver or going for a voluntary liquidation have to be seriously considered from the standpoint of Company Law and the position of the Directors. Effectively, both these options close Leeds down (in the absence of any serious likelihood that the business as current constituted has no prospect of viability) and whilst a company less in the public eye can negotiate a phoenix with the liquidator doing a deal through a purchase agreement to buy the company back from the liquidator, I believe the Premiership would have no option but to cancel Leeds' registration in the event of a voluntary liquidation and certainly in the event of receivership (receivers are primarilly appointed to break the business up). I have no doubt that were Leeds a conventional business, it would either be in liquidation or receivership by now- it is clearly insolvent, has a massively negative balance sheet, and possesses virtually no unencumbered assets. The lawyers advising Leeds will only be allowing the directors to continue in business because there are significant intangible assets which might attract a buyer to pay significantly more than the balance sheet is worth. Membership of the Premiership is a very valuable right but not valued on the balance sheet because it is both transitory and cannot be accurately assessed from an accounting standpoint in the same way as the Leeds United brand image has a saleable value (but less than it should be because of publicity Pete fooling around with the badge) but is also excluded from the formal balance sheet. Even taking those benefits into consideration (and Premiership membership is a rapidly wasting asset when you are languishing in 20th position), the board meeting minutes will be enormously reliant on descriptions of negotiations with potential investors or purchasers to give the lawyers and directors the necessary fig leaves to cover their backsides and remain arguably within the law. However, as I have already pointed out, the American lenders have Leeds United by every part of the anatomy Vinnie Jones could reach. Nobody with Leeds affiliations has come forwards to rescue Leeds and I just cannot see any sane outside investor spending £60M+ to sort out Ridsdale's debt inheritance to buy a club with no assets and no prospect of avoiding relegation. This thing is so complex and expensive, I think it is highly unlikely a deal could be done before the January transfer window is closed. Irrespective of whether the club has directors or an administrator by the time the window opens, Leeds will be selling players again in January. The Americans have no interest in doing any deal to rescue Leeds' premiership position as they will have done their sums and can see their cash coming back from a Nationwide outfit. The same amount of money (£60m) would probably buy Doug Ellis out of Aston Villa, give the investor control over Villa Park and a sizeable chunk of better than OK Birmingham real estate which is owned by Villa AND leave spare cash to give O'Leary more of a transfer pot than Ellis allowed. Why buy into Leeds if you are an arab oil sheikh? Abramovich didn't even look at it when he went shopping. One final observation. I remember being very suspicious a number of years ago when the City whizz kid who helped set up the Ridsdale take over of Leeds walked out of Elland Road to take over Hull City. He was right!
  24. Just dashing out to a meeting so will answer later but the replies which follow are good ones.
  25. I don't see a serious risk of Leeds doing an Accy Stanley- too many fans ands too big a brand. However, things are right at the edge for the PLC to put out a statement effectively blackmailing their creditors and threatening shareholders with an absolute loss. My guess is that the creditors have concluded that their money will probably be safer with an administrator than Prof McKenzie and his bungling over Kewell. The Prem relaxed the rule about automatic deduction of points for a club going into administration but it will still go before their disciplinary body if Leeds do hand over control of the business. Leeds are in very deep trouble.
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