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Does it really matter who owns Leeds United?

By Tony Attwood

In 29 July 2011 a Parliamentary committee on football said that they were appalled by what was going on at Leeds United.

Ever since 2005, the reminded us, no one knew who owned Leeds United.  Ken Bates said he didn’t own any Leeds shares, and was just the UK rep of Forward Sports Fund in the Cayman Islands – the company that owned Leeds.  The company operates in Europe through an office in Switzerland and Swiss law makes it impossible to know what’s going on within its companies.   The Football League insisted they be told who owned Leeds United.  The club and the companies shrugged their shoulders and did nothing.

The suddenly Leeds was sold to Ken Bates, who is a tax exile in Monaco and who owns the club via another tax haven – Nevis.

As the attempts to find out what Bates was up to he banned the Guardian from the ground, and then banned the BBC from all admission except where it had a contract with the Football League that allowed it in.

Although no one knew who owned Leeds  The Football League allowed Leeds to continue on the grounds that no one owned more than 10% of the club.  It has always seemed a ludicrous statement. In the end it came out in a court case in Jersey that Mr Bates owned some of Leeds but had made “an error” when he had previously informed a court in Jersey that he and his long-term financial adviser, Patrick Murrin, each held one “management share” in Forward Sports Fund, the Cayman Islands-registered company which owns Leeds.

Yet in an affidavit sworn for the same court in May, Bates stated that in fact he does not have any shares in Forward at all. His previous statement, that he had been the joint owner, was “not correct,” he said, and “an error on my part”.

The affidavit, sworn in a legal action Leeds brought against a Jersey-based company, Admatch, for money Bates said was owed to the club, attached a letter from the director of Château Fiduciaire, financial administrators of Forward, based in Geneva. The letter said there are 10,000 “participating shares” in Forward, and the owners will not be revealed because Château Fiduciaire protects its clients’ anonymity unless ordered by a court to disclose them.

The Football League does not disclose who have been named as the owners of a club for the purpose of the fit-and-proper-person test, claiming that it cannot do so under the Data Protection Act. But the fact that the owners of Leeds United were shown as holders of 10,000 shares in a Cayman Islands company, whose administrators will not disclose their identities without a court order, does raise the issue – how could they have been checked as fit and proper.

That raises the possibility that Forward’s takeovers of Leeds, with Bates as the chairman, in 2005 then in 2007 when Forward bought the club from administrators, may never have been properly ratified by the League.

So MPs told Revenue and Customs who collect tax in the UK to investigate, and asked the FA to do some digging too.  Nothing happened, except that Leeds is now being sold to GFH Capital of Bahrain who are owned by Gulf Finance House bank.

The auditors of GFH said in their last report that the company, “had accumulated losses of $300.69 million contractual obligations…”  They said it was insolvent.  There is talk now that GFH will buy Leeds in the style of the Glazers buying Manchester United and put the debt on the balance sheet of Leeds.

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Now GFH Capital has issued a press release in which it lays out plans for sustained investment in Leeds.

It is possible – although the fact is we still won’t exactly know who owns Leeds.   But it is also possible that since there is no obvious source of all the investment, that Leeds will quite soon, once again, be bust.  And we still won’t know who owns them.

So here’s the question: does it matter who owns a club?  Well, yes it does, especially if you want to try and stop new buyers coming into clubs, loading them with debt and then either milking them or sinking them.  It matters if you don’t want crooks running clubs.  It matters if you don’t want clubs to be the heart of money laundering arenas.  Indeed although no proof is given as yet there are stories circulating that football is indeed one of the main money laundering arenas in the world.

In fact it is getting to the point where the last thing that matters is the talent of players. All that matters is how to move the money.  Given the huge amounts being paid to players, and the fact that we don’t know who owns clubs, then really we can’t be surprised.

“Hello Alfonso.  Your salary is £250,000 a week.”

“Fine Mr Chairman”

“Now we have to remove some of that for taxation purposes, by law, so we will do that, and you will receive about £120,000 a week.”


“But fear not – you will get the rest paid through our Cayman Island account into your Cayman Island account.  You’ll like the Cayman Islands – nip over and pick up a suitcase when you are a bit short of the readies.”

“Sure thing boss.”

Don’t believe me?  I have actually seen that happen in the publishing trade.  Why not football.



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13 comments to Does it really matter who owns Leeds United?

  • Leeds fan

    You’re missing a couple of key points here.

    Firstly, Ken Bates now admits he owns Leeds United. He “bought” around 75% of the shares from Forward Sports Fund (the previously registered and anonymous owners) last year.

    The real problem with the anonymity is that it’s believed Ken Bates has owned Leeds United all along (from 2005), breaking laws and robbing the country of tax in the process.

    In 2005, Bates bought the club. A couple of seasons later he had to put them into administration, therefore should have lost control. However, due to some strange and mysterious debts owed to anonymous offshore companies that had miraculously appeared on the balance sheet and who controlled the majority of the voting share when it came to bidding for the club, Ken Bates, through another anonymous offshore company (Forward Sports Fund) remained chairman (and most suspect owner) of the now debt-free Leeds United.

    It appears Bates used the administration of Leeds United to clear debt, while cleverly creating a network of anonymous offshore companies and fake debt to ensure the bidding process left him in control. The anonymous offshore company who just-so-happened to be Leeds United’s biggest creditor said they’d wipe clear all debt owed to them, but only if Ken Bates remained in charge of LUFC. Millions and millions of pounds written off because they like Ken Bates? Doesn’t sound like any business I know.

    The rules of admin don’t allow Bates to remain in control and he appears to have defrauded the taxman out of tens of millions. That’s why HMRC were so pissed off. The Leeds fans weren’t impressed either, not only did we end up stuck with Ken Bates (again) but according to the administrators KPMG, there were several offers on the table that all offered a better deal going forward, including investment to get Leeds back to the Premier League. Bates meanwhile has never spent a penny on the club, he just strips us dry of all assets and lines his own pockets, all while charging ticket prices that rank as the 4th highest in the Premier League.

  • Guy

    Good piece and bang-on too. A similar money laundering and tax/royalty avoidance technique was used to geat effect in the US recording/film industries in the 60’s. As a Leeds fan I do not trust Bates to look after any interests but his own in the sale of the club, and I can already see an “out of the frying pan and into the fire” situation developing, and as if to confirm this it looks like an American group are sniffing about again and with that the possibility of a Glazer type template to a take-over. Leeds United could not stand that type of deal or debt without promotion and other revenue streams also maybe, without going under again…or perhaps GFH are a totally honest private equity group who only have the best interests of Leeds United and it’s fans at heart! As if….

  • Paul

    don’t know why an Arsenal blog would interest itself in LUFC, but truth as far as we can tell is Bates bought control of LUFC from FSAF earlier this year for an undisclosed sum; undisclosed because common belief is FSF was one of his many shell companies based in the Caymans (another owns Elland road and the Thorpe Arch training ground allegedl). In respect of GFH they are an investment bank, therefore have no funds of their own, they use other peoples money to invest in projects that will produce short or medium term high vaalue returns; now anyone remotely connected to football knows the only way to make a small fortune from a football club is to start off with a large fortune. Lees is currently profitable, however since it will need at least £100 million to buy the club, the extra playing staff etc plus at least the same again should we actually get into the PL, the TV rights of £60 million are not going to make anyone any money even with extra revenue from bigger gates, merchandising etc. the new buyers i’m guessing would be looking to sell the club on from the PL status and get their money that way otherwise as you say we will end up with Glazer style debts and a leverage position that no-one in their right minds would take on; leading to spirraling debts and looming administration again; why is nothing ever striaght forward for LUFC?

  • reddo

    Everything you’ve said is true, but it’s money, and money talks, and lets face it most of parliament are getting brown envelopes, this country has turned into the most corrupt country in the world. I’m a Leeds fan and it’s amazing how many fans think Bates saved the club, even with proof he was using it as a cash cow they dont listen. whats happening at leeds will soon be happening all over football, mark my words.

  • Mandy Dodd

    Hope you do not get a Glazer type scenario but it seems there are a lot of them about. But I could easily see why a serious and genuine investor would be interested in Leeds – potentially a sleeping giant if managed correctly

  • Stuart

    I suppose anyone who buys Leeds is going to get pretty good value.

    The support are dedicated and loyal, they are not in the Premier League but have a good reputation so can attract relatively big stars and in their current division, wages are not so high at present.

    As Mandy says, if managed (and marketed) correctly, I think Leeds could be an investors dream with so much money to be made.

  • Prasanna Veeraraghavan

    I have not heard the Cayman Islands name crop up here because its too far away from India and also too out of reach for an Indian but certain other names exist in India and do the rounds.

  • bjtgooner

    Interesting article Tony. The danger with the Glazier style leveraged purchase is that the club will never get the full benefit from future income; for the sake of Leeds fans I hope that type of buyout does not happen.

    I would be concerned that at some point Usmanov will try to buy the Arsenal and would attempt to use the leveraged route.

  • Mahesh

    @Tony (Off topic)
    Just read this on Bing Finance:
    Spain debt rises on aid to banks, regions

    Spain’s debt levels are set to rise next year, piling pressure on the government to apply for aid as it pours funds in to cash-strapped regions, an ailing banking system and rising refinancing costs, its budget showed on Saturday.

    Spain’s debt as a ratio of gross domestic product will reach 90.5 percent by end 2013, according to the document presented to parliament for approval, almost three times that registered before the property bubble burst in 2008.

    Calls by wealthy northeastern region Catalonia for independence and the rising number of demonstrations on the streets of major cities have stoked doubts Spain can fix its problems without help.

    Seems like Spanish football is up for harder times ahead!

  • nicky

    Your comment gives rise to the obvious question. Are we owed any monies following the sale of Henry, Fabregas and Song to Spain?
    Or perhaps I should, more correctly, ask “How much are we still owed by Barceloa and Real Madrid”?.

  • Top article.

    Mr Bates’ sudden realization that he didn’t own a company – and the lack of anything making him proove this – shows what a poor state football is in.

    Money is completely flooding the sport. We’re going the way of the NFL. The difference is, the NFL franchises are worth so much it would be difficult for one of these jokes to get in the door. They also have a wage-cap which makes it difficult to push the franchise massively into debt.

    The FA/FL really do need to step up in my opinion. Too often they just wash their hands of issues, or release statements that sound nice but don’t commit them to anything. I believe Pompey was even sold to somebody to technically didn’t exist?!

    It’s about time the football authorities got real and started guarding clubs against chancers, charlatans and people out to exploit them.

    For example, Leeds’ facilities are costing the club millions per year to rent – and we have no way of knowing who owns it. If the club’s owner, for example, did then I believe stakeholders should have a right to know that.

  • Woolwich Peripatetic

    Turning up to home games and buying the replica kit is basically consenting to letting the ‘owners’ (used for irony) do whatever they like with the club.
    That’s why I have a lot of time (despite their previous affiliations) for AFC Wimbledon and FC United.

  • rusty


    I appreciate these state-of-the-game articles — I only wish the AAA would take the message that “It can happen to anyone!” to heart. There’s nothing wrong with being disappointed in a top-four finish at the end of the year, but it’s absolute foolishness to forget how long the fall is from the top, even from third place!