Contrast between Hereford United and Leeds United

Two clubs in the same League. One probably punching above its weight, the other having a short break from a higher division. One with a turnover approaching £2M, the other many millions more. One owned by hundreds of shareholders, the other whose ownership is much more complex. Just a few of the differences between Hereford United and Leeds United.

Go back a few years and remember when Hereford United went into a CVA. It was straight forward. The Bulls were virtually bust and a CVA was probably the only way to keep the club alive. By the end of of the CVA, creditors had received a reasonable proportion of what they were owed.

Contrast Leeds United. When they went into a CVA, their creditors received just 10p in the pound. The Inland Revenue missed out on £7M.

So why the difference? A recent court case in Jersey has made one journalist probe into what's going on at Leeds

The Guardian's David Conn has been writing on football business matters for some years and this morning has written a long article about Leeds United. It's a very complicated story but in it Conn has suggested that maybe the whole truth has not come out about how Ken Bates bought the club from the administrators for just £1.8M

Leeds United is currently controlled by a company known as Forward Sports Fund which is registered in the Cayman Islands and administered in Switzerland. 77 year old Chairman Bates lives in the tax haven of Monaco.

However Forward Sports Fund was originally owned by Astor Investments, a trust fund based in Guernsey with an address in Tortola, the British Virgin Islands.

In May 2007, after Bates had put Leeds into administration (CVA) with debts of £38m, Astor wrote off £17.6M owed to it by the club, as long as Forward Sports Fund bought the club back and Bates stayed on as chairman.

No other bidders could compete with Bates because of the Astor agreement so he, through the Forward company, bought the club from the administrators KPMG for just £1.8M. With little debt Bates was able to produce a profit of £4.5M last year.

At the Jersey Court Case a letter from Leeds' solicitors was read out about the Forward Sports Fund which stated: "One share was initially held by Astor Investment Holdings Limited, a unit trust fund based in Guernsey. Astor Investments then instructed professional agents to incorporate Forward Sports Fund, and Astor Investments then proceeded to loan money to Forward Sports Fund to undertake its investment in Leeds."

The question that appears unanswered is why Astor Investments were prepared to write off £17.6M owing to it by Leeds. Lib Dem MP Phil Willis wants a government enquiry.

"We were told there had been a connection but I am dismayed to find that Astor actually owned the club originally," Willis said.

"I believe KPMG should have made further investigations at the time to find out who the owners were. As so much tax was left unpaid, the Treasury should investigate. Football supporters also have the right to know who owns their clubs, and the Premier and Football Leagues should make sure that all their clubs have to fully disclose who is behind them."

Much of what Conn has revealed stems from this court case in Jersey which is about who a company called Admatch which is owned by a Jersey resident called Robert Weston. Leeds claim Weston owes them £190,400. Weston claims he is owed £1.43M by another Leeds company which went bust in 2006.

During the case the court ordered that Leeds should disclose the ultimate owners of several of the offshore companies.

"The court made an order and your client has not complied with it," deputy baliff Michael Birt said to Leeds' solicitors. "You are not compliant with who the beneficial owner is. We will go through the chain of companies and see who is the beneficial owner," he ordered. "If it gets to the stage where some percentage of the company up the chain is owned by another company where you do not know who the owners are, then someone must go on oath and say so."

Whilst some information has been forth-coming from Leeds, Weston feels there should be more. How much more remains to be seen.

Back to Hereford United, a company registered at Cardiff and owned by shareholders large and small. All of whom are on a shareholders list which can be seen by supporters. The club holds its AGM in three weeks time and it will show a profit obtained acheived by hard work both on and off the pitch. And the club plays in the same league as Leeds United.

David Conn's article can be found at: http://www.guardian.co.uk/football/blog/2009/mar/04/leeds-united-ken-bates

---