Leeds United has become the latest football club to fall into the hands of a Gulf financial institution, as GFH Capital, a Dubai-based private equity group, said it was buying the Championship club.
Terms were not revealed, although people with knowledge of the deal said a cash transaction in the region of £44m had been agreed and that the club had no bank debts.
After months of negotiations with chairman Ken Bates, 73 per cent owner, GFH Capital will take full ownership on December 21. Leeds represents GFH Capital’s first takeover.
David Haigh, deputy chief executive of GFH Capital and a Leeds fan from childhood, joins the board with immediate effect. Two other GFH Capital executives will follow next month.
Mr Bates, who sold Chelsea to Roman Abramovich in 2003, will stay on as chairman until the end of the season, after which he becomes club president.
GFH Capital, which put £2m into Leeds last month, said it had added to this amount and would inject more to help manager Neil Warnock strengthen the team, which is struggling near the bottom of English football’s second tier.
But some Leeds fan groups have questioned the financial robustness of the new owners.
GFH Capital is a subsidiary of Gulf Finance House, an Islamic investment bank based in Bahrain. The parent’s accountants have expressed worries about its ability to continue as a going concern. KPMG Fakhro earlier this month said GFH’s accumulated losses at September 30 were $293.8m, and that “its current contractual obligations exceeded its liquid assets.”
GFH invested heavily in real estate before the global downturn, and has been forced to write off billions of its assets.
Gary Cooper, chairman of Leeds United Supporters Trust, said: “The financial circumstances of GFH are absolutely relevant to the future of Leeds United.”
A spokesman for GFH Capital said the parent group was an asset-rich institution with cash on the balance sheet. “This is a long-term investment, and is about putting money into the club with the intention of taking it back to the Premier League and enjoying the fruits of what the league offers,” the spokesman said.
Gulf interest in the business of football was ignited by the 2007 takeover of Manchester City by Sheikh Mansour bin Zayed bin Sultan Al Nahyan of the Abu Dhabi royal family. Qatar Investment Authority is the outright owner of Paris Saint-Germain, and Kuwait’s Al-Hasawi family own Nottingham Forest.
But with the 2022 world cup scheduled to be held in Qatar, further interest in European football clubs is expected.
Leeds enjoyed considerable success in the 1970s. But it was saddled with huge debts in the late 1990s, ending up in administration and dropping two divisions.
Eurofin Capital acted as advisers to the club.
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