Going public hurt Leeds
One of the administrators of Leeds United plc has questioned whether football clubs should list on the stock exchange, after shareholders received zero return from the sale of the club.
Link: Profile: Leeds FC chairman Gerald Krasner
Garry Wilson, along with colleague Alan Bloom from Ernst & Young and Brendan Guilfoyle from the P&A Partnership, were appointed administrators for the plc last month. They immediately sold the club to a consortium led by Gerald Krasner and including former player Peter Lorimer.
Despite the two main creditors losing most of their money, shareholders were hit the hardest in the deal.
‘Shareholders are getting nothing out of this,’ said Garry Wilson. ‘There are roughly 21,000 shareholders, the vast majority of whom are Leeds United fans. We hope they can take comfort in the fact that the club has been saved.’
Wilson, himself a Leeds United fan, went on to raise doubts over clubs going public. ‘Given what has happened to Leeds, you have got to question whether the plc is a suitable vehicle for football clubs. There is a loss of control as to who actually owns the club,’ he said.
Wilson added that apart from the very largest, football clubs are only medium-sized businesses, but have a financial structure that allows them to raise abnormal levels of debt.
‘You have also got to remember that, in a normal business, you don’t have pressure from thousands of people to spend money all the time,’ said Wilson. ‘You can’t underestimate that huge pressure.’
Wilson added that having a fan in charge of the club, namely Peter Ridsdale, exacerbated Leeds’ problems.
‘I think the judgement of a fan overruled that of the business judgement.
You always think your club is going to do better than they really are.’