Peter Reid is under pressure. Serious pressure. Second bottom of the league is not good enough. Not for him, not for the fans, not for the players and certainly not for Leeds' finances. If Leeds are... relegated... the drop will mean the club is doomed to implode under the weight of its own debts - a legacy of unbelievable mismanagement. As well as having debts close to £80million, Leeds this week announced losses for the past financial year of £49.5million - the worst set of results of any UK football club has ever reported.
Facing up to his responsibilities and publicly explaining the club's financial position Professor John McKenzie dropped one of the sound-bites of the year when he added a twist to the words of his predecessor, Peter Ridsdale, by saying:
'They lived the dream. I've inherited the nightmare.'
Indeed, for many people the excesses of 'P.Riddy' have become legend. From a wholly unnecessary fleet of company cars to an excessively expensive tropical fish habit Leeds United's largesse under Ridsdale seems evermore lunatic as time goes by. And while some Barnsley fans, where Ridsdale is now in charge, insist that Ridsdale has become the scapegoat for the actions of the whole Leeds United board, the buck must stop somewhere.
One of the most disturbing facts that came out of the announcement of Leeds' financial misery is that the club does not own some of its players. McKenzie has revealed that six of the star players bought while Ridsdale was in charge are not actually owned by the club but leased, along lines similar to a hire purchase agreement, from a from a third-party company.
Registered European Football Finance, a leasing company run by former Manchester City defender Ray Ranson, is owed £21.3 million by Leeds for players which it bought on the club's behalf. Taking the example of Viduka's £6million move form Celtic to Leeds, the Elland Road club stumped up nothing towards the deal, but instead used REFF to provide the money with the club in return agreeing to a scheme of monthly repayments.
The pitfalls in this sort of arrangement are huge. Not only are clubs tempted to exist far beyond their means and buy players they can't in reality afford, but they never actually own their assets and so never benefit when they are sold on.
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Another equally distressing fact to emerge from Leeds' financial statement is that some of Leeds star players have effectively been mortgaged in order to raise cash for the club.
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In the case of Leeds, failure to reach the lucrative Champions League meant it was crippling itself, not just on wages, the now ususal problem for clubs, but also on player repayments.
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Even after the fire-sale of Rio Ferdinand, Jonathan Woodgate, Robbie Fowler, Robbie Keane, Lee Bowyer and Olivier Dacourt Leeds somehow managed to increase its wage bill to £56.6million, equal to 88 per cent of turnover - a particularly unhealthy ratio.
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Full Article from Soccernet.com
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