And then there were 4 (at least): The ownership of Leeds United

Another week, and the confusion over the ownership of Leeds United continues. As pointed out here upon the release of GFH’s financial results, the ownership structure had changed, with GFH now owning a minority stake. Following the release of the accounts, the ownership structure disappeared and then reappeared on the website 24 hours later. The revised ownership of Leeds United is stated as follows:

Leeds United Football Club Limited ('LUFC') the company that holds the share in the Football League, is a member of the West Riding County Football Association and a Full Member of the Football Association.

LUFC is a wholly owned subsidiary of Leeds City Holdings Limited ('LCH').

LCH is wholly owned by LUFC Holding Limited ('LUH') a company based in Grand Cayman.

LUH is managed by GFH Capital ('GFHC') on behalf of its investors.

The shareholders in LUH that hold over 10% are: -

i.    GFHC
ii.   International Investment Bank
iii.  Envest Limited

GFHC is a wholly owned subsidiary of Gulf Finance House, BSC.

Envest Limited is owned by Mr and Mrs Salah Nooruddin.

Our ownership is therefore derived as follows:

 

 

So what does this mean for Leeds United Fans:

Do GFH still own the majority of Leeds United?

In a word, no. GFH is now a minority owner of Leeds United, but as was subsequently clarified, they do control a majority stake.

GFH is a private equity fund management business. Their business model is to raise equity from clients and invest it in projects. Their income stream is:

·         Profit on successful investments from their own capital

·         Fees charged to clients in managing their capital

·         Promote or effectively a bonus for achieving a profit in excess of a target return

GFH will therefore raise a consortium of investors around a project, invest that capital and execute a business plan. Typically these clients will be passive investors, with GFH retaining de facto control over all business decisions, hence GFH’s reference to being in majority control.

A synopsis of GFH’s business model can be found here.

Is this the large investment talked about and do we have more cash to invest?

In my opinion, no. From the messages trailed by GFH and other parties, it is likely that these investors came into this relatively early. It is likely that this restructuring was completed in the summer after Bates had left in order to “clean up” the investment structure.

This hasn’t led to further investment (just see McDermott’s spending power!) and any capital is likely to be diverted to funding the cashflow of a club which is still struggling with the excesses of the Bates era. It is likely that any further investment will see a further reduction in GFH’s stake and given this is still “held for sale” on the bank’s balance sheet, I could see this happening over the short to medium term, with GFH remaining in control and charging investors fees. Typically PE fund managers only have small stakes in deals and profit from fees and the promote (or bonus) from outperformance. Expect this sell-down to continue.

Will this reduce transparency?

Given the size of Leeds City Holdings (and subsidiaries), there will remain a requirement for the companies to file detailed accounts which are public knowledge (and which I, plus many others will be following in close detail). Given the Bates-era legacy issues, I would also expect to see GFH highlighting the financial performance to provide fans with clarity as to the issues they’re facing.

Conclusion

The reorganisation has little practical impact but does provide markers to the future ownership structure. Taking large stakes in companies is generally not practical for private equity investors. It is too capital intensive. I would therefore expect more investors to be introduced over the coming months with GFH diluted down further.

Does this concern me? No, GFH will likely remain in day to day control, managing the club on behalf of others. To date they have proven to be adept at identifying the issues with the club and seeking to resolve them. It is important for fans to remember however that even for all the PR spiel, GFH will be focussed on securing the most profitable exit for their clients. Whilst this should be aligned with the aspirations of the fans, this might not always be the case.  

GFH - Q2 2013 Results and more ownership questions...

GFH released their 1st Half Year 2013 results today, and as ever for Leeds fans, and those with a slight interest in the comings and goings of our parent company, it posed a great deal of questions, particularly over our opaque ownership.

Hisham Al Rayes, acting CEO of GFH, had the following to say:

"We continue to focus on the strengthening of the balance sheet and the realignment of projects for successful exits, which is allowing us today to establish the Bank's credit rating in the market. We believe that this will also further enhance market confidence in the bank and allow for better business making in the future."

He added: "Furthermore, during the quarter we focused on building platforms to extract value from our existing assets. In this regard, we secured a number of strategic investors alongside GFH in Leeds United FC.

"We also saw progress on a number of our development projects and expect to see positive results later this year in particular in Bahrain and Tunis... We are confident that a stronger future is ahead and are determined to deliver higher returns for our investors and shareholders as we go forward."
First to the financial performance, looking at the income statement for H1 2013, we can see that there was a decrease in underlying profit compared to the same period in 2012 (pre-ownership of Leeds). Profit from operations was $4.9m vs. $5.7m which was largely driven by a decrease in "Other Income" of $12.2m.

Other Income is primarily a buy back of financing liabilities, recovery of expenses and of impaired facilities, therefore items which aren't related to the principal operations of the company. If we strip this out, the underlying income (predominantly from management fees) has actually increased significantly over the period, with management fees up from $1.6m to $5.2m.

The cashflow paints a slightly more challenging picture. If we strip out the proceeds from issues of convertible murabaha (essentially debt) and proceeds from treasury shares (equity raised), there was a cashflow shortfall of $20m over H1 2013. This is nothing new for GFH which has continued to suffer from cash burn at quite an alarming rate. They have always been able to refinance their liabilities, however it does raise questions as to  how the company could support itself if creditors/investors stopped providing financing to GFH.

The most interesting aspect of the accounts relates to the reduction in assets held-for-sale. As stated in the 2012 accounts:

"The Group has an active plan to sell its stake in LUFC Holdings Limited, and accordingly, the asset and liabilities acquired were classified as held-for-sale and presented in the consolidated statement of financial position. Subsequent to the year end, the Group has commenced negotiations relating to the sale of its stake in LUFC Holdings Limited."

This resulted in a net total of assets held for sale of $45.5m. Looking at the H1 2013 balance sheet we can see that assets held for sale has actually decreased to $22.2m. Whilst small stakes in Leeds City Holdings Limited (LCHL) had been disposed of (see previous blog posts on IIBB), it doesn't account for such a significant reduction in ownership. Turning to note 11 of the accounts, GFH state that:

"During the period, based on placement of majority stake in LUFC to strategic investors, the Group de-consolidated LUFC Holdings Company."

Whilst it had been GFH's stated aim to reduce its holding in Leeds United to a minority stake in the short to medium-term, it had been thought that any sale had not been completed. Looking at this there are 2 scenarios:

• GFH has sold a majority stake to a single investor
• GFH has sold down a majority stake to a fund which it manages and which has numerous investors

The lack of announcements from GFH but the mention of strategic investors, would suggest to me that the latter was more accurate. This also fits in with GFH's business model as detailed here,

This would de-consolidate LCHL's accounts from GFH's (a nightmare from an accounting perspective), and formalise the investment structure. It could also suggest that the spike in management fees in H1 2013 related to the arrival of new investors (previous reports such as this article detail how GFH's business model relies on charging investors a "premium" in order to invest in projects).

So what does this all mean for Leeds fans? Well, the following:

• It would suggest that GFH have achieved their goal of selling down a majority stake to investors, and deconsolidating their balance sheet from that of LCHL's.
• The previously contradictory messages of long-term, sustainable ownership and holding the asset for sale can be understood a bit better. GFH as fund manager, and minority holder, will look to maximise value, and hold for the medium term (unless of course they receive an offer for an early exit at a reasonable profit).
• If it is a standard private equity fund structure, GFH as General Partner (GP) will have overall control for managing the fund and will decide and execute strategy at largely their own discretion. The other investors (or Limited Partners) will have little/no control over the strategy, and therefore one would hope that incidents such as investors' nephews being forced on our youth squad should not be something to worry about in future.
• Financially, unless we have further investment, it is likely that we will continue to work on a tight budget, hence the trailed messages on 2-3 year promotion horizons and "sustainable investment". The promotion of Leeds United will rely on the financial support of its fan base, and GFH managing to reduce the profligacy of the Ken Bates era, essentially "bread and butter" private equity (reduce overheads and increase turnover).

The start made over the past few months has been promising, and what is reassuring is that GFH have realised that having a united and content fan base is the only way to ensure the financial success of Leeds United. Having started this year as relatively pessimistic, I am certainly more confident as to where the club is going. Time will tell as to whether GFH can deliver on their well-polished rhetoric.

Q1 2013: IIBB, GFH and the curious partial sale of Leeds United

We are now through our first full financial quarter of GFH's ownership. The first quarter of 2013 has been quite active with GFH selling a stake to IIBB, a fellow Bahraini investment bank. Now with the first publication of both GFH and IIBB's results we can see how this purchase/sale has been reported by both institutions and how it has changed the ownership structure. A few things are worth noting which I detail below:

Value of the investment in Leeds United

As can be seen, in US$ terms, the value of Leeds United fell by $3.2m over the quarter. However, this fall was driven by currency movements rather than any depreciation in the value of the investment. The value of a 10% stake (roughly £2.8m) is broadly in line with the £2.5m which IIBB state that they have paid for their stake.

Nature of Investment

Now this might get a bit technical, but here we go. Typically, an investment would be structured like this:

This would have the following benefits:

• The investment is ring-fenced from the rest of the group
• It provides an easy structure for investors to be able to acquire a stake
• A new investor gets "clean" exposure to the performance of Leeds United rather than if a stake is acquired through GFH for example.

Comments in the IIBB accounts suggest that their stake is held indirectly through an investment in GFH. GFH also control 100% of the company and it is fully consolidated on their balance sheet, therefore suggesting that the structure is something like this:

Now, for an investment bank to hold an investment in this structure is quite odd for a lot of reasons.

1. Any investment is exposed to GFH's financial performance, at least indirectly.
2. Who controls the exit from the investment? If GFH own 100% of Leeds United, it would suggest that any other investors are effectively dependent on GFH to decide when the exit is.
3. An investment structure as per the above would be a difficult structure for most investors to get comfortable with, unless they could get very comfortable with the GFH business model. This could limit the potential pool of future investors and perhaps ties in with comments from the IIBB annual report about GFH targeting other "regional players" as investment partners.

IIBB's annual report also provided a few more comments on their strategy for this investment: 

"IIB anticipates capital appreciation over the medium-term, therefore we are currently taking the approach to hold the 10% investment in its portfolio, with a consideration to offer it once the club’s financial position is solidified."

To me, this sounds relatively short-term, and would suggest that IIBB would look to exit as and when an appropriate offer was tabled. Much work is to be done in stabilising the club's financial position still (see my previous blog), but with the building work complete and the final season of season ticket forward sales to Ticketus now upon us, one would hope that with some recovery in attendances, the cashflow of Leeds United should improve over the short-term. This would suggest that IIBB's ownership is not likely to being long-term.

Timing of investment

My final point relates to the timing of the investment. The inclusion of the investment in the IIBB 2012 annual report; comments that IIBB were introduced to the investment in December 2012 and as mentioned in previous blogs, the positive revaluation of the investment in the FY2012 GFH accounts, would suggest strongly to me that the sale of 10% of Leeds United actually occurred in December 2012 before the year end rather than at the time of the announcement at the end of March. If this was true, why then was this announcement delayed by 3 months?

Conclusion

The continuing theme of an opaque ownership structure of Leeds United continues, and the strategy for sourcing further investment is open to question as is the assertion that any investment is for the "long-term" when you have a co-investor stating that it will look to exit once the club's financial position is "solidified". In my opinion, the acquisition by IIBB muddies the waters and I see a majority sale over the short to medium term as the most logical step forward.

Time will tell however, and a lot more will become clearer over the early part of the summer and the club's attitude to backing McDermott's strategy, alongside the retention of key personnel such as Byram. If Byram for one is to be sold for a significant sum (which may occur), then whether these funds are then re-invested into the squad is an important metric as to how GFH will be judged as owner of Leeds United. As has been seen in my previous blog, there has been a pattern over the past 5 years of excess transfer profits being diverted to fund ancillary projects rather than being reinvested in the squad. A break from this negative feedback loop would be a positive step forward, that said, I would much prefer Byram to stay.

The Mythology of Ken Bates - Leeds United 2008-12

The Oxford English Dictionary defines a myth as:

A widely held but false belief or idea:

·         an exaggerated or idealized conception of a person or thing

One of the largest myths in association with Leeds United concerns the argument that Ken Bates has created a “well run” football club. A cursory glance at the accounts indicates that this is far from the case.

Stepping back to the original takeover, it can be argued that at that critical juncture there was no one else with neither the will nor ability to step in and take over Leeds. Maybe so, but that doesn’t explain the chronic misallocation of capital away from what should be the primary objective of a football club, the playing squad.

My analysis has focussed on the accounts from the period 2008-2012. 2008 coincided with the exit of Leeds from the latest period of administration, a deduction of 15 points and effectively a business facing a new start. Bates’ consortium had taken control of the club following a payment to shareholders of 11.2p in the pound and whilst numerous creditors lost out, Leeds was effectively debt-free. On that basis, and with the highest turnover of any club in the lower leagues, then Leeds should have been ideally placed to grow from a sustainable base. What therefore happened? One of the main parts of the Bates mythology surrounds his assertion that he established a well-run football club. A simple analysis of the cashflow, the starting basis for whether a business is in a healthy state or not suggests otherwise:

 

As can be seen above, the cashflow of Leeds was largely supported by player sales throughout the post-2008 era, with the exception of 2011 where the net outflow was £1.25m on player transfers. If we look at the entire period, income from player sales contributed £8.4m to Leeds United’s cashflow over the period, and as can be seen from above, this has played a crucial role in keeping Leeds United operating as a viable concern over the period.

Construction Costs

Looking at the cashflow, a total of £18.6m was spent over the 5 years on alterations and fixtures/fittings, which we can see is related to the improvements made to Elland Road (this ties in broadly with the £20m that Bates said had been invested in Elland Road in the Daily Mail article in December). To put this amount into context, the total amount of cashflow generated from operating activities by the club, plus the player sales over the 5 year period totals £19.25m. This is quite astonishing, and for a business whose primary revenue generator isn’t real estate (especially one which doesn’t actually own the real estate it is investing) it is the equivalent of betting the house on black.

Now, there are two reasons why investing this amount may have been necessary/desirable:

1.       Elland Road was unsuitable to host Championship football: Whilst Elland Road may have been requiring modernisation in an ideal world, this wasn’t something that was strictly required. If there had been some legislative or structural requirement to improve the stadium, then under most circumstances this would be the responsibility of our landlord (whoever they may be...).

2.       The investment would produce an attractive and sustainable return which can be reinvested in the playing squad: Given the cost of investing such a large amount involved diverting funds and weakening the playing squad, one would expect that the business would have to receive a substantial return over a short timeframe in order for this to justify the outlay.

To my mind, neither point is valid in this case and certainly not to the detriment of investment in the playing squad. £18.6m which could have been invested in the playing squad was instead diverted to a spurious building project which has done little to enhance the bottom line of the business and by diverting funds at crucial points over the past 5 years, may have prevented Leeds United securing promotion at an earlier stage. This is further proved when looking at the growth in turnover components over the period. For this I have excluded central distributions and TV income which are largely outside of the control of the football club business and instead focussed on gate receipts, merchandise revenue and other commercial revenue. If we assume that corporate hospitality falls into other commercial revenue which is its most logical location, we can see that it has broadly flatlined over the period;

What therefore was the justification for investing a huge component of the cashflow for what looks like quite meagre returns to date?

Administrative Expenses

Another component which stands out when looking through the accounts is the amount of administrative expenses. As can be seen below, whilst wage growth has been relatively constrained, and I have assumed that rent has grown by 3% per year from a base of £2m (as per Swiss Ramble’s blog: http://swissramble.blogspot.co.uk/2012/05/leeds-united-marching-on-together.html), the growth in other costs has been huge, growing from £5.5m to a total of £10.6m, in effect doubling. It is hard to see what significant other costs would be due to be paid by a club which has outsourced its catering services and does pose some questions. As ever, given the lack of clarity in the accounts it is very hard to see where the costs have been accrued.

 

Given the comments during the Levi case where Harvey referenced the huge legal costs that the club had incurred, one can only presume that a significant component of the other costs must relate to some of these legal costs.

Wage growth has remained constrained throughout the period, as can be seen from the chart below:

Leeds have consistently kept the ratio of wages/turnover between 49-56% over the 5 year period which, as Swiss Ramble stated in his blog, puts Leeds at the bottom of the pile compared to other Championship clubs. Whilst sustainability is obviously important (as we have seen over our recent history) it does suggest that there is room for further investment in wages to be made, especially if there can be some cost control of some of the other costs within the business.

 

Conclusions

"We are one of the most stable clubs in the country, we will not take any risks, and we will not spend money that we haven`t got in the hope that we will go up." – Ken Bates 28/12/11

Looking at the 2008-12 period and Bates’ claim of building a “well-run club”, one which takes no risks and doesn’t spend money it doesn’t have doesn’t quite stack up. For a start, investing the vast majority of the operating cashflow of the business whilst also funding the remainder by selling the only valuable assets of the business (the playing squad) to fund an investment which to date has failed to produce any form of reasonable return for the outlay strikes me as the exact opposite of not taking risks.

When the cashflow started to run out in 2011/12, Bates had to rely on raising capital by forward-selling income from season tickets and taking loans from other spurious sources. Forward-selling season ticket income it should be remembered was exactly the strategy that got Leeds into trouble during the Ridsdale era, an era Bates likes to refer to as an example of bad management.

Ultimately 2008-12 represents an opportunity missed. Had the operating cashflows been invested sustainably in the playing squad, had the club taken a more active approach in keeping some of the promising League One squad together by perhaps increasing its wage/turnover ratio and reducing some of the other costs, then the dream of Premier League status could have been realised. Instead we have shiny new corporate facilities, another season of mid-table Championship football and a club which has a significant amount of its future cashflow sold onto other companies. Turning around a troubled business is like turning around an oil tanker and therefore GFH or whichever other party becomes involved with Leeds over the near future will require time and investment to do this. Ultimately the rhetoric and mythology that Bates has sought to create belies the reality of a club which has gone backwards rather than forwards over the past 5 years.

Long-term strategic ownership? A few thoughts on GFH's performance so far...

The question of ownership can often be controversial, especially when linked to something as emotive as a football club. The question of what or whom is a good or bad owner largely comes down to personal opinion and with Leeds and its recent history this is especially so. I personally stand with a foot in both camps. From a pure supporter perspective, the possibility of fan ownership or ownership by a supporters group is immensely attractive, but as a realist, working in the investment industry, I can see that a business such as Leeds United will always attract interest from professional investors.

It is very easy to class one or the other as a "good" or "bad" owner, arguably most football supporters would rightly argue that SISU Capital, owners of Coventry, or the Venkys would represent an example of bad ownership. However, for every SISU/Venky ownership, there is an ADUG, the Abu Dhabi investment consortium that bought Manchester City, or a Fenway Sports Group. In my opinion, there is no reason why an investment firm or consortium with no historical link to the club cannot be a good owner.

And so to the curious case of Leeds United. It is sometimes worth reflecting where Leeds have come from, something which has often been forgotten in recent months. If Leeds United was a patient a year ago, it would have been in intensive care, with the paddles charged and the Grim Reaper standing by the door. Rightly or wrongly, without GFH's or another outside party's intervention and capital during the course of last year, I strongly believe Leeds United would most likely have ended up back in administration. A cashflow dedicated to spurious building projects to the detriment (as critiqued brilliantly by Amitai Winehouse here) of the playing squad, and funded by debt and player sales had left us in a perilous position, and for taking us off the critical list alone, I for one will always be grateful to GFH.

It is one thing however to save a sick person's life, but its another to administer the medicine to cure them. For me, Leeds United as a business has the following issues which need addressing:

1. Poor cashflow generation: effectively the business isn't creating enough cash to support its activities
2. A lack of long-term strategic investment: A playing squad which has been chronically underfunded and plundered to support the cashflow rather than invested in.
3. Lack of engagement with the customer base: A customer base (the supporters) who have become disinterested in the product on offer.
4. Lack of stability and vision: Lack of clarity in the future of the business and its aims.

For me, GFH seem to have made good steps to address point 1 (which should largely be addressed should the remainder be sorted satisfactorily), to some extent point 3, and in my opinion it is too early to judge their performance against point 2.

In the short-term, it is point 4, a lack of stability and vision which is in danger of seriously damaging the club. For most businesses, It is not necessary for management to explain in detail to its customers how it is expected to move forward over the medium/long-term, however a football club, especially one with a fanbase as engaged as Leeds United, it is crucial.

Leeds United over the past 12 months has been dominated by uncertainty in terms of ownership which has continued under GFH with a variety of contradictory messages, with official statements professing a desire for "long-term" and "strategic" ownership, whilst releases to the stock exchange detail the desire for a short-term exit, and the involvement of investors who look to be keen to make a short-term investment return (see here). The long-term ownership and vision for the strategic direction of the club needs to be clarified and explained to a supporter base who have remained loyal in the face of disinterest for far too long. More importantly, no new manager of a sufficient calibre will be attracted to Leeds United without understanding and buying into the long-term vision of its owners. When said owner has the club as "held for sale" in their books, it does little to suggest a long-term and strategic approach.

Over the medium-term, point 2 in particular needs addressing, and to do so, Leeds United need to have an ownership structure in place with the necessary funds to invest for the long term in the playing squad, to enable the club to challenge effectively in the Championship, but also to attract the calibre of manager required to secure promotion. As can be seen from my earlier blogs, the financial statements released by both GFH and IIB raise concerns over the ability of both businesses to fund the strategic investment required by Leeds to take the club forward. There may be investors standing behind both enterprises willing to fund future investment but this is unclear, and given the high leverage of GFH in particular, one has to be concerned over the long-term viability of their business model. GFH Capital have often said they have a separate funding source to GFH and are therefore independent, however this is contradicted by the fact that Leeds United Holdings is held on the balance sheet of GFH.


Buying and running a business is difficult, buying and running a football club, with the constant attention and interest groups involved is exceptionally so, however I still think that Leeds United deserve a lot better than the status quo. Whilst I will always be grateful to GFH for removing Bates from the equation and for stabilising the business in a period of great uncertainty, I also believe that Leeds requires an ownership understands the history and legacy of the club, is prepared to engage with the fans on a more effective basis, and is able to outline a long-term strategic vision for where they hope to take the club.

Whether this is through a supporter-owned model or whether it is through a professional investment house which understands the nuances of our great club, I am relatively neutral, but it is clear that both financial capital and a vision are required to move us forward, and to ultimately build a successful football club, built on the support of an enfranchised and inspired supporter base. At this stage, it is doubtful to my mind whether GFH have the ability or vision to achieve this.

GFH and IIB - Long-Term Strategic Investment?

Last week saw GFH achieve the sale of a 10% stake in Leeds United Holdings Ltd to International Investment Bank (IIB), a Bahrain-based investment bank. David Haigh's comments at the time were as follows:

"The introduction of IIB is in keeping with what have always been GFH Capital's aims for the successful, sustainable and long term ownership of Leeds United FC.
"We believe that a consortium of like-minded investors provides the best ownership model for a club which belongs among the elite of English football clubs and global sporting brands.
"It is our aim to provide the finance and the stability to enable the club to complete that journey as soon as possible."

I'm going to come back to that statement in a minute, but first a brief look at IIB and their business activities. IIB was incorporated in 2003, and its core business areas are Real Estate, Private Equity and Structured Products. From looking through the portfolio of investments, the bulk seem to be real estate deals throughout Europe and the Middle East, with the private equity transactions predominantly confined to the Middle East.

David Haigh's comments above would indicate that IIB's investment in Leeds will be "long-term", "sustainable" and will provide the "finance and stability" to take the club forward. With particular focus on the "finance and stability" element, are IIB in a position to deliver this?  Looking at the Q4 2012 accounts (http://www.iib-bahrain.com/pdf/EnglishQ42012.pdf) provides some insight into the firm's financial stability and potentially also the ability to finance further investment in Leeds United.

Income Statement

If you strip out "gain on conversion of associate to investment at fair value through equity" (effectively a non-cash revaluation), we get to an operating loss of -$967,000 for 2012, an improvement on 2011's operating loss of -$2,565,000 but a loss nonetheless. Effectively we have a business whose core revenue (Investment Banking Fees) does not cover its Corporate and General and Administrative Expenses. This would indicate a business which is struggling to generate a profit through its core activities. Again however, it must be stated that this is an improvement from the position in 2011.

Balance Sheet
The balance sheet of IIB is in solid shape with limited debt putting pressure on the capital structure. It is unclear as to how their investments ($58.6m in total) are valued and whether this is hiding any losses, particularly on the real estate side.

Cashflow
For me the most troubling aspect of the business is their cashflow which shows a net cash decrease of $25,929,000 over the course of 2012 with a current cash balance of c. $35.5m. This is largely linked to investments made, but as can be seen from the income statement, the business is not generating cash and therefore its sustainability is down to support from outside sources (either investors through equity or debt).

This may be readily available, but it does raise a question mark over their ability to continue to sustain investment in their transactions and does to my mind create questions in terms of their ability to provide "finance and stability" to Leeds United.

With Warnock's comments indicating that GFH need to sell shares in order to fund investment in the club, and Haigh's comments above, this may be the first of many share sales in Leeds United. With the outcome of any proposed investment by Steve Parkin at the time of writing this uncertain, what would the implications of having a consortium with multiple investors, invested in Leeds United?

From personal experience, investment consortiums can be incredibly tricky to maintain and manage for anything but a medium term investment horizon and must generally be governed by a firm legal framework and stringent business plan.

For a business such as Leeds United, which requires investment and stabilisation, not to mention having to deal with the vagaries of the performance of a football team (whose performance can to a reasonable extent be governed by chance), it can be difficult to maintain a cohesive vision amongst all parties, especially when some/all of these parties who are investment banks and therefore might have different investment targets, hold periods and ability to fund further investment on an ongoing basis. As a Leeds fan, any attempt to stitch together a consortium of multiple parties of a similar ilk would particularly worry me, especially when it is unclear in terms of their ability to provide long-term sustainable investment into the club.

To my mind, the following is clear:

1. Leeds United today is a club for sale and one which requires further investment. This breeds uncertainty and will make it difficult to attract both the manager or players required to mount a successful promotion bid.
2. GFH need to sell down their stake (either fully or partially) over the short to medium term.
3. Given how this season has turned out, and the need to attract a new manager with a proven track record to replace Neil Warnock, a sustainable consortium/pool of investors will need to be in place before the end of the season in order to maximise the opportunity of next season.

I still retain some faith that GFH will take the necessary steps to ensure that the club is put on a sustainable footing, and that much of the work they have done to date has improved things compared to the Bates era, however the uncertainty over the club's ownership is unsustainable with the investment of IIB doing little to improve the status quo. The longer it is allowed to drag on, the more damage will be done to our prospects for next season and even from GFH's perspective, this is surely untenable.