How much to buy Leeds United?


The 2016 accounts are now available for Leeds United FC and yet, despite the Club’s website saying there was a change in ownership in December, these documents make no reference to it.

It is my understanding that all UK Companies are legally obliged to ensure their accounts detail all significant events up to the date of being approved by the Board of Directors. This is to ensure that creditors understand the risks involved in giving money to the Company and can decide whether the promises of payment or repayment are worth the risk involved.

The 2016 accounts in question were approved by the Board as being a true and fair account of the Company as it was on the 9th March 2017. They make mention of various significant events that occurred after 30th June 2016 and before 9th March 2017, such as the change to the repayment of the GFH loans, yet make no mention of any significant change in ownership despite parties claiming in the press that happened two months previously.

As a long term financial investor and current creditor of Leeds United my investment decisions can only be based on true factual statements from the Board of Directors and I put my trust in Mr Cellino that when he signed the accounts on 9th March 2017 they represented a true and fair analysis of the Club’s finances and that Eleonora Sport Limited was still the parent company.

Similarly, I am sure that the Leeds United’s Board of Directors wouldn’t have approved that Mr Cellino should sign false or misleading statements of accounts at any time and I will continue to base my investment decisions on these accounts that show no significant change in ownership occurred before 9th March 2017 and that Eleonora Sport Limited was the owner at that time.

It does, however, raise the question to me, as a financial backer and creditor of Leeds United, as to what it would take to buy a portion of the Club.

The official accounts filed at Companies House provide the detail needed, although they do need to be studied for some time to understand the various ins and outs of cash since Eleonora Sport Ltd took over. I’ve detailed the trail here: Eleonora Cash Investment in Leeds United

This shows that Eleonora Sport have eventually invested just over £25 million pounds in the Club and gave GFH £11 million pounds for the initial purchase (much less than the £43m the official Club statement led investors to believe ESL had already invested in their project last year). This figure of £36m includes all monies invested into the Club by ESL, as legally reported in the filed accounts, and the widely reported initial purchase price to buy shares from GFH. Subsequent to the Club’s statement last year it was reported that ESL obtained the remaining shares owned by GFH as a zero cost benefit from the new GFH loan and share restructure which will be confirmed or otherwise when their accounts are eventually filed at Companies House.

Clearly, an investor looking to buy 50% of the Club would start at, or below, offering 50% of this amount – £18m – which would go to Eleonora Sport’s bank account and not give any cash to the Club to aid with running costs, etc. I’m sure the seller would look to increase this value by highlighting the lower losses and lower player wages since he arrived so future, but uncertain, profitable gains could be made and the purchaser would counter with highlighting the Club’s increase in both net debt and short-term debt resulting since June 2014 after the seller had taken control of the Club, combined with an almost empty bank account and the need for massive (relative to my bank balance) cash injections to keep the Club operating in the Championship.

I wonder what value they settled on?