Football clubs warm up with big money deals

Top Premiership clubs yesterday limbered up for the new football season with a series of financial deals that pave the way for a major escalation in transfer market activity for star players.

The clubs are engaged in frenzied fund-raising exercises to compete for players with Manchester United and Tottenham Hotspur, the only British clubs quoted on the main stock exchange, whose shares have soared in recent months on the back of multi-million pound television and sponsorship deals.

The most audacious move saw peace break out at FA Cup semi-finalists Chelsea, where millionaire director Matthew Harding agreed to pump pounds 5m into the club's holding company, Chelsea Village, which is listed on the Alternative Investment Market. The money will be used to develop Chelsea's Stamford Bridge ground and to strengthen manager Ruud Gullit's squad. Mr Harding is paying 52p a share and the news sent shares in Chelsea Village soaring to close 23p higher at 91p.

Chelsea Village's board also agreed that Mr Harding and Ken Bates, the Chelsea chairman, should each be granted options over 7.5 million shares in the company at prices between 60p and 80p exercisable over five years.

Once these deals have been finalised - probably before the end of this month - Mr Harding will become vice-chairman of Chelsea.

Mr Harding has been embroiled in a long-running boardroom battle with Mr Bates.

Negotiations between the pair broke down in May when a deal for Mr Harding to invest pounds 10m in the club in return for greater influence was scrapped.

In a separate development big-spending Newcastle United confirmed it had appointed stockbroker NatWest Markets to provide it with financial advice that may result in a stock market flotation.

Club chairman Sir John Hall hopes to turn Newcastle into a European-style total sporting club and has sought permission to build a new stadium across the river Tyne with seating for up to 80,000 at its St James' Park ground, more than double its current capacity.

And Leeds United is set to become a public company after the quoted sports and leisure group Caspian made a recommended cash offer, valuing the club at pounds 16.5m. Caspian said it had entered into irrevocable undertakings and acquisition agreements with two directors of Leeds to buy 66 per cent of the club's shares at 82.5p per share.

Caspian will also subscribe pounds 12m, taking its minimum shareholding to 79.1 per cent.The combined proceeds of pounds 17.6m will be used to buy new players and develop Leeds' youth policy.

Caspian was named on Wednesday as preferred bidder for Leeds at a meeting of the club's board, despite a higher offer from Manchester-based leisure group Conrad.