Directors sell Elland Road and clear own liabilities

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The Independent Online

Leeds United sold Elland Road last night after ending negotiations with Sebastian Sainsbury's Anglo-American consortium over a £25m takeover. The Leeds chairman, Gerald Krasner, said that selling the stadium was part of an "alternative strategy" to safeguard Leeds' future, adding that the sale, believed to be for around £10m, was necessary to repay debts.

Leeds United sold Elland Road last night after ending negotiations with Sebastian Sainsbury's Anglo-American consortium over a £25m takeover. The Leeds chairman, Gerald Krasner, said that selling the stadium was part of an "alternative strategy" to safeguard Leeds' future, adding that the sale, believed to be for around £10m, was necessary to repay debts.

While Krasner insisted that Leeds had negotiated a deal to play at Elland Road for at least 25 years, the club will be evicted and become homeless if they default on their "leaseback" rental payments. The new owner is understood to be a Manchester-based property developer.

Krasner insisted that Leeds would not default, but fans have been given little reason in recent months to share his confidence. The Thorp Arch training ground was sold recently, in another "leaseback" deal, to pay debts, and Krasner admitted yesterday that after selling Elland Road, Leeds' debts will still be around £25m. He claimed that the club has no plans, or need, to enter financial administration in the foreseeable future, and said that the club was in "advanced discussions" with a Yorkshire consortium about a buy-out.

No details were provided about this group, although it is thought to be headed by a local businessman, Norman Stubbs. "As well as being business people, they are all diehard Leeds United fans, and, like us, have the club's welfare at heart," Krasner said.

The sale of Elland Road will depress supporters but be beneficial to several other parties. If Leeds experience a change in fortunes and can buy it back, the vendor will pocket a "commercial premium", or negotiated profit, thought to be around £1.5m. Krasner insisted that neither he nor any of his board would benefit financially from this. He also argued that leasebacks were common in business, and many firms did not own the property where they were based.

While that is true, yesterday's sale did directly benefit Krasner - and his fellow directors Simon Morris, Melvyn Levi and Melvyn Helme - in wiping out their personal liabilities on the loan they obtained from businessman Jack Petchey to buy Leeds themselves earlier this year. The stadium sale will allow full repayment to Petchey, letting the four off the hook. In effect, they personally guaranteed the loan to buy Leeds and have now sold Leeds' main asset to acquit themselves of the obligation.

Levi confirmed yesterday that the board members would have been personally liable for "millions of pounds" each if they had failed to pay Petchey, who is the second-largest shareholder in Aston Villa and was formerly the chairman of Watford and a director at West Ham.

The structure of repayments to Petchey was the reason for an urgent need to either sell to Sainsbury yesterday or sell Elland Road. The latest instalment was due on an outstanding balance of £9.5m (of an original £15m). If payment had not been made, a £2m penalty would have been triggered.

There was confusion and disagreement last night about why the talks with Sainsbury had been called off. Despite announcing proof of funding had been seen earlier this week, Leeds claimed yesterday that Nova Financial Partners, the US-based group backing Sainsbury, had consistently failed to come up with the money. Sainsbury maintained last night that he had not had sufficient time to complete due diligence and was "not going away".

Krasner conceded that if Sainsbury came back with £25m, a deal could still be done, but denied he had given Sainsbury a specific one-week extension to complete a takeover.

Grounds for concern

Bradford City

Following Geoffrey Richmond's (right) "six months of madness" the club was forced into administration. To escape, the family pension fund of then-chairman Gordon Gibb bought the ground. But the club went back into administration and Gibb and his partner, the present chairman Julian Rhodes, fell out, leaving Valley Parade's future unsure.

Brighton

Absentee owner Bill Archer, head of Focus-Wickes, removed a "no-profit" clause for directors then sold the ground for development. After sharing with Gillingham, 70 miles away, Brighton moved into a 6,000-capacity athletics ground at Withdean. Attempts to build a permanent home at Falmer have been mired in planning inquiries.

Chelsea

Endured years of uncertainty after Stamford Bridge was bought by property developers. Saved by a combination of the late house-price crash, which forced the owners into liquidation, Ken Bates's resistance, which had kept them at bay, and Matthew Harding buying out the receivers, Bank of Scotland.

York City

The board, led by chairman Douglas Craig and including ex-player Barry Swallow, hived off the ground from the football club, then sold it to Persimmon Homes. Following administration the Supporters Trust bought the club and, eventually, the ground, but in the turmoil the team fell into the Conference.

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