Inside Football: Divided they stand: Leicester's men at war

ASKED BY Gary Lineker on Saturday's Match of the Day about the ongoing soap opera in Leicester City's boardroom, Alan Hansen shrugged and said: "Wherever you have internal strife there are only ever losers." He then reverted to seemingly more comfortable footballing matters such as refereering decisions and Liverpool's difficulties defending the high ball.

With a crucial public inquiry pending into a proposed new 40,000-seat stadium, Leicester City is in the throes of more than strife. The club is bitterly divided, personally, culturally, even geographically, between its football and commercial operations. Latest position in the tangled saga is that four directors - Roy Parker, Gilbert Kinch, Philip Smith and the chief executive Barrie Pierpoint - have taken legal advice which they claim allows them to accept verbal resignations they say were given last Friday by two others, John Elsom and Sir Rodney Walker. Elsom and Walker both deny they quit, and have refused to resign in writing. The highly-regarded finance director Steve Kind has been edged off the fence to side with the embattled two, who work closely with the manager Martin O'Neill, who does not speak to Pierpoint, whom fans blame for the clubs' problems.

To make matters murkier, the club is undergoing two external investigations, by the Stock Exchange over the alleged resignations and by the Football Association, which has charged 27 members of the playing staff over alleged misallocation of tickets for the 1998 Worthington Cup final.

Hansen's reaction was strange, not merely for the absence of illuminating punditry, but in the light of his own previous involvement in Leicester's affairs. Only two years ago, Hansen was employed as a director - alongside Walker, and the Manchester United director and major shareholder Mike Edelson - of a company, Soccer Investments, the vehicle for Leicester City's flotation on the Stock Market. Hansen said yesterday that he spent three days, two in London and one in Edinburgh, helping to raise money from financial institutions. Then, when Leicester was targeted, he advised Soccer Investments on the quality of the manager and players. When Leicester floated, on 24 October 1997, Hansen was paid pounds 15,000, given 10,000 shares, then worth pounds 1.10 each, and 100,000 share options, to which he is still entitled.

As with all football flotations, then just passing their fashionable peak, Leicester formed a holding company, Leicester City plc, making the football club a subsidiary, each company having its own board. This was done to bypass longstanding FA rules designed to preserve football clubs as sporting, not purely financial, organisations, restricting dividend payments and directors' salaries. As at other clubs, the sitting directors, who had bought shares years before for undisclosed but comparatively small sums, made overnight fortunes. Ken Brigstock and Martin George, two long- serving directors, now departed, made pounds 2.9m and pounds 2.7m respectively. Two of the directors now at loggerheads, Parker and Elsom, saw their shares revalued at pounds 2.4m and pounds 2.5m. Tom Smeaton, the chairman who left last year, made pounds 850,000.

Since then, like all football plcs except Manchester United, Leicester's shares have slumped; yesterday's value was below 40p, around a third of the flotation price. Supporters encouraged to buy shares have all lost significant sums.

The flotation, which raised around pounds 10m, predominantly for new players and the planned new ground, brought the split between the plc and the football club to a club already beset by boardroom politics. Led by Pierpoint at the Filbert Street HQ, where the plc staff and commercial operations are based, Leicester have been financially successful, introducing innovative merchandising and hospitality operations, paying out pounds 297,000 in dividends to shareholders this year. O'Neill and all the football staff - including Elsom, the football club chairman - are based wholly at the Middlesex Road training ground, where their autonomy is guarded fiercely by O'Neill. When Pierpoint became chief executive last May, it was written into his contract that he is not allowed to involve himself in any way in footballing matters.

O'Neill and Pierpoint do not speak, communicating through Elsom, who works at the training ground. Elsom's animosity with the so-called "Gang of Four" directors on the plc board has its roots partly in festering personal politics, but there is also a cultural divide at Leicester, between football and business.

O'Neill, a football man to his soul, is considered by some on the plc side to be, at best, uninterested in the club's commercialism. Similarly, Elsom, despite having himself made a fortune from the flotation, is regarded as a football traditionalist. The other directors see themselves as modernisers, responsible to the Stock Market and to maximising returns to shareholders.

The deepening divide, which the plc chairman Walker has been unable to heal, erupted at last Friday's meeting called, according to sources close to the board, to discuss two matters. The first was the Worthington Cup tickets debacle. Despite headlines implying widespread touting, in fact only Andy Impey and Tony Cottee have been charged with misconduct by the FA, with Cottee protesting his innocence.

The other 25 have been charged after failing to fill in a form by a 27 August deadline given by Graham Bean, the FA compliance officer, on the telephone to Charles Rayner, Lecester's commercial director. Rayner told the board he had sent memos about the deadline to the training ground on 13 and 16 August. O'Neill and the players deny having received the memos, leaving Elsom, as the football club chairman based at the training ground, to take intense criticism from the other directors for the deadline not having been met.

After Memo-gate - a tale of non-communication - the second item was an internal investigation, apparently overseen by Walker, into Pierpoint himself, who was alleged to have had a conservatory built at his house for free by one of Leicester's sponsors. Pierpoint and the sponsors were totally cleared, but the four directors were, according to sources, incensed that the investigation had taken place without their knowledge.

Depending on whose account of last Friday's board meeting is given, the questioning of Walker was either merely "vigorous" or personally abusive. He walked out, followed by Elsom, leaving the two sides in dispute over whether their departures amounted to resignations.

With the dispute raging over the alleged resignations, Sir Rodney has invited shareholders to call an Extraordinary General Meeting, where presumably confident shareholders will back him and Elsom, who is close to O'Neill, Leicester's most cherished asset.

Pierpoint, believed to feel aggrieved at fans' anger vented against him last Saturday, is due to embark on his own PR campaign today, in which he is expected to stress his achievements, willingness to work to O'Neill's requirements, and desire to find a solution.

One of the few subjects on which there is unanimity at Leicester is about the way flotation has exacerbated tensions. Its advantages are acknowledged: introducing new funds, and, according to Leicester's Independent Supporters Association, a measure of transparency and shareholder influence.

But the constitutional separation of football club and plc, and the higher commercial stakes of Stock Exchange status, have reinforced the conflict between a football culture and the financial demands of a plc. Even at board level, sources say a view is forming that: "FC and Plc don't match".

Hansen acknowledges the part played in exacerbating Leicester's problems by the divided structure which he was paid to help introduce:

"I recognise there may be some downsides to flotation, particularly if it hampers the football club," he said yesterday. "But it is not something I concerned myself with when advising Soccer Investments."

Last week's leak of a report written to the Football Task Force by the football authorities suggests they still see no inherent conflicts in floated football clubs, and have no plans to introduce regulation. While talking sternly to the players about alleged impropriety over ticket allocations, the game's governing body should have a word with Leicester's manager, directors and concerned supporters over the long-term effects at their club of the FA having allowed its own rules to be bypassed, in the rush to cash in on the Stock Market.

A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Life and Style
Floral-print swim shorts, £26, by Topman,; sunglasses, £215, by Paul Smith,
FashionBag yourself the perfect pair
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Caption competition
Caption competition
Have you tried new the Independent Digital Edition apps?
Daily Quiz
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

Career Services
iJobs Job Widget
iJobs General

(Senior) IT Support Engineer - 1st-3rd Line Support

£40000 per annum: Ashdown Group: A successful IT service provider that has bee...

Wind Farm Civil Design Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principal Marine Mechanical Engineer

£60000 - £70000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principle Geotechnical Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup