Skip to main content

Will Leeds takeover go ahead?

Running Leeds has given  Andrea Radrizzani status beyond anything he had known before. Prior to investing in 2017, he was an entrepreneur with little or no profile outside niche media circles. He liked the exposure and he liked the attention but, as predicted in certain quarters, he was missing from the stands for the game against Tottenham, conspicuously absent as Leeds gave up the ghost and went down.

Previously, his £45million investment in Leeds had risen tenfold to a level where the club were valued at half a billion pounds but at full time this afternoon, Premier League status was gone and so was that price tag. To all intents and purposes, the Radrizzani project has run its course. Leeds are back where they started.

From here, though, everything that happens will be shaped by Radrizzani’s next move. The offer of a takeover by minority partner 49ers Enterprises is still on the table, albeit at a significantly lower valuation. 

From the very beginning, though, Leeds needed Radrizzani’s cash. They were a loss-making club and at the height of their run to promotion, they were relying on him to plough in between £1million and £1.5million a month to cover operating costs.   Between 2019 and the summer of 2022, the club were almost wholly reliant on shareholder cash and shareholder loans to cover shortfalls. 

Around 18 months ago, people close to Radrizzani began asking the question of how much further he could feasibly take the club. He was wealthy, undoubtedly, but not at the obscene level needed to drive a Premier League team on year after year. The division required an inordinate amount of cash and, though Radrizzani had talked publicly about future growth — a new city-centre training ground, major redevelopment of Elland Road, staying on as majority shareholder until Leeds qualified for Europe — their struggle through the 2021-22 season cast doubt over the likelihood of any of that happening.

Criticism from the fanbase of him and Leeds’ stagnation grew and Radrizzani, a regular Twitter user, was acutely aware of it, keen for greater popularity or validation. 

In terms of annual revenue, Leeds were consistently in a healthy position. In the 2021-22 financial year, their turnover reached a record £189million. But while that money covered a lot of their day-to-day costs, the view internally was that a minimum of £30m to £40m was needed via additional shareholder injections to allow for sufficient transfer activity. It was that which encouraged the feeling that, if Leeds were to progress, Radrizzani would have to relinquish them to 49ers Enterprises. The US fund, which was pulling together investors in the States, had the capacity to plough in more cash. And overall losses of £34million in the 2021-22 season showed how much a Premier League outfit swallowed.

It is five years since 49ers Enterprises first came on the scene at Leeds, making an initial investment in 2018, but its intentions became more serious in 2021 when it upped its stake to 44 per cent and agreed an option to buy Radrizzani out in full, with a deadline of January 2024. Though the group sought complete control, it was mindful of not disrespecting Radrizzani or being seen to push him out prematurely. Then, in the early part of this season, 49ers Enterprises made it clear that it was ready to do the deal sooner. But it was aware of financial liabilities waiting down the line, some comprising of future payments owed for transfers, and it was not willing to pay quite as much as had been agreed in the 2024 option, one which valued Leeds at just under £500million.

The spectre of relegation, and the realisation that it was probably coming this time, prompted 49ers Enterprises to initiate fresh discussions with Radrizzani about buying the club regardless of league status. Those negotiations have been ongoing for the past few weeks, urgent and tense. As time went on, the relationship between the two sides became more and more delicate and the US group is now clear on two things: that it will only buy at what it considers to be a fair price and that it wants Radrizzani to exit the building, as opposed to him continuing in an active, operational role as a minority stakeholder.

Additional challenges for 49ers Enterprises remain, even at this late stage. Not all of the investors behind its project are enthusiastic about buying an EFL side. The fund was put together on the basis of Leeds being a Premier League entity. A major call with the investment group took place this Thursday gone, with 49ers Enterprises still determined to bring a takeover to fruition in the worst-case scenario of relegation. But Radrizzani holds many of the cards, with the prerogative to stick to the price he wants or to plough on and try to get Leeds promoted again.

A takeover of Sampdoria appears to hinge on Radrizzani selling Leeds, though, and progress on that front might be the tipping point for him and 49ers Enterprises to resolve and close out their own discussions. Yesterday, Sampdoria issued a statement announcing that the bid Radrizzani is part of had secured exclusivity to complete a deal. 

As rising dissent rang around Elland Road for the final time this season, Radrizzani must have been asking himself if the game at Leeds is up. In football club ownership, that question comes to them all.

 

Comments

Popular posts from this blog

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

A poor financial record, but new hope at Everton

I recently saw an amusing video online in which a group of Everton fans were rebuked in jest for being hopeful.  Football fans in general tend to swing between excessive optimism and excessive pessimism, but for many it seems that moaning is in their bloodstream (Spurs fans probably take the trophy).  However, Everton fans have had plenty to moan about on and off the pitch.   Let’s hope that a new era is about to begin for this grand old club. Everton’s 2023/24 financial results covered a fairly momentous season, when they ended up 15th in the Premier League, though they would finished three places higher if they had not received an 8-point deduction for breaching the Premier League’s Profitability and Sustainability Regulations (PSR). It was a worrying time for Everton fans, as the club faced a “perfect storm” of issues, including large financial losses, an ever increasing debt burden, a challenging stadium build and the tortuous sale of the club. There were eve...