The future of Leeds United was thrown into uncertainty after the investor who had agreed to buy the Championship club was convicted in a Sardinian court on a charge of tax evasion.
Massimo Cellino had struck a deal with owners GFH Capital, a private equity fund based in Bahrain, for his company, Eleonora Sports, pay £25m for a 75 per cent stake in the club.
But a Sardinian court on Tuesday found the Miami-based agricultural entrepreneur guilty of failing to pay an import duty on the purchase of a yacht and fined him €600,000.
Under Football League rules on the suitability of owners and directors, a conviction disqualifies a potential investor from taking a significant stake in a club.
Mr Cellino, who owns Serie A club Cagliari, has previous convictions from 1996 and 2001. His lawyers claimed the former was overturned on appeal and the latter was “spent”, meaning that under the league’s ownership rules it was too long ago to disqualify him.
This latest conviction throws Mr Cellino’s takeover into doubt, putting the club’s finances at risk. He has loaned GFH money, believed to be around £6m, to help it through its financial problems, and the latest uncertainty could raise prospect of the club’s administration.
David Haigh, Leeds’ managing director, said last week there was “no chance” of the club calling in the receivers.
But with Mr Cellino set to appeal, there is the prospect of Leeds’ ownership remaining in limbo for several months.
Leeds was one of English football’s most successful clubs and reached the semi-finals of the Champions League. But it was crippled by heavy debts as it chased success on the pitch and went into decline, going into administration briefly in 2007.
Brendan Guilfoyle, who handled a previous administration of Leeds’ holding company in 2004, said it was a “mystery” why such a prestigious club had not secured stable ownership since. “You look at clubs like Leicester being taken over and you wonder why Leeds has found it difficult,” he said. “To own a football club now you need £100m.”
Mr Guilfoyle, of the P&A Partnership, said GFH would do everything they could to avoid administration as their shareholding would become almost worthless.
GFH have invested around £40m in the club and Mr Haigh has lent the club £2m.
The Football League said: “The Football League has noted the outcome of the court hearing earlier today regarding Massimo Cellino. We are engaged in an ongoing dialogue with his legal representatives in this country and cannot comment further at this time.”
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