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In his own words and the subject of much Twitter chat.
This essay looks at how GFH are still influencing and holding back LUFC’s progress.
Now that Andrea Radrizzani seems to be on the final stretch of his takeover of Leeds United I’ve been thinking about who the winners are from the Club’s financial troubles and tribulations over the last few years: I’ve come to the conclusion that the out and out winners are, disappointingly, GFH.
My views on GFH are well known and it pains me to realise that, not only do they come out of this takeover with every penny they put in paid back, they also come out with bonuses; bonuses that we, the fans, pay with our ticket money each match.
Let’s look at some of the players in the “Leeds United Finance Manager 2005-2017” game.
Ken no doubt took his expenses and other benefits during his time at the Club and sold to GFH for what was a fair market value of the club in 2012 but as it turns out he’s probably not won this game.
Ken sold the Club when its value was low but stable and while I’m sure he took a profit it was less than those to come.
2007 AFC Creditors
The big losers in this game are the “pawns” who provided goods and services to the original club before it went bust in 2007. They are owed money by the original club and would have had £4.75m to share between them if the new FC Club had been promoted to the Premier League this season.
In a perverse way, the fans and the new FC Club’s owners gain from not having to pay this obligation but it would have been small change to the Club, given the PL money, yet a significant sum to the small creditors.
When Ken Bates sold the Club to GFH we were stable, maybe without ambition, and with yearly profits and losses bouncing around the breakeven point: GFH took us deeply into losses and increased the debts that the club owed significantly.
When they sold to Cellino they got back a large proportion of the cash they’d spent and also got legal guarantees that Cellino would make the Club pay them many more millions of pounds (and he agreed if the Club couldn’t afford it then he’d pay them personally).
GFH took on a risky football business, they failed at it and then they managed to sell that risk to Cellino. In some ways it’s to be admired (in the same despicable way double glazing companies rip off customers and do a pre-pack administration to return without any obligation to their customers) but to any business person with an ounce of integrity it’s shocking.
There’s no doubt that the Club was bankrupt when Cellino bought it and it had possibly been trading while insolvent for some time. Again, there’s no doubt that Cellino’s intervention and money injected saved the club from going into administration again.
Cellino (via his company Eleonora Sport Limited) has put a lot of money into the club to keep it running and, while we don’t know the terms of his deal with Radrizzani, he looks from many reports to be getting his money back without much premium, if any.
Cellino has certainly kept the Club afloat and brought it from the potential of HMRC winding us up to an enjoyable season of football, with better revenues and lower costs and looks to be leaving without losing or gaining financially from his time here.
It is too early to say whether Radrizzani will gain financially but the new streaming rules look to be good for increasing revenues and he seems keen to invest sensibly in the players and the club’s infrastructure.
Time will tell.
GFH (again) – bonuses and remaining control
In the late summer of 2016 GFH gave up its shares in the Club to Cellino (or ESL) and reportedly did so for free, something I found rather strange.
I now understand GFH gave up these shares with an agreement Cellino would pay them many millions when we are promoted. So not only do GFH get back their outlay in running the Club into huge losses they also get a bonus paid by the owners of the Club who follow them, do the real work and get success: this is, unfortunately, their known modus operandi in previous operations overseas and comes as no surprise to me.
What I find galling, and hugely objectionable, is that GFH are demanding Radrizzani takes over Cellino’s commitment to pay future Club profits and earnings to GFH once Cellino leaves.
As if GFH draining the Club’s bank account in future wasn’t enough they also have control over the Club’s assets and borrowing abilities with the debenture Cellino gave them as part of the 2016 deal where he got their shares.
Their debenture means the Club cannot sell major assets or make changes to assets such as Elland Road without prior written approval from GFH. In effect, they still have as much control over the Club’s future as they did back in 2012: this control significantly hampered Cellino in his plans and is going to continue to do the same under Radrizzani’s tenure.
Furthermore, it seems GFH have a clause in their loan agreement (the one that says the Club will pay them back over 13 years) that if there is a change of owner the debt becomes due immediately.
Radrizzani looks like he’ll be spending all the money allocated to the Club’s future giving GFH a big pay day and LUFC will be back where we started: worryingly, Radrizzani’s deal could be called off for now if GFH don’t back off and accept they can’t be continually rewarded for their previous mistakes.
GFH are clear winners in this game: they spent badly and managed badly; they passed on their costs to Cellino who repaid them handsomely compared with other failed football club owners; they negotiated bonuses to be paid long after they had supposedly gone; they are still in control of our future and still draining us dry of every spare bit of cash.
When I look at other Clubs where failed owners have to write off many millions of pounds in loans and equity to sell their clubs on I can only wonder how GFH have managed to fleece Leeds United again and again and now look likely to stop Radrizzani’s takeover fully in its tracks.
My views on GFH are well known: I hope Andrea Radrizzani can overcome their demands and rid us of GFH completely.
As some playwright said “will no one rid us of this turbulent GFH?”
Gary Andrew Speed, MBE — Always In Our Hearts, 1969-2011
Leeds United Americas (LUA)
You can take the Leeds out of the top flight but you'll never take the top flight out of Leeds.
and now they expect that deal to be honoured when the club is sold to someone else...
what's unfair about that?!