Leeds United Administration

[Loki]

Can any of the Leeds fans amongst us shed any light on what the current state of play is with this administration issue. I notice Roberto Martinez has been crying fowl this morning saying if they get the points deduction overhauled then it could upset the apple cart for the teams in automatic promotion places. Also it would set a precedent for teams like Luton & Bournemouth who will already be docked points for the start of next season.

On the other side, Leeds are arguing it was unlawful for the Football League to impose the sanctions in the first place. Obviously this is a very contentious and emotive subject for the fans effected but what are the facts surrounding this ?

 

[Lead_Head]

I won't be impressed in the slightest if they get any points back.

I'm sure if they did the football league would expect a load of legal action being taken against them from other football clubs affected for promotion to the Championship.

It's all about the massive showdown between Forest v Leeds at Wembley.

 

[Gilly]

There are many 'facts' been reported about the goings on.

Basically Leeds entered administration before the end of last season when they'd almost been relegated already, and this meant a points deduction of 10. This is fact, and is completely above board.

After this the details start to get murky. At many points the league have released contrasting information to details released by KPMG (the administrators acting on behalf of Leeds United Plc) and those released by Leeds United themselves.

It should be remembered that any problems after the club were placed into administration should be laid at the feet of the administrators, not the club itself. The club went into administration with £35m of debt. This was done before the it was mathematically impossible for the club to survive in the Championship - but by rights could have been done any point up until the last day of the season. This has clear precedent. This left a sour taste in the mouths of many whether through dislike of Ken Bates or of Leeds United as an entity, but other clubs have managed to do this so as to not have the 10 point deduction the following season. Any club in the world would do this in the same situation. Any director not backing this needs his head examined, the fans would revolt if it was not done this way.

The administrators agreed to sell the club back to Ken Bates under the agreement that all football creditors would have to be paid in full (as required under Football League regulations) and the offer to non-footballing creditors was 1p in the £. This was the best offer on the table at the time. It was rebuffed after challenge from (IIRC) the largest non-footballing creditor and an improved offer of around 8p in the £ was put on the table.

At this point the CVA was put together and voted on (the Football League voted against Leeds United's CVA, though as a footballing creditor they would be paid in full). The vote went against Leeds. A further attempt at a CVA was made and this was legally challenged by HMRC, the largest non-footballing creditor owed in excess of £7m. The date for the hearing following the legal challenge was set at a point after the start of the season.

At this point the golden share was granted to Leeds, allowing them to enter the league for the coming season. This was under the "exceptional circumstances" clause in the Football League rules. Part of this agreement (which was the only way Leeds united could continue to exist) stated that Leeds United would not be allowed to take legal action against anything the Football League did in terms of sanctions against Leeds. The Football League objected to the fact that Ken Bates had retained control outside a CVA, meaning that creditors hadn't had a chance to vote on the offer. KPMG had made this decision as they could not see any way for a CVA to be successful given the previous behavior of the footballing and non-footballing creditors. The administrators took this decision, not Leeds United.

After very protracted talks the League did provide the golden share to Leeds, but levied a 15 point penalty against them for exiting administration without a CVA (note: the League had voted against Leeds' CVA, the administrators had taken the decision to bring Leeds out of administration without a CVA and sell to Ken Bates (the best offer on the table)) and Leeds started the season on minus 15 points.

2 hours before the deadline for the aforementioned hearing HMRC decided to drop their legal challenge.

HMRC challenged the CVA because they don't agree with Football League regulations. It was nothing to do with Leeds United nor the position they were in, and this discord has been going on for far longer than Leeds' money troubles. HMRC would have behaved in exactly the same way whichever big club it had been in trouble. That it has brought the discord to light is enough for them. They never intended on seeing through their legal challenge because it was bound to fail. There is legal precedent that football creditors get paid in full where non-footballing creditors do not. This is the thing that HMRC do not like and the reason for the challenge.

Anyone speaking against the return of all the points to Leeds either doesn't understand the situation or has something to gain from it.

I won't even bother going into the fact that Leeds' direct competitors got to vote on their punishment!

The 15 point deduction is unfathomable, the ban on appeals is unlawful, the first appeal was heard by the person that had initially decided on the punishment (hardly independent), an independent arbitration request was turned down by the League and in the end Leeds had no choice but to go to the high court. This was the only way independent arbitration could be achieved.

 

[Loki]

Anyone speaking against the return of all the points to Leeds either doesn't understand the situation or has something to gain from it.

I won't even bother going into the fact that Leeds' direct competitors got to vote on their punishment!

Thats what I couldn't understand. One report claimed 70% of the teams upheld the points deduction. So in essence it was a Kangaroo court

 

[Gilly]

Thats what I couldn't understand. One report claimed 70% of the teams upheld the points deduction. So in essence it was a Kangaroo court

Almost. A kangaroo court at least pretends to be legal in essence.

 

[Weebull]

Basically Leeds entered administration before the end of last season when they'd almost been relegated already, and this meant a points deduction of 10. This is fact, and is completely above board.

Almost? You applied almost immediately after the last game, when Bates knew it would make no difference to your status. Even if the papers had been prepared and filed before it, you were 3 points off safety with a 9 goal deficit to make up, so it was all but confirmed.

Regardless of whether it's "above board" or not, applying for administration almost immediately after relegation has been confirmed, but before the season is classed as technically over, in order to dodge the punishment, is cynical to the extreme. If results had gone Leeds way at the end of the season, you could be sure Bates would have at least waited until the beginning of the new season before declaring administration (if of course, Leeds would have even needed it if they were still getting Championship-level money and TV funds).

The whole point of the ten points deduction is that it's supposed to penalise the club in some way. By applying when they did, regardless of the legality of it, Leeds avoided it actually punishing them in any way.

That said, the 15 points this season isn't actually directly connected to that, so that's a different matter that I won't pass comment on. I will say I think it's a silly idea for the other clubs to claim it changes their plans though. You go out to win every game, regardless of whether Leeds are above or below you in the table.

 

[seaviewuk]

Interesting write up there Gilly from a Leeds point of view.

I personally think that the FL should have fought a high court case to get a legal ruling on this issue.

I'm of the opinion that Leeds should either get all the points returned or none.

I don't believe a fudge of say '5 points back' will clear the muddy waters.

Whatever is decided, one thing is for sure, some clubs are going to get mighty upset whether it be Leeds (0 points returned) or any other club either kept out of a play off place or losing automatic promotion spots by a return of points to LUFC(07).

 

[Gilly]

Almost? You applied almost immediately after the last game, when Bates knew it would make no difference to your status. Even if the papers had been prepared and filed before it, you were 3 points off safety with a 9 goal deficit to make up, so it was all but confirmed.

As I explained though, it is allowed. Leeds can't be punished for something that is allowed and has been done by everyone before them. Leicester got a new stadium out of theirs!

It would have been foolish in the extreme to go into administration after the end of the season so the points were docked from the next season, especially given the stupidity of the Football League and the subsequent deduction.

Regardless of whether it's "above board" or not, applying for administration almost immediately after relegation has been confirmed, but before the season is classed as technically over, in order to dodge the punishment, is cynical to the extreme. If results had gone Leeds way at the end of the season, you could be sure Bates would have at least waited until the beginning of the new season before declaring administration (if of course, Leeds would have even needed it if they were still getting Championship-level money and TV funds).

Cynical? It is common sense. If your team were guaranteed for the drop (or almost, as in the Leeds situation) and took the -10 points next season rather than this, wouldn't you have something to say about it? Football is a business, no business could be allowed to run that way.

 

[Gilly]

See, most of the rubbish being spouted by other chairmen within League 1 proves that the chairmen know nothing.

Doncaster Rovers chairman John Ryan thinks it would be a sad day for football if Leeds United have their 15-point deduction overturned.

If the West Yorkshire side win their appeal against the penalty and get all the points back, they would move into an automatic promotion place, while Rovers would slip to fourth. Ryan told the BBC: "In my opinion they will fail. If they do succeed it would be an incredibly sad day for football.

"It would actually mean that promotion could be decided in a court of law.

"I've never known anything like this happen. What would happen next? Would Bournemouth, Luton, Rotherham - all the other teams that have lost ten points - take on the Football League? I think it's a nonsense."

He is speaking out because his team wouldn't have performed well enough over the course of the season to go up. The points Leeds are trying to get are not points that shouldn't have been theirs in the first place so the matter would have been settled over the course of the season. It wouldn't have needed to go to court if the Football League were capable, but given that they're not does he expect Leeds to not fight it?

What if they screw Doncaster out of 15 points next season. Would he just say 'ah well' and get on with it?

Get your own house in order Mr Ryan, Swansea have managed to out-point Leeds this season, though only just, if your side had played better you might have too.

He's even talking about the 10 points like that is what Leeds are contesting. IT IS THE UNLAWFUL 15 THEY'RE CONTESTING. They accepted their 10 points because that is what should have happened. And that should have been the end of it. The teams mentioned (Bournemouth and Rotherham in particular) would also lose another 15 points if this decision is upheld. Of course, that is only if it isn't just leeds/Bates they want to punish...

 

[Tute]

I was talking to my other half about this last night.

The point of being "promoted" and "relegated" is that the best teams get the rewards, and the worst teams get the penalties.

In terms of performance, Leeds have been the second best team in their league this season, no matter where they lie in the table. They would have been in an automatic promotion spot without the points deduction.

Now if the court decides that the punishment should be overturned, I don't think any team above Leeds have any grounds to complain. After all, if they were "better" teams than Leeds in the first place, they wouldn't be facing the possibility of being leapfrogged.

 

[Visage]

I was talking to my other half about this last night.

The point of being "promoted" and "relegated" is that the best teams get the rewards, and the worst teams get the penalties.

In terms of performance, Leeds have been the second best team in their league this season, no matter where they lie in the table. They would have been in an automatic promotion spot without the points deduction.

Now if the court decides that the punishment should be overturned, I don't think any team above Leeds have any grounds to complain. After all, if they were "better" teams than Leeds in the first place, they wouldn't be facing the possibility of being leapfrogged.

You're right...assuming there is a level playing field. If a team spends so much money getting promoted that they send themselves into administration, only to reappear in the next division up having paid off a pitifully small %age of their debts then how is that fair?

 

[Tute]

You're right...assuming there is a level playing field. If a team spends so much money getting promoted that they send themselves into administration, only to reappear in the next division up having paid off a pitifully small %age of their debts then how is that fair?

Well surely the punishment is that all the players they bought have left, and they have little or no money to replace them?

Clubs that keep their finances in order have more to spend on things like bolstering their squad and attracting the bigger players.

 

[Gilly]

You're right...assuming there is a level playing field. If a team spends so much money getting promoted that they send themselves into administration, only to reappear in the next division up having paid off a pitifully small %age of their debts then how is that fair?

Can you point out a time when this has happened? It would make it easier for me to understand where you're coming from.

 

[Visage]

Can you point out a time when this has happened? It would make it easier for me to understand where you're coming from.

I'll try and explain it better then.

If a club in a given division outspent everyone else in the league and then, having got promotion as a result, chose administration as an alternative to paying back their loans then surely it is right that such actions should merit sanctions.

 

[Visage]

Well surely the punishment is that all the players they bought have left, and they have little or no money to replace them?

Well being in a higher division brings more income....

Clubs that keep their finances in order have more to spend on things like bolstering their squad and attracting the bigger players.

In the long term, yes. But the actions of LUFC in 98ish to 2001ish were not the actions of a club whose finances were in order....

 

[Gilly]

I'll try and explain it better then.

If a club in a given division outspent everyone else in the league and then, having got promotion as a result, chose administration as an alternative to paying back their loans then surely it is right that such actions should merit sanctions.

OK, that is pretty straightforward and I agree with it fully.

I can't think of any time that has happened though.

In the long term, yes. But the actions of LUFC in 98ish to 2001ish were not the actions of a club whose finances were in order....

...and in the long term Leeds have been paying for what Ridsdale and what the lummoxes he worked with did to us ever since...

 

[Visage]

OK, that is pretty straightforward and I agree with it fully.

I can't think of any time that has happened though.

It was a response to Tute's 2.47 post - i was just making the point that it isnt always as simple as 'Team X got more points than Team Y, so should be higher in the table' - if Team X got those points in a scenario such as I've described then they certainly *shouldnt* be higher in the table.

It was merely a 'thought experiment' to refute his point.

 

[Gilly]

Fair enough

Seems like the arbitration decision is going to carry on past this weekend. Perhaps past the end of the month

 

[seaviewuk]

SWANSEA CITY have been told their promotion to the Championship cannot yet be confirmed... by the Football League.

The bombshell has been delivered by league bosses just five days after Roberto Martinez, his players and jubilant Swans’ fans celebrated going up with their 2-1 win at Gillingham.

The Swans have been warned nothing can be rubber-stamped until the fate of Leeds United is known, with the Elland Road club going to independent arbitration as they seek to have 15 points reinstated.

The Leeds hearing, expected to last three days, started in London yesterday and will have widespread ramifications if it goes the way of the Yorkshire club.

Already league bosses have stated they “cannot confirm” that Swansea have gone up.

The news was first revealed in e-mails sent to Swans fans by Patricia Brown, a customer services official for the league, which were posted on websites.

“At this stage it is not possible to confirm that Swansea City have been promoted from League One to the Championship,” she was quoted as saying.

“In view of pending proceedings, we can only confirm the league table as it currently stands.”

Just gets more farcical!

 

[Gilly]