Writer: Strachan's Shinpad
Date:Wednesday February 27 2008
A Leeds fan that frequents the message board of the 606 Rebels, Strachan's Shinpad, has a bit of a rant about the whole Leeds United 15 point penalty saga and just why non-Leeds fans should stop laughing and take note!
Used with permission of the mysterious Strachan’s Shinpad with thanks!
Everybody (outside Leeds) painted Ken Bates as the evil genius, what he did in sending Leeds into administration at the end of last season saw the club all but mathematically relegated in the penultimate game of the season. At that point he had reduced the clubs debts from a headline £130,000,000 to around £40M. Compare that to clubs previously entering administration that just discharged their debt with little active effort towards paying off their debts, the obvious example being Leicester City who got a free stadium for going into administration. In comparison Leeds sold Elland Road and their state of the art training complex at Thorp Arch just to paper over the cracks.
In going into administration the FL docked Leeds 10 points during the 45th league game of the season (as opposed to the roughly halfway through that Luton and Bournemouth have cynically done). That should have been that, but because the Taxman decided that Leeds was a powerful scalp to mess with, they decided to object to the deal forged by the (independent) administrator appointed to sort out the affairs of the club. The best deal on the table was one by the original owner of the club (not the original operating company), so Her Majesty's Revenue and Customs decided they would test the mettle of the Football League by threatening Leeds United (interestingly not their administrator who was in charge of affairs at the time) with court action to recover debts to the taxman, who under current rules is not a football creditor and therefore only entitled to the percentage of what they are owed that is offered by the successful buyer. HMRC decided to have a court hearing deliberately set after the season started.
Without a Company Voluntary Agreement Leeds United would be unable to have the Golden Share that is required to take part in Football League competitions, but a CVA could not be issued until HMRC dropped their claim. Remember that at this point the Administrator (KPMG) were in charge of financial affairs at Leeds United, and that is who was selling the club back to the original owner to the fierce objection of HMRC despite the fact that it was the best deal for the creditors.
Given the impasse offered by both HMRC and the FL, KPMG put the club up for sale again and once again the Ken Bates led bid was the best by a country mile, paying non football creditors 35% of their debt, a 3500% increase on the first bid.
HMRC continued with their court bid, and the Football League decided that in the absence of a CVA (impossible whilst the threat of legal action by HMRC was present) decided to implement the 'special circumstances' option and docked Leeds another 15 points - 25 points overall, or put another way 2.5 times the maximum penalty ever given before. Remember that Leeds at this point had paid over £90m of the debt they had owed two years previously.
Once this had happened HMRC dropped their legal action - did they think they would lose, or had they been undone by the Football League's use of special circumstances rule? Who knows, but the one thing that is certain is that Leeds United were just pawns in a game of brinksmanship between the Football League and HMRC.
Leeds appealed against the 15 point deduction, and the Football League allowed the issue to be voted upon by it's members. Now of those 71 clubs, remember that 23 of them will be direct competitors of Leeds United, and another half dozen or so will be geographically close, and the demise of a large club might be to their benefit. Unsurprisingly the turkeys voted against Christmas, and Leeds started the season on -15 points.
The appeal - which interestingly the Football League effectively outlawed in August (a clear case of duress if I ever saw it) - is now upon us. The facts are simple. HMRC's grudge should have been against the Administrator, they were just seeking to make a point, and the Football League were derelict in allowing the member clubs to make a ruling on an appeal - a move without precedent in the long history of the League. Strange how the clubs have never been offered a free vote on other issues such as all-seater stadia amongst other things.
The facts are that Ken Bates is a cleverer businessman than the HMRC or the FL will ever be and he caught them with their trousers down. They are now seeking to cover their own embarrassment.
The current chairman of the Football League is Sir Brian Mawhinney. Who he? I hear you say, well seeing as how you ask, he was the person 'parachuted' into troubleshooting jobs in the NHS and the Railways by the last Conservative Government. He was also Chairman of the Conservative Party when they suffered a landslide defeat against Labour in 1997.
Clearly a high calibre individual. I'm not surprised that the Football League is in the state it is.
Thanks again to Strachan’s Shinpad, who really should be on Vital and not 606rebals for that brilliant rant!
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Date:Wednesday February 27 2008
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