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SBD Global/July 29, 2013/Franchises

Leeds Chair Ken Bates Claims $185K-A-Year Private Jet Deal Prompted Sacking

Leeds United chairman Ken Bates claims he was sacked due to a $185K-a-year private jet contract.
Former League Championship Leeds United Chair Ken Bates "has severed his ties with the Yorkshire club, by stepping down as president," according to the BBC. In a statement on the club website, Managing Dir David Haigh said, "Ken Bates has ceased to be president of Leeds United FC. Mr. Bates will now no longer have any role within the football club." Ex-Chelsea Owner Bates, 81, became club president on June 30, "having remained chairman after the sale to Middle East-based private equity group GFH Capital" (BBC, 7/26). In London, David Conn reported Bates said that "he was abruptly sacked from his tenure as the Leeds United president by the new owners, GFH, after he entered the club into a contract with the private aeroplane company 247 Jet that could be used to fly him to Leeds from his Monaco home." The cost of this contract to which Bates committed the Championship club, which is under financial strain, is thought to be £500,000 ($770,000) over three years. Previously Bates "has been flown by private jet." The costs of use of a private jet to the club is understood from sources who have seen the Leeds accounts to be around £120,000 ($185,000) a year. A "key sticking point with GFH is that Bates did not gain the approval of the board for the new, three-year private jet contract." Describing his treatment as "despicable," Bates said that he is considering suing. GFH said that "there were confidentiality agreements in place, and declined to comment" (GUARDIAN, 7/27). The London DAILY MAIL reported the news "is sure to please a number of Leeds' fans who spent long periods of his reign protesting at a perceived lack of investment." Leeds entered administration under his stewardship in '07 and "had to start a season in League One with a starting points tally of minus 15" (DAILY MAIL, 7/26).

ACCOUNTING GAME: In London, Conn reported in a separate piece that a deal done in Dec. '11 with a company, Lutonville Holdings Ltd., connected to Outro, by which Lutonville paid £3.2M for preference shares, "involved a regular payment by the club to Lutonville." Leeds paid a "set-up fee" of £100,000 to Lutonville for the £3.2M, which "was used to repay creditors, principally Caddick Construction." They were paid £10M by Leeds for "developing the centenary pavilion and conference and banqueting facilities in the Elland Road east stand." Under the terms of the agreement, Leeds United paid Lutonville a "monitoring fee" of £40,000 every quarter. When Bates sold Leeds to GFH in December, the £3.2M preference shares were repaid at £4M, an £800,000 profit. Leeds United's published accounts state that "Lutonville Holdings is a related party by virtue of its connection to Outro Limited." However, Bates said that Lutonville "is not in fact his company." Of the monitoring fee payment, he said that "he could not comment because he did not have the details in front of him" (GUARDIAN, 7/27).
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