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Would Administration be better for Leeds United?

6/3/2014

 
With the Cellino bid stuck somewhere between Preston and London, and stories appearing seeming to cite the wheels of the bid could be about to fall off, Administration is a real and genuine threat to Leeds United, but is administration a dire outcome?

In recent months, Leeds fans have once again had to put their accountancy hats on and try to decipher the in's and out's of complex financial and commercial matters.  GFH-C it seems ran out of funds several months ago and relied on money from a combination of Flowers and Haigh to bankroll the club.  Cellino gazumped the deal, thought he had bought the Whites, hadn't, but now appears to be the source of funds, ahead of the deal completing.  Farnan has jumped up and down on the outside trying to get a look in, but largely being ignored, but where does this leave Leeds?

If the Football League fail to approve the Cellino bid, GFH-C are in trouble.  Big trouble!  Cellino has put money in, we assume by way of loans to meet the ongoing running costs and to pacify some debts.  It is reported he has paid at least part of the money back to Flowers.  If the deal cannot proceed, a lot will depend on how quickly he will want his money back - we suspect it will be a case of hours rather than months.  GFH-C with no income, no reserves and no plan B will either be forced to hold a fire sale for the club, selling to the highest bidder and cutting their losses, or look to the protection of Administration to protect what assets they have.

Of course, the impact of a club entering Administration is the immediate deduction of 10 points.  Leeds are currently placed in 12th in the Championship, 8 points adrift of the play-off's but 17 points ahead of relegation.  With 14 games still to play, a play-off place is not beyond the realms of possibility, but dropping to 34 points would lead to a worrying few months in maintaining a place in the championship.  

GHF-C won't be worried about that.  As we have learned in recent weeks, the success of the football and 'doing the right thing' is not as high on their agenda as we perhaps once felt.


All eyes remain peeled on the Football League as they complete their various checks on Cellino.  It is doubtful that previous or possible forthcoming convictions are to blame for the delay, rather more that a deeper understanding of the proposed ownership and funding for Leeds United, and their ability to provide short to medium term financial stability is proving tricky to perform due diligence on.  The Football League have recently confirmed that spent convictions are just that, spent, and the legal standpoint of 'innocent until proven guilty' applies in their considerations.

Whilst other bidders remain on the sidelines, most notable, Farnam and Flowers, it is anyones guess as to whether GFH-C would sell Leeds on the cheap if the Cellino bid stalls, or look to secure a better financial return using the administration route - or indeed if other bidders would want to pay an unrealistic asking price, knowing the price might drop were Administration to be entered.

On 44 points, Leeds look to be safe and the fans are still looking upwards toward the pay-off places, but dropping to 34 would really pile on the pressure and administration should be avoided at all costs, even if those costs include selling to a dodgy Italian with a trigger happy (manager) firing gun, but we are in the hands of the Football League and GFH-C might need to call on Administration if Farnan or Flowers don't ride up on a white horse with a reasonable offer for the club to give them the escape route they need.

The fact that we know at least two parties were previously attempting to buy the club is some consolation, as one may be prepared what GFH-C need, knowing the other is sniffing around.


Got a different opinion?  Join our free Leeds United Messageboard or add your comments below.  Remember to keep them friendly...

Jon
6/3/2014 07:41:47

While I agree that GFH-C may not have a plan B, I rather suspect a successful business man like Mr Cellino does. I think it highly unlikely that he would allow LUFC to go into administration and risk losing quite a lot of his money that he has probably put into the club so far. I think that he would still try to buy the club through some other means.

Edwin Fozzard
6/3/2014 17:31:36

What with the usless Arabs and the even more stupid football league who don't give ashit wether lufc survive or not what a perfect opportunity to get rid of us once and for all why is a mp sticking his nose in with the idea that his mate can come up with a better deal than collinio bringing up the question of the tax issue of a yacht that is owned by an American resident seems like sour grapes to me

JohnB
6/3/2014 08:14:15

The whole yacht tax thing is bogus. Ffs he has a home in Miami, so the boat's registered in America.

Caesar
6/3/2014 08:52:44

If Leeds united end up going into administration theres only 1 group to really blame and thats the fl they should of turned cellino down way before now . If they had then there wouldn't of been anymore money borrowed and. someone else would of owned Leeds united and progress would be made. I now feel the fl have no choice but to give cellino the go ahead so why not just do it now.

Jay
6/3/2014 09:20:12

Well to be fair, GFH should never have been seen as fit and proper in the first place, they only thing filling their pockets is sand!!

cesar
6/3/2014 10:45:32

the thing is gfh could easily afford to keep us afloat but leeds are not making them any money so they have just gone fuc* it

Allan
6/3/2014 18:35:12

The FL is more interested in messing Leeds about than doing their job properly. This has been going on since the Hardaker days. Harvey shouldn't even be involved because Leeds sacked him about six months ago although his bum chums on the panel would follow his wishes to mess Leeds up to the maximum. Note also the FL are so far not looking into illegal bonus payments or and owner now convicted of money laundering. I totally agree if Leeds go into administration then the FL are totally to blame.

whiteblob
6/3/2014 08:55:44

would be a terrible idea, the club is already on a vital credit black list after the scale of the last. even chelsea and man city need to borrow cash, leeds would be a finical leper. probably the reason we ended up with don cellino is that any body who had spent their life amassing a fortune wouldn't go near a club who's finical history over shadows its football history.

john palmer link
6/3/2014 12:36:10

we can't just keep going into amin.,no players or sponsers would ever come near again,we need Cellino ,and cut the squad of dead wood

PAUL W
6/3/2014 12:46:04

Going into administration would be a total disaster for Leeds, because you don't know how many points the club could be docked. I don't think that some of the "bottlers" currently playing for Leeds would have the balls for a relegation fight, from Leeds being back down to 34 or even 29 points, if its a 15 point deduction.
During past 3 months, it has been a terrible struggle for Leeds to win games and Championship safety could only be guaranteed if this hugely inconsistent Leeds team stop their bad habits, by going on an unbeaten, winning run and win at least 8 games to avoid a disastrous relegation to League 1.
As usual, the fans and club suppliers will be the only people that suffer by Leeds going into administration, because the useless players will all once again desert the club and go elsewhere.

ilkleywhite
6/3/2014 15:00:41

My worries about administration are that we may well get docked 30 points, just like Luton did, and then we really would be in it, don't think for one minute it couldn't happen, if the FL could do it to Luton, they could quiet easily do it to Leeds.

Allan
6/3/2014 18:39:30

The FL have been trying to destroy Leeds for many years and a 30 point deduction would probably be the minimum using Luton as the excuse.

john palmer link
7/3/2014 00:37:29

Just read BMCD 'S report on Kebe ,he looks at the stats & not the play THAT explains picking Austin

masterpfa
7/3/2014 05:08:04

Any bid involving any consortium invariably is doomed to failure. The most successful of businesses have one boss, with money and a single minded obsession.
Consortium's usually are a group of wanna be's with no money only promise of money and when called on to deliver often fall to produce the goods all with differing opinions and pulling in different selfish directions with a power struggle to be the leader.
Who knows where this leaves LUFC, but corks we see more years of gloom ahead?


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