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Why hasn’t a serious investor taken a punt on Leeds?


Many  former Premier League clubs have staged astonishing falls from grace in recent years – Charlton, Portsmouth and Leicester to name a few – but the traditional case study of rapid decline down the football leagues still remains Leeds United.

The Yorkshire club went from a Champions League semi-final to League 1 in less than a decade, with financial implosion, administration and a host of managers along the way, as well as former Chelsea owner Ken Bates overseeing repetitive stagnation in the Championship.

Things are looking brighter for the Whites nowadays however, with new investors from the Middle-East taking over in December, Bates relieved of his duties last week over apparent wrongful expenses claims, a new manager in Brian McDermott and the recent hope of buying back Elland Road, after having to sell it on a lease-back deal in 2004 due to financial insecurity.

However, the club is still a shadow of its former self; gunning for promotion under a new wave of optimism but nothing guaranteed. It begs the question, why hasn’t a serious investor – a multi-millionaire or even billionaire of the Roman Abramovich mould – ever taken a punt on a club with a prestigious history, strong fan base and high-standard facilities?

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There is certainly room for scope at Elland Road, especially if the finance of a wealthy individual with too much money to spend were to help push them back into the top flight. As previously mentioned, Leeds have been able to maintain their significant supporter base and high attendance despite their rapid decline, with the stadium’s maximum capacity at 37,914, and a 30,000 turnout expected for their first home game of the season against Brighton this weekend.

The attendance figures outweigh those of a number of Premier League clubs from last season, including Fulham, Norwich, QPR, West Brom and Wigan. Maxing out Elland Road with the promise of Premiership football for budding pundits would undoubtedly produce a steady supply of match day revenue to appease any potential investor. Furthermore, there is the potential to expand the stadium – plans were made in 2009 to increase the capacity to over 50,000 if England’s bid for the 2018 World Cup was successful.

Similarly, financially, the club is still in a precarious position, but Leeds have maintained their healthy youth system throughout. Currently, Tom Lees and Sam Byram, aged 22 and 19 respectively, hold down regular places in the first team, and were two of United’s top performers last term. It’s another attractive prospect for potential investors, with no fear of constantly relying upon inward transfers to source new players as we have seen at Manchester City since Sheik Mansour’s takeover in 2008, whilst Chelsea in comparison, benefitted greatly from John Terry rising through the ranks of the youth set-up.

Furthermore, Leeds’ prestigious past should not be ignored or underestimated. Granted, the last decade has been one of the darkest eras of the club’s history, but previously, they were an established top flight outfit. Since 1921, the majority of their football has been played in the English first tier, and on the continental stage they’re also well-recognised, lifting the European Cup in 1975 and regularly featuring in the modern competitions of the UEFA Cup and the Champions League before their fall from grace. It’s the kind of prestigious history that can be utilised effectively to attract talent from abroad, as well as in England, where there are still strong memories of Leeds being a Premier League institution.

But there are also plenty of reasons why an investor could be put off by the prospect of acquiring Leeds United too. Part of the attraction of foreign investors to Chelsea and Manchester City alike was the added commercial revenue that could be provided by the location of both clubs. London and Manchester are the two biggest cities in the UK, with huge populations and footfalls – 9.8million and 2.5million populations respectively – whilst West Yorkshire lags some way behind, with 1.7million between Leeds, Bradford, Wakefield and Huddlesfield, and a much lesser population density to boot.

Stamford Bridge in particular, is situated in an incredibly affluent district of London, and Roman Abramovich has taken full advantage by expanding Chelsea’s stadium into a complex that includes cinemas, restaurants and bars, and it would be difficult to replicate such a business enterprise to a similar degree in a city with a fraction of London’s population.

Similarly, the club’s debts still remain a big issue. Roman Abramovich cleared the slate for the Blues in 2003, but at that point, Chelsea were a lot closer to the unprecidented revenues of European football and Premier League titles than Leeds are in their current situation, and at the moment, the Championship side’s economic model is unsustainable, despite the new investors arriving around Christmas time.

According to Spoughts.Com, Leeds City Holdings closed with a debt increase from £1.3million to £5million, and in 2012, Leeds United Football Club lost £2.2million before player sales. Ken Bates’ tactic to keep the club’s head above water was to sell the first team’s stars year upon year, and although GFH Capital have alleviated the financial strain, recently selling a 10% share in the club for further profit, it’s hard to see where a more viable solution to improve United’s cash flow problems without immediate promotion.

Perhaps most importantly however, is the fact that the Championship is the most volatile and unpredictable division within the realms of the English football league. Leicester City have spent big year upon year to bring the Championship’s top talents to the King Power stadium, but they are still yet to bring their prolonged absence from the Premiership to an end.

Similarly, clubs like Reading, Burnley, Crystal Palace and Hull have managed promotion on a shoe-string, with more impetus on the ability of the manager and the attitude of the players rather than actual quality, whilst QPR, who were taken over in 2007 by racing tycoons Flavio  Briatore and Bernie Ecclestone, didn’t make it into the top flight until 2011.

So maybe there’s more risk than meets the eye in investing in what is traditionally one of England’s most successful clubs, but perhaps it’s for the best. Big-money investment hasn’t served QPR too well over the past few years, although I’m sure plenty of Leeds fans would relish the prospect of a Roman Abramovich or Sheik Mansour arriving at Elland Road.

Then again, you should always be careful what you wish for. A recent article in the Yorkshire Evening Post speculated that energy-drinks giant Red Bull were considering investing in the club. But I can’t imagine too many fans being happy if the company insisted on re-branding as they have with their take-over of Salzburg.

Formerly known as SV Austria Salzburg, the Austrian Bundesliga outfit are now called FC Red Bull Salzburg, don a badge with two red bulls on it, play their games in the Red Bull arena and wear kits consisting of the Red Bull colours (mainly red, white, blue and yellow).

Sometimes in football, there are things more important than money, winning, or the Premier League.

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Article title: Why hasn’t a serious investor taken a punt on Leeds?

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