GFH Capital – Feel the Burn

Where some of our cashflow is sitting right now... the east stand

It’s January and after 2 consecutive months of colds, hangovers and general malaise it was time to go to the gym yesterday. And it struck me that as my expectations of a straightforward session evaporated in coughs wheezes, and dizzy spells, that they weren’t that dissimilar to the unreasonable ones of Leeds fans’ over the transfer window.

There seems a general sense of consternation growing as we miss out on the likes of Wood, Blackstock (according to the YEP), potentially Jerome Thomas, and whomsoever the 2 missed targets were according again to Warnock.

Compare that to the announcements of 2 weeks ago, and the response to them. GFH capital made a good stick of being positive when they took over, they want to establish our club back at the “heart of the city”, to bring back a sense of positivity.

Sensibly though they want any success to be based upon sustainable business principles.

In the Yorkshire Evening Post Salem Patel spoke specifically about our “one area of weakness” being Cashflow. If you combine this with their drive to get bums back on seats with the half season ticket promotion then you can see that this is not a revolution but evolution.

Much is made of Leeds United’s relatively large turnover, certainly compared to other championship clubs. But where we fall down it appears is in terms of how much wadge we have to use. Turnover is meaningless if it’s all tied up in loans, rent and litigation bills, that’s where Leeds are now. Step forward Ken Bates..

For example let’s take the Chris Wood scenario with Leicester. Warnock (unadvisedly in my opinion) came out stating he “couldn’t compete financially with Leicester”

But this was a £1.25m transfer? Surely to god a £32m turnover business can afford that? And with some funds injected to bolster the position?

Well if your business just reported a loss, (as Leeds City Holdings did) it means a couple of things.

Firstly who’ll lend you the cash if you are overdrawn? GFH are a Bank admittedly, but they too have to justify to their shareholders how that money would be spent, and that the loan was a good one. The second effect is simply that other more important creditors, your landlord, the taxman, the local authority all need paying first, and it leaves less in the pot.

Dull dull dull I know, and it sounds like one of Bates’ programme rants. But there is an upside, hidden in the paragraph above. GFH are an investment bank, they’ve already said that they want to bring in partners to work with, and the investment model is clear. Pump in a sensible amount of money (more than the flat nil Bates seemed to each year) and the upside will be enormous. Even if the club ends up yo-yoing for a couple of years betwixt PL and Championship the parachute payments alone are worth the punt.

But what GFH are really feeling now is that acute lack of cash. The business was not as rosy as Bates often claimed. He played no small part in driving fans away, not just through providing a dire team, but in being pretty dreadful to those who still turned up, and charging them to the hilt.

Half season tickets will bring in more cash, and a positive response to these will enable GFH to convince investors that they can increase whats in the coffers. A positive cashflow also means that you dont have to sell your players to break into profit. GFH will have to address that, restructure the complex web of loans and securitisations the Bates regime tied us to via the loathsome Ticketus, to ensure our outflow of cash is improved. And at the same time meet those expectations of fans and sign good players!

As the title goes – its time for GFH to feel the burn and this rather tremendous juggling act takes place. Expectations of the fans (which are astronomical) versus the reality of turning round a business going nowhere.

Would a straight £6m of cash being injected into the transfer pot solve our problems?

Well yes it might. Signing Jerome, Tonge, Boyd, Faurlin and co would go a long way to helping us out, and it may happen yet?

But our current lack of cash due to years of investment in side projects away from football has ensnared what working capital we might have had for players, and GFH will need to use all their financial acumen to resolve it.

In the meantime perhaps it’s unfair of Leeds fans to expect a Man City style revolution. Leicester City are profligate in the extreme, and one suspects their model cannot continue much longer especially with the UFFP rules incoming in 2014. That might sound like sour grapes but we do need to keep our house in order to stave off the consequences.

I genuinely believe that for the first time in perhaps 5 years we do have some money to spend in January, within reason, and that done properly that could work well for us. But £1.25m offered over 3 years will always lose out to £1.25m right now, which is no doubt whats happened with Wood.

I think Leeds fans can expect a bright(er) future under our new ownership, but after only 2 weeks of ownership we cannot reasonably expect the likes of David Silva, Iniesta or Falcao to roll up at Elland Road. It’s why Patel has already stated the value of releasing more money into our business, be that through increasing season ticket sales, advertising, or otherwise.

As is happening now a slower process which sees fringe players finally trimmed from the squad, and youth players tied up to better deals is just as important.

Our favourite miscreant on a Leeds obsessed West Ham fan site has mocked our inability to compete with `middleweight’ Leicester City, but this seems an unfair comparison, with player like Jermaine Beckford on over £30k a week that puts Leicester’s backers firmly in the same pool as some of the lower end Premier League clubs. Should we be racking up enormous debt for new players? Of course we shouldn’t.

GFH may well have to dig that little bit deeper as is always the case, and it may not even be until the summer that we see that taking place, but for the first time in a long time we have people in charge who understand there does need to be some `risk’ in the model for any investment to take place, luckily for us unlike Leicester or even Man City we can look forward to it being done affordably.

I also think we will see at least one marquee, cash signing this January, if you want the crowds to come back a signal of intent is critical to achieving this. Bates didnt really care too much about winning popularity, perverse when youre trying to encourage 40,000 people to drop their weekend plans and come down to watch a game of 2nd division football.

GFH will want to re-engage supporters, making that signing is whats called a `quick win’…

Keep the faith – surely to god we can give these guys more than 2 weeks we gave Bates nearly 8 Years. MOT.

[info]Reporter –  Matthew Brown-Bolton[/info]


  • Irving08

    But if GFH haven’t got the cash, then at least they can outline a strategy. And I don’t call yo-yoing between Divisions a ‘strategy’. There are two ways: (a) the Silver/Wilko way, or (b) the Revie way. Since GFH don’t seem to have the resources to support (a) (and anyway the Premiership eldorado makes it nigh on impossible to repeat it), it has to be the Revie way, which means placing the accent on youth, with the addition of the odd bit of experience. We have some of the youth….our most urgent need is to find a Revie. For the moment George Boyd would keep us all entertained till the season’s end, which gives GFH ample time to work up a medium-to-long-term vision and strategy for the club.

  • fringo

    That’s a well written piece. What it says to me most of all is that GFH have brought absolutely no money of their own to the table. The £53m or whatever, if it exists in the real world, they could have simply written a cheque for. They are, as you remind us, a bank after all. Whatever happened to the rich Arab who was supposed to be backing them? Jesus! You say Leicester’s backers are up there with the lower, LOWER, poorer owners in the PL, and we’re even poorer! Whoop-ee-doo! Has this really been a Take Over or a Make Over, and was this what all the excitement was for? TOMA!, is now ROMA!, (Rich Owners My Ass). I almost misread the first paragraph, and it made more sense when I did, “fans’ not unreasonable expectations” for “unreasonable expectations”. And no, it’s not a revolution, or an evolution, it’s more of the same.

    • D.P

      My thoughts exactly.

    • pattayarag

      ROMA love it. Yes, more of the same and it could be the same under another name. Just a ploy to get the fans back.

      Would Blackstock be considered a marquee signing. Not for me. Again just more of the same.

  • Right in the Gary Kelly’s

    @fringo I dont think it is more of the same, more a case of Bates web will take some time to unravel. Hes tied up our cash in all sorts of fascinating knots. The double whammy being so many of the fans have been alienated. GFH always had a tough task when you then put that in the context of supporters (myself included) yearning for a return to the big time. Dont kid yourself on wages, sure Chelsea pay £100K per week with ease as would Man U but increasingly youll find clubs not handing out wages willy nilly. UFFP will put paid to that. @Irving08 i think your comments on tthe revie model are spot on. thats where leeds can do it. Use local talent, and good young prospects to build the nucleus of a team. Has Warnock got 10 years in him to do it? well probably not but Hopefully he can leave the squad in a decent enough shape to compete.

    • pattayarag

      GFH’s strategy seems to be to get the fans to show their cash first. Very Bates like..

      One of the many issues I have with the takeover is GFH reportedly paid 52mill but can’t find 5mill more, (+ wages), to make us really competitive in a very tough league. Surely GFH want a better return on their investment than whatever amount Bates has been taking out of the club each year. How do GFH justify that to their shareholders.

    • murty

      The thing is this takeover took nearly eight months to sort out and unless I’m greatly mistaken all the angles should have been covered by GFH with regard to debt and running costs, so you would think like we were led to believe that a couple of decent signings would be made and no players out apart from the fringe players.

    • murty

      New contract for Becchio would be a good start, would show our intentions, a pacey centre half and a real playmaker in the middle of the park. we don’t need more forwards. Also clarify Warnocks situation cause the fans are getting impatient.

  • terry boland

    Great article RITGK I was losing all hope about gfh” before I did read your post…If what you say about gfh knowing what they are doing, makes me more optimistic

  • snipenose

    don,t think the half season tickets will bring many fans back,they work out just as expensive as the ken bates prices!!!!!especially when the last few matches have been as bad if not worse than the rest of the season when it comes to entertainment value.lets pray the new owners get some investment in to buy back the ground and training ground as these together with the loans for ground improvements are draining the club of any potential transfer money,untill that happens were in division 1 for a long time!!!!sorry to be so negative but i,m only stating facts,all the loan players weve got aren,t good enough to get in poor premier sides thats why there at leeds!!!

  • Right in the Gary Kelly’s

    Aterryboland Well thanks Terry, I think GFH are genuine and hinest in their approach, they havent promised Brewsters Millions, they have though said they want to rebuild our club and not destroy it through recklessness thats good enough for me. Bates should take note. If hed acted in this way he would have kept about 2,000 extra fans coming ito the ground each Saturday. @snipenose Well yes a good poitn, what would you rather 2 more years of mediocrity but a groundwe own and have redeveloped, or yo-yoing between the divisions in our rented accomodation!

  • snipenose

    just stating the facts really,it just upsetting to think that if theres not major investment soon leeds will just be left behind possibly forever to be known as a great club of the past that lost there way .looking at the last ten years alone we are now a million miles away from being a top club,as for people saying do it the revie way it would be impossible in todays football to keep young players at the club long enough to win anything,what chance have we got if the likes of tottenham and newcastle to name 2 can,t keep their best players., and they probably pay their players upto 40 grand a week not 5grand like us!!!if they want to fill the ground why dont they give away free kids tickets to full paying adults and get the next generation of supporters coming,i,m sure they would get there money in the souvenir shop and refreshment bars etc.

    • gary

      does not matter how many burgers you sell that was sold to compass plc and monies already in bates account

  • Right in the Gary Kelly’s

    if it cheers you up snipenose look at Norwich (grr) and West Brom. They are in a cycle of reconstruction, they have spent sensibly, and leapfrogged the likes of leciester to get back up there. Ditto Reading, where do you get untold millions? its only ever nowadays from investors, advertising, and TV. Leeds do have that profile so if and when we get back our ascent to being a big club will be far easier than say that of Norwich.. chin up mate!

  • Roger Entwistel

    It doesnt matter what bates has done previously. GFHC have done their due dilligence and you would expect them to come in with a plan. they had said they would back warnock with what he needed yet at the first hurdle they have failed. Did anyone really think the club was to become a money making machine simply because they bought us. As you rightly point out bates has been burying us for 8 years, he has absolutely destroyed this club yet still we get idiots writing to him thanking him if you believe the nonsense he spouts. But what has happened has passed they can put in place a plan to overcome all that. What the club needs and has needed for over eight years is an investment in quality players, this was point number 1 of any takeover. no one is saying spend like risdale at the end of his reign or like man city. what fans want is for us to compete with clubs who dont have our turnover, fanbase, facilities and sign quality players at this level. its not a holy grail its what every other club is able to do it seems apart from us. As for the revie approach, he bought players even when we were cash strapped, remember charles our record transfer at the time. it wasnt ultimately what brough the good times but dont fool yourselfs for one minute that a team just suddenly appeared in youth setup ready to go. We are going to have to wait till the end of the window to see what if any players we sign if its yet another false dawn then, questions need to be asked of the new owners already.

  • SLG

    A good article and I hope you’re right.

    Just wondering as an aside what GFH did buy that was worth £50,000,000 assuming the ground and Thorp Arch wasn’t part of that figure?

  • Tare

    The fact is that we have not seen anything yet happen from GFH. This is early days and January is a long month to make business in player market. Personally I believe there is money in place but nobody wants to shout it from the roof tops. So take it easy mates and think of a glass half full for a moment…. Tare

  • http://Orange Mr Gullible

    The only person that seems to have benefitted from this takeover are the new owners, who have a good championship club and Bates, who takes the money. Now the promised investment and the fans? What is going on?

  • louthwhiteerry Cunningham

    That’s a very good article. Personally I believe GFH have a dilemma. Do they support a manager who will be gone in May or do (and this what I think they will do) support him in a qualified way, by adding players that will add value to the balance sheet and at the same time add value to the team ?There are such nuggets available, Dexter Blackstock being a prime example. However is Neil Warnock capabale of getting the Whites up from their current position, and what does history tell us ? Half way through the season (Post Middlesbro win and before defeats to Forest and Hull and a win v Bolton) after 23 games we averaged 1.52 points per game. If we maintain that average we’ll finish on 70 points and probably with a low goal difference. That total will by recent seasons achieve at best only an 8th placed finish and with it more heartache for already long suffering fans at LS11. Two season ago, Leeds finished seventh, three points off Notts Forest who tallied 75 points. It was argued successfully in hindsight (leaning information from very recent decent articles) that Leeds lost their chance of play-off success in January of 2011 by not investing in the squad. In came Gonzales (on loan keeper) and Zac Thompson and out went Andy Hughes, Neil Collins (for £500k to Sheff Utd), Andy Robinson, Crowe, Hatfield and Bessone. Livermore and Bannon later came in on emergency loans but it was defensive cover that cost us, and Andy Hughes at left back is arguably better than anyone we’ve had there since his departure. United hit the buffers and Forest claimed the 6th spot, although Swansea in third position went up via the play-offs. Last season Leeds sold Jonny Howson to Norwich City and Ben Parker left for Carlisle. Fabian Delph came in on loan from Villa but it was no fairytale return as he got injured. Townsend came in on loan from Spurs and did well initially before falling out with Neil Warnock and moving to Birmingham, whilst Robbie Rogers and Adam Smith contributed basically nothing. Leeds realistically need to hit 76 points (because of their negative goal difference) to secure a play-off position. That means from our remaining 20 matches securing 1.9 points per game. If a team secures 1.9 points per game over 46 matches, more often than not that team will be promoted automatically. In essence United need to win around 12 of their last 20 games and add in two draws along the way. That is no easy task. Remember we have to go to Leicester, M’bro, C Palace, Birmingham and Watford, and we have only three away wins to our credit. When one considers that we had Howson and Gradel in our side in 2010/11 and were much more dynamic going forward, Leeds need to release the schackles and really go for it. Warnock will have to be at the top of his game in the transfer window. His 15 arrivals thus far does not inspire one with confidence. So who should Colin try and bring in ? United have been linked with Dexter Blackstock who has just six months of his contract left at the City ground. This player would give us much needed pace up front and is a decent finisher, a perfect outlet for Warnock’s long ball tactics. Instead of prowling around after Clint Hill and Shaun Derry, Warnock could do worse than taking Jay Boothroyd on loan for the rest of the season from QPR. He has just returned from Sheff Weds and would take much of the work load off Luciano Becchio. In midfield Warnock should try and bag Jacob Butterfield whose loan deal at Bolton expires on January 5th. He is just 22 and has always caused us problems when he was with Barnsley and again yesterday with Bolton. Wes Hoolahan and Jonny Howson will keep him out ofthe Norwich line up. This is a player who sees a pass, can dribble and is always looking for the ball, unlike Norris, Austin and Green. If Warnock is unwilling to play Adam Drury (the player he described before the start of the season as the best left back in the Championship) at left back, we need one quickly, because Lee Peliter is no left back. A quick central defender is also needed because Lees, Pearce and Tate are all too slow, unless that is Peltier’s rightful position, although he was signed as a right back. It will be interesting to see how the new owners back Neil Warnock’s judgement. Will they tread down the road we know to our cost, that of the loan market or will they splash the cash on decent players with sell on value or the potential to improve Leeds United and become really good players ? Tactically Warnock has been really poor to date. How many times has he changed a game positively through substitutions ? All the sides above us contain players who are comfortable on the ball .No side has lost more points this season from leading matches (15 points to date and mostly with negative changes) Has it been a fact that some of the players signed were not his initial targets ? Are Tate, Tonge and Jerome Thomas good enough ? We certainly need a speedy, skilful winger, but WBA now seem to want a transfer fee for Thomas. Can we buy better ? Is he too injury prone ? We have two eminently winnable games coming up in the league after the Birmingham cup game, fixtures versus Bristol City and Barnsley. Who arrives in Beeston in January will have a great bearing on how our season turns out. It is unavoidable as a fact however that the manager will have to up his game, especially away from home if United are to hit those 76 points needed for the play off lottery. Something tells me that the new owners are no mugs and I agree that they may just get the balance right between a marquee signing and some decent additions. It’s then up to Neil Warnock to utilise the assets at his disposal. Louth White

    • Tare

      Injury prone… well if you introduce me for an pro footballer who has not been injured in his job then that will be a day…JT is as I have realised the best way to give something to shout about… After all NW has been selected for the job so it is his team and the buck stops with him. I support him 150 % until GFH gives him the boot. Period. Never mind the tactics, or other BS then after all it is about Manager and his team talk for the game.

      And those hoofball fans then Chelski won the UCL last year v Messis with Drobski football. It is pretty one sighted to evaluate tactics and style to play, this is results based business after all.

      There is now FM 13 solutions here but if one believes then everything is possible.


      • chareose

        ………hoofball wont work in the premiership as its about posession. You wont keep posession if your constantly hoofing it upto to full foreign internationals who are comfortable on the ball. The game has changed in England, you can see that by the statts from all out games….. we are lucky to get 45% posession and the oposition normally has double the shots on goal. Our problem isnt the defence, its simply posession and has been for a long time/ Yes its a results based business and currently we are the biggest club in this division but as usual we languish outside the playoffs…

        • Tare

          Chareose yep possession football was latest seen in DRs band of brothers team so I am not so blue eyed fan here. What I trying to say is that until otherwise guided we have to stick with the material and playing style which is affordable for this team. If anybody asks NW to change his coaching style and match day tactics is like asking foe Leopard getting rid of its spots. In good or bad until management changes it will go on…Personally I think think that a team who can adapt to various playing tactics can rise from the CS. We can actually play football as it should be played e.g. Toffees game in League Cup. Tare

  • mattbb2

    good points all. And some interesting takes on what issues gfh face in terms of how and what to invest. I see the Blackstock rumours are growing, and i think that is a good sign of intent. I think hed do a job for us a very underrated striker. @louthwhite what can i say – an epic post! MOT!

  • Right in the Gary Kelly’s

    Mr Gulliblw, its been 2 weeks, give the guys a chance!

  • snipenose

    personally i think our midfield needs strenghthening the most,we have nobody in there with any pace and nobody who can unlock defences with vision/passsing ability,although austin looks to have potential he as a lack of pace which you can get away with if you have some pace next to him but when you havebrown next to him teams seem to stroll through are midfield exposing our defence time after time.after 1hour of a match our midfield looks shattered and this appears to me why we are getting hammered in the second half of matches(chelsea,hull,forest,)we need amidfield that has some quality,pace and can go the distance,if we had that i,m sure the defence and attack would look far better than it does at the moment.people say bechio and mccormack would get in most championship teams and everybody rates diuoff, somma is an instinctive striker and polleon is one for the future so why is a striker a priority.could the reason possibly be our manager avoids playing a passing game through midfield??warnock as always had battling teams with loads of strikers and it looks like this plan will continue at leeds,to his credit i come away from games wondering how we won so he must have something that works to get results,at championship level at least.

  • little tomy

    I may be paranoid but what has actually changed at Elland Road? We have new owners who if the manager is to be believed do not have the funds to buy or pay the wages of the more talented players.
    I am beginning to think that Bates is still pulling the financial strings and after all how do we know where the funds invested by GFH capital have come from? I am not an expert in the tax system but I would not put it passed Bates being one of GFH clients. I can’t understand how any new owners of the club can allow a man who is loathed by the vast majority supporters (Including me) to carry on as chairman for the remainder of the season and then become the president of the club. I was a season ticket holder but I have and will not pay for another season ticket until I am positive that Bates as gone, that GFH is not a front for Bates and that GFH invest in players.

    • Tare

      Little tomy we have now evidence, just rumours that are tend to exploit when there is not much to tell. Let see what January brings before judging anybody. My bet is that there is a lot of activity behind the curtains so patience my friends…. Tare

  • Mattbb2

    Perhaps bates, with 52m in his pocket mat Invest in Leeds?…. Mmm.

  • louthwhite

    To compare Chelsea’s tactics with Leeds United is baffling. On Saturday Birmingham City without 9 regulars and loaded with Youth team players gave us a lesson at various time during the match. Let’s be honest here, Leeds had A very strong side out. Tate and Pearce (both signed by Warnock) are too slow to play together and with all due respect to Lees, the lad is not a right back. Tate’s loan spell is up in a few weeks. We need better. His lack of pace is a real problem. We need a central midfielder who wants the ball and is allowed to play through midfield. We need a left back, and we need a quality striker with pace. Blackstock would be a good acquisition and a very good foil for Becchio. But more importantly we need an astute manager who sees all this. Long ball tactics is acceptable if it gets results. So far we have not had the results. The teams above us all play football on the ground….Cardiff, Hull City, C Palace, B’pool, M’bro,Leicester, Watford and guess what, four out of these sevenhave defeated us. I think Neil Warnock’s tactics has been baffling to say the least. At QPR he had Keith Curle a young coach. Perhaps Jones and Warnock are too much old school. I fear unless he changes the way we play, it won’t matter who we sign because it won’t make a difference. Don’t forget he has brought 15 players in so far.

  • http://twitter/jontysolomons Jonty

    If GFH say the finances at Leeds are so poorly, then why did they write to Bahrain stock exchange saying Leeds would positively impact their profits for Q4 2012 and Q1 2013?

    GFH made a decision that Leeds were a good business to buy into.

    They then spent 6 months approximately doing due diligence to feel comfortable that Leeds was the right business.

    It is not too much too ask to expect GFH to articulate, even if just at a high level, how exactly they expect the business to be viable if it is in such a woeful position at present.

  • Andy Kaye

    Good article

  • colin gill

    Two weeks into the transfer window , and the doomsday people are on the backs of the new owners to bring in new players. Well from what i read that is an on going situatiion with the manager trying his hardest to do this. But the reality is that firstly there are not that many good players out there at this time of year, and what are available because Leeds united show an interest the asking price goes up. We might just get the players we want before the window closes, but if we do not then we will have to wait until the summer break and use what we have. This team have not played consistently that has been the problem, yet we are still only two points outside the playoffs. So why all the air of panic, the season is only half way over for God’s sake. The team needs support now more than ever and until the end of the season. Let the moaners and doomsday people stay away, probably more than half of them never go to Elland Road anyway.

    • http://Orange Bluesman

      Fair comment – there are a lot of disillusioned people who have suffered due to the previous two chairmen! But you are right, “Give Peace a Chance”!

  • Right in the Gary Kelly’s

    thanks for the RT SP!

  • Steve (@LufcTyke)

    I dont think masterbates gave GFH much of a choice about staying on as chairman to the end of the season and president there after.
    We need to give GFH a chance, they seem to want to rengage with the fans and seem to be moving in the right direction.

  • ML

    This article is in effect saying ‘lets be patient and build up slowly’ but the problem is we are getting weaker and weaker with each passing month and year as the only thing we did have that was worth something since we dont own our ground or training facilities and our squad of players is worthless is our ‘massive loyal fan base’.So our fan base is what makes us worth 50 million but the probelm is that fan base is melting away like the snow in spring and without promotion i reckon the club will be worth 15 million less every season.Perhaps having banked 50m Bates will return once more and buy us back out of administration for 1 pound?