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Commons Select Committee calls for investigation into Leeds United

Commons Select Committee calls for investigation into Leeds United

The House of Commons select committee on Culture Media and Sport has finally reported on Football Governance. The wide ranging report has made a number of recommendations  including reform of the FA institutions,  the football creditors rule, payments to players and agents, but above the vexed subject of ownership of football clubs.   A hard hitting call for a thorough investigation in the affairs Leeds United is made, following hearing evidence from Chairman Ken Bates.

The report begins by a review of the governing bodies of English Football, calling for urgent reform of the FA Board, the FA Council  and other committees. It then turns to look at debt in the game, concluding that much of the blame lies with players and their agents who should be subject to tighter regulation.

Other areas that have come under the spotlight include the ‘Football Creditors Rule’ that encourages ‘financial risk taking’ and is clearly not liked by the HMRC who have recently taken a more pro active role in director disqualification cases where clubs have gone into administration.  Foreign ownership is mentioned in passing, with a comment that a more ‘robust criteria’ should be introduced for those owners from abroad who wish to own a club in English competitions.

The ‘meat’ of the report however relates to the question of transparency of club ownership, and will no doubt lift the spirits of the long suffering supporters of Leeds United, the team that made such a spectacular fall from grace in the early 2000’s, that such a financial meltdown is known as ‘doing a Leeds United’. Long gone are the days when the directors of the club seemed to have the best interests of the club and its supporters at heart.

Fans at Leeds witnessed relegation the Premier League, followed by the sale of the starts for knock down values, before the club was ‘rescued’ by Ken Bates in January 2005. Under Bates, the club was again relegated again and then went into administration in unusual circumstances.

Although the club has returned to the Championship, many fans still question the motives of the Chairman who is spending freely on improvements to the ground, whilst failing to support the team for reasons that are not apparent. Other questions were asked as to the opaque ownership of both the ground and the newly formed Leeds United Football Club Limited, which were later clarified. Demonstrators both at home and away have been branded ‘morons’ by Bates who seems disinterested in any issue that has been raised that questions his intentions or motives.

The Report criticises the FA, the Premier League and the Football League, as spending too long behind the curve on ownership matters, and accusing them of allowing some startlingly poor business practices to occur and tolerating an unacceptably low level of transparency.

There is no more blatant an example of lack of transparency than the recent ownership history of Leeds United, and we urge the FA to demonstrate its new resolve by conducting a thorough investigation and if necessary, to seek the assistance of Her Majesty’s Revenue and Customs’

The Main body of the report deals with the evidence that was heard in respect of Ken Bates and Leeds United.

188.  We were also concerned as to why, until very recently, the Football League appeared content to allow a club—Leeds United—to play in its competition without the Football League or the FA or Leeds United fans knowing who owned the club. We invited Ken Bates, Chairman of Leeds United, to give evidence but he said he was unable to attend through illness

His Chief Executive, Shaun Harvey, told us that Leeds United was owned by discretionary trusts, but that neither he nor, to his knowledge, Ken Bates, knew who they were. Leeds United subsequently announced that Ken Bates had bought the club from the discretionary trusts for an undisclosed fee. This announcement, however, raised further governance concerns, as it was not at all clear why the trusts should sell a financially-sound, upwardly-mobile club without at least seeking alternative bids to find the best price. The manner of the sale raises concerns, which cannot be substantiated or disproven given the lack of transparency, that Ken Bates, who took the club into administration, was a participant in the discretionary trusts who took the club out of administration.

Further suggestions in the report include the increase in supporter involvement in the running of football. In other areas such as sustainability, economists are devising new shareholder models to give a voice to interested parties other than the investors in a company.

There is a strong case to be made that those who dedicate themselves to their football clubs, often for many years and great personal expense should have an equal if not superior say in the financial affairs of their club. Perhaps the time has arrived when accountability of the board will become a priority. No doubt a properly funded and determined investigation into affairs at Leeds would go a long way to assuage the concerns of the majority of supporters

Click here to read the full report of the select committee.

For any advice and assistance for issues like these please do call Jeremy on 0844 2722322 or submit a comment below. Jeremy will come back to you at the earliest convenience.

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