Leeds United teetered a step closer to administration last night after Sebastien Sainsbury gave up on his bid to buy the club. While Leeds maintained that "negotiations with other interested parties are ongoing", there are no credible, funded proposals left on the table.
When asked whether Sainsbury's decision meant administration was now around the corner for Leeds, the club's chairman, Gerald Krasner, said: "Eventually it will happen. It's not going to happen today or tomorrow but unless something positive happens [with another investor], it will happen."
Krasner hopes that now that Sainsbury is out of the picture, other would-be saviours will recognise the urgency of Leeds' situation and focus attention on last-ditch attempts to save the club. Administration would not only lead to more stringent cutbacks at Elland Road but also to a 10-point penalty in the Championship.
"The financial situation has not been good since day one," said Krasner, who still believes, in the face of all the evidence, that a buyer or major investor can be found. "But having reduced the debts from £104m to less than £25m, we're not going to give up."
Senior sources at Elland Road say Leeds will be forced to the wall in a maximum of three months. The club is struggling to scrape funds together to pay wages. Even selling players - such as goalkeeper Scott Carson - during the transfer window might not buy much time. Krasner's hopes of salvation apparently now rest on the shoulders of a local property developer, Norman Stubbs, but doubts persist over whether his consortium has adequate funding.
As recently as yesterday morning, Sainsbury claimed to be on the brink of completing his £25m buyout. He claimed his decision to pull out was triggered by an 11th-hour discovery that Leeds' short-term financial problems were much worse than he had been led to believe.
Under the terms of his takeover plan, it is understood that Sainsbury had agreed to inherit £18m of debt, scheduled to be repaid over two years. But yesterday, according to an auditing source, he was told that Leeds' net losses, including imminent debts due, are forecast to be £10m in the next five months alone. Sainsbury's major backer promptly withdrew his support, causing the bid to collapse.
"That's it, I'm finished with football," Sainsbury said last night.
"This was a serious attempt to save Leeds United and I'm sick to my stomach that it hasn't worked out. The upshot is that the immediate financial pressures, which we've only just found out about, would have devoured our funding and left nothing for the football side. That wasn't the point of what we were trying to do."
Sainsbury's plan involved £25m of investment, which he intended to use to repurchase Elland Road and the Thorp Arch training complex - both sold recently to alleviate debts - and bolster the playing squad. He said that after learning the full extent of Leeds' short-term financial obligations, he would have needed up to £45m to do what he had planned.
If that figure is accurate, Leeds have little chance of staying out of administration. There seems no logical reason at all that anyone would want to spent significant money now on buying Leeds, a company with no major assets.
Krasner was no doubt pondering that last night, driving home from a function at Elland Road. The occasion? A long-arranged speech to 100 insolvency practitioners. The title was: "How to save a football club."
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