Leeds United & The Lottery Of The Owners & Directors Test

2 By Ian  |   The Ball  |   March 24, 2014  |     63

So there, then, is the decision of the Football League. Massimo Cellino has been adjudged by the Football League to have failed its Owners & Directors Test on account of his conviction under Italian law over the non-payment of tax for a boat that he owned. The League’s statement on the matter was clear enough to leave little quesion in the minds of those that have been watching this situation over the last few weeks of the reasoning behind their decision in spite of the obfuscation of the matter brought about by Cellino’s legal team last week, and it’s worth reprinting that statement in full in order to understand the reasoning behind the decision.

At its meeting yesterday evening, the board of the Football League considered the eligibility of Massimo Cellino. The board considered detailed legal advice with regard to the application of its regulations within the context of a decision made under Italian law.

Mr Cellino was recently found guilty beyond reasonable doubt by a court in Sardinia of an offence under Italian tax legislation relating to the non-payment of import duties on a boat. This resulted in a fine of €600,000, an order for the payment of trial costs and the confiscation of the boat in question.

Having fully considered the matter, the board agreed unanimously that the decision of the Italian court does constitute a disqualifying condition under its owners’ and directors’ test. The relevant disqualifying condition being that Massimo Cellino has been convicted of an offence involving acts that would reasonably be considered to be dishonest.

In line with Football League regulations, Massimo Cellino is entitled to appeal against the decision within 14 days. In such circumstances, the League would seek to expedite the process to deliver certainty to all parties in the shortest possible timeframe.

The decision made by the League was unanimous and its allusion to the fact that Cellino was “recently found guilty beyond reasonable doubt by a court in Sardinia of an offence under Italian tax legislation” hinted that the arguments put over by Cellino’s supporters that this was a civil matter and that he shouldn’t be considered had been mulled over and dismissed. But which way next for Leeds United? The future of the club has, with this decision, yet again been tossed back into limbo, but the club’s immediate response to the League’s statement indicates that GFH Capital, the current incumbents of this most poisoned of chalices, aren’t conceding on Cellino just yet:

The club and its shareholders are disappointed at the decision of the Football League not to approve Massimo Cellino as a director of Leeds United FC. However, the Board and Executive Management of the club, will continue discussions with the Football League and Eleonora Sport to find a solution that is suitable to all parties. Our shareholders continue to support the club directly or through additional investments as has always been the case. We would like to reassure the fans of the continuity of our great club.

Ultimately, though, whilst the club can “continue discussions with the Football League and Eleonora Sport to find a solution that is suitable to all parties”, just as Cellino can himself appeal the decision, unless something crops up in the next couple of weeks to throw a spanner into the works, there would, on the surface at least, be little realistic prospect of success in any appeal. The Football League has made its decision based on all available evidence, and this is likely to have included the contortions of legalese put forward by Cellino’s legal team last week. Such appeals do not ordinarily have a particularly prospect of success, but we shall see.

Of course, the small matter of what happens to Leeds United next is that which will now be vexing supporters of the club more than anything else. Cellino may well decide to appeal the decision through the Football League, but it is difficult to see where success in doing so might come from. His alternative, of course, would be success through the appeal courts in Italy, but, while the chances of a successful appeal are statistically speaking considerably higher in Italy than they might be in this country, it is difficult to see any successful appeal not taking months to complete, and this is significant because Leeds United has been continuing to haemorrhage money at an alarming rate since GFH took ownership of the club. Cellino has already put about £5m worth of loans into the club this season, which would seem to indicate that GFH either has no further appetite or ability to fund the club’s continuing financial losses. Ultimately, there seem to be five options open to the owners of the club at this point in time.

  1. Support Cellino through the appeal process to the Football League, keep funding the losses and hope that, at some point later in the year, he successfully appeals his case in Italy and then passes the Owners & Directors Test. Possible, though the amount of time that any successful appeal could be lengthy with no guarantees of success at its end, and all the time somebody will need to keep funding those losses.
  2. Return to previous alternative bidders – one headed by Andrew Flowers, chief executive Enterprise Insurance, who withdrew from it all at the end of January after not particularly subtle signs from the owners of the club that they weren’t particularly interested in dealing with him any more, and the Together Leeds group, which is fronted by Irishman Mike Farnan and which now has Flowers onboard, but which had an offer to buy the club rejected towards the end of last year – and see if they might be persuaded to resume their interest in buying the club. Possible, though whether this will be the right answer for the supporters would obviously depend on the exact constitution of any revised bid. And that’s before we move onto the subject of how much bad blood has been spilled over the last few weeks following GFH’s treatment of the Flowers consortium.
  3. Decide that, actually, losing £1m a month isn’t so bad after all and stay in charge of it themselves, finding the funding to back a bid for promotion next season. Unlikely, considering the owners’ reticence to keep funding losses themselves this season, although with sensible investment the possibility of making a killing through getting the club back into the Premier League continues to exist. Few believe that the current owners have the wherewithal to see this through. 
  4. Place the club into administration again in order to ensure that any new owners were handed a debt-free club and a clean state. Probably unlikely as things stand, as the money put in by GFH and Cellino would most likely be lost, with the owners of the club lsing control of who the new owners might be, but would become a more realistic outcome in the event that new owners can’t be reasonably quickly found and the club continues to leak money from every orifice.
  5. Wind everything back and put the club back up for sale to all bidders. It’s difficult to imagine that GFH wouldn’t even countenance listening to anybody who made them an offer for the club that would be in keeping with their expected return, but the extent to which the owners seems to be continuing to support Cellino – not to mention the amount of money that they would be receiving plus retaining share-holding, which would become very valuable in the event of the club getting back into the Premier League – doesn’t give a great deal of indication of anything other than that no-one within GFH has given much thought to anybody other than Cellino’s group buying the club. And again, this would most likely be time-consuming.

So, in other words, this evening nobody knows what the future of Leeds United is going to be, whether in the short, medium or long-term. But whilst the reflex reaction to such a verdict from the Football League may well be to offer a firm shake of the hand on account of them actually having drawn a line in the sand for once, any such gratitude should be tempered with caution. We have, in recent years, seen repeated failures of the various tests introduced to try and safeguard clubs in this respect and the time has surely come for these rules to be further tightened. The Football League failed over Carson Yeung at Birmingham City, and that club may yet feel the chill of the jetstream of that particular debacle over the coming months.

The man who did more than most to initiate the chain of events that led Leeds United to where it is today, Peter Ridsdale, continues to act at Preston North End in spite of having been barred from acting as a company director for seven years because he is – stifle your giggles, readers – the club’s “Chairman Of Football” rather than listed as a director of the club with Companies House. He was the chairman of Cardiff City at the time of the offences that led to this disqualification. It is consistencies of this nature which only add to the frustration of supporters who, in all honesty, have a full entitlement to see their clubs being run by people for whom there should be no grey area regarding whether they or fit or proper people to run a business. The Football League may well be congratulating itself on the decision it announced this morning. If it doesn’t want to continue to be the target of whataboutery on this subject for the foreseeable future, it needs to tighten these rules once and for all.

For the long-suffering supporters of Leeds United, meanwhile, the uncertainty continues, with no end in sight.

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Ian

Ian began writing Twohundredpercent in May 2006. He lives in Brighton. He has also written for, amongst others, Pitch Invasion, FC Business Magazine, The Score, When Saturday Comes, Stand Against Modern Football and The Football Supporter. Ian was the first winner of the Socrates Award For Not Being Dead Yet at the 2010 NOPA awards for football bloggers.

Comments
  • March 25, 2014 at 9:13 am

    Robson Parker

    I find it funny how football clubs are now becoming businesses. Now I don’t know an awful lot about business (being 17 can you hardly blame me) but I am sure every business needs a short, medium and long term goal? If we are trying to sell we need people working on the takeover behind closed doors and people working with the rest of the staff on the results on the pitch and with the rest of the staff so the club runs fluently. It’s a big shambles to see no care or direction in the club.

  • March 27, 2014 at 10:03 am

    Kevin Rye

    Well put, Robson. The term ‘business’ gets thrown around by the owners and directors of football clubs, often without them ever realising what the word even means. Football club owners and directors, and regulation, needs to start to ensure that clubs operate with a long-term view in mind. Most businesses would go kaput if they behaved like clubs do.

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