Ken Bates is on the verge of making a sensational return to football as Leeds United's new owner, perhaps as soon as today.
Last night the former Chelsea chairman was in pole position among three groups vying to buy the ailing Championship club. Two were deemed serious contenders by the Leeds board, but Elland Road sources said that Bates, 73, is almost certain to edge his main rival, Norman Stubbs, a property dealer, out of the picture. The third group, unidentified, was rated as "fringe players at best".
The Leeds chairman, Gerald Krasner, was so confident that the Bates deal would go ahead that he started drafting a press release to confirm it. An insider said: "It's all but done. Ken Bates loves football and he wants to prove himself again."
Bates' plan is thought to involve an initial £10m of his own money, supplemented by an unknown amount from anonymous backers.
One source said that the "deal breaker" for Bates is that he has offered financial incentives - legal incentives - to the Leeds board.
Of Leeds' debts of £24m, some £4.5m is owed in directors' loans. Bates has guaranteed quick repayment of that money, plus an unknown equity payment on top.
The Stubbs consortium is adamant that any cash injection should be channelled solely in the best interests of the club.
Under the Stubbs plan, the directors' loans are not a priority, and there is no equity on offer to the board.
As The Independent exclusively revealed 10 days ago, Bates, whose outspoken reign at Stamford Bridge ended last March, has been plotting to acquire a majority share in Leeds for several weeks.
Last month, he booked talks with Leeds' former would-be saviour, Sebastien Sainsbury, to discuss investing in Sainsbury's bid. The pair subsequently met for lunch earlier this month at The Dorchester hotel, where Bates offered Sainsbury £10m for 51 per cent of Leeds - and the chairmanship - if Sainsbury succeeded in his buyout. Sainsbury withdrew his bid last week.
Bates, who has been desperate to get back into football, rubbished the report of his interest in Leeds. Acquaintances at Sheffield Wednesday, where he has offered funding only to be rejected, were shocked at suggestions he could be so fickle.
Secretly, however, Bates continued to court Sainsbury from Monaco, where he is now based. When Sainsbury's bid fell through, Bates looked elsewhere for financial partners. He returned with a proposition for Leeds this week and travelled to Yorkshire for talks on Tuesday. He returned to London last night.
Leeds confirmed that Bates was discussing a deal. "We are still talking to all consortiums and Mr Bates is one of those," Bryan Morris, a club spokesman, said. "No deal has been finalised but as soon as negotiations have been concluded we will issue a press statement."
Morris's son Simon is on the Leeds board and was instrumental in the current regime's takeover last year. Bryan Morris last night confirmed to The Independent that Bates is not acting alone. "He's part of a consortium," he said. "I think that within 24 hours there will be a press statement confirming a deal with one of two groups. I've spoken to Ken and he is very positive."
Bates' backers remain unidentified. This is no surprise. Bates has traditionally worked by himself in football and even at Chelsea the identities of other mystery shareholders were never established. Bates banked a personal windfall of £17m when he sold his declared shareholding to Roman Abramovich.
It is believed the majority of Bates' financial assets, thought to amount to about £40m, are lodged in Swiss banks. When Bates was in talks with Sainsbury, he was planning on using a Geneva-based investment vehicle to provide the funding for his part of that aborted deal.
If and when Bates completes his buyout, his priority will be dealing with Leeds' remaining debts. The most pressing problem will be handling the tax authorities, with the Inland Revenue and Customs & Excise understood to be owed around £7m between them. Rescheduled payments are possible but not certain.
Leeds also owe some £8m to former players, managers and agents relating to severance packages. These creditors are unlikely to press for immediate repayment if long-term reimbursement is guaranteed. A smattering of other creditors will probably take the same view.
The club's viability will also depend on further slashing of costs. A year ago, Leeds were still in the Premiership and the top-flight wage packages of the likes of Seth Johnson, Michael Duberry, Eirik Bakke and Lucas Radebe remain a drain. Leeds' expenditure still outweighs income, although this will be remedied, albeit slowly, as some of the higher-earning players' contracts expire or they are offloaded.
A return for Bates would be a personal triumph and a step back towards the corridors of power, his ultimate aim.Reuse content