the square ball week: lambo mamboBack
The international break is always an odd time, but this one has kept us busy at Leeds United.
There was the joy of seeing Chris Wood whack a penalty for New Zealand, then the fear as he flew back around the globe, injured. Over the past few days, there was been the revival of an intense, age-old rivalry as a war of word broke out with bitter foes Reading. The club sent its most recent set of accounts, for 2015/16, to Companies House, always a fun event. And the man who signed them off, Massimo Cellino, was spotted in Florida, posing with his wife in front of a Lamborghini showroom.
If their day out resembled his time at Leeds, I imagine Mr and Mrs Cellino posed for that photo — perhaps they asked a passer by to take it — then Massimo announced that he was going to the bank the very next day, and buying a Lambo the day after that. Days pass, but no Lambo, Lambo Italiano. Perhaps one day a Lamborghini does appear, but it’s a rental.
Couldn’t Massimo Cellino just buy a flash car, if he wanted one? This is the guy who people thought was a billionaire, thanks to a fake Forbes website from back before fake news was news (Leeds United: always ahead of the trend). Well, perhaps. Yet for some reason Leeds United Football Club dipped into its increased turnover of £30.1m — which is all the money you and I paid in, through tickets, merchandise purchases, food and drink consumption, TV subscriptions or willingness to look at adverts — and found £19,862 to advance, interest free and unsecured, to Massimo Cellino.
He paid it back, so it was just a short term loan. But I do wonder why such an apparently rich man — he stands in front of Lamborghinis! — should need a short-term lend of twenty grand from us.
It’s easier to work out what Edoardo Cellino needed his five grand for. That’s the amount the FA fined him for calling a fan a “moron” and a “spastic” etc etc. Edoardo, who to be fair, despite being a director of Leeds United, doesn’t seem to be a person of independent means, seems to have gone for the option of using club money — our money — to pay his personal fine. The £5,000 is again unsecured and interest free, but wasn’t paid back in this accounting period.
Which is all quite petty, but typical of the Cellinos, who I admit I have missed during their current low profile. They’re always there on Instagram, though; Ercole, the one who resigned his directorship after likening his own haircut to that of a Nazi, still claims to be ‘Vice President Leeds United F.C.’ in his bio, still appears to be on an ‘anywhere-but-Leeds’ world tour. Edoardo has met the love of his life (their eleven month anniversary is this week) and is writing long essays in which I hope he doesn’t call her a moron (translations are vague); while over on his sister Eleonora’s account, we can see her leaning her bosom on Edoardo’s arm as if it was an old-fashioned ale-house bartop, above her slightly threatening caption, ‘No LoNgEr A tEeN’.
The kids are the sideshow, though, whereas the accounts are the real deal, and represent the first (only?) full year of Papa Cellino driving the bus. Better analysis than I could hope to provide can be found here, here and here, and the consensus seems to be that, like in the closing scene of The Italian Job, the bus is being kept on the road, but all that gold shifting in the back could one day drag us over a cliff.
The opening statement, signed by Massimo Cellino, reminds us that these numbers are a season out of date, beginning in quite a surreal manner: “Uwe Rosler was named as the club’s new head coach,” it begins, “The club also moved to secure a new contract for midfielder Lewis Cook … The first new signings arrived in June: Charlie Horton, Lee Erwin and Sol Bamba all putting pen to paper at Elland Road as things geared up for the new season.” It’s torture, all this; like someone showing a film of you taking an exam.
Things do improve; the positive takeaway is the improved turnover, up by £5.75m, most of it down to the decision to cancel the contract with Compass and bring catering back in house. That added £4.8m of revenue; enough to cover the £3.5m it cost to cancel the deal with Macron, plus sundry legal disputes that Cellino confidently promises “will not be repeated in future seasons.” Aye, it would help.
It can be argued that the Compass and Macron deals were legacy problems — Batesonomic legacies, at that — that Cellino had no choice but to do his best with, and that a score draw isn’t a bad result. But Cellino came here on a Sheriff’s promise to ’sort out the mess’ — Make Leeds Great Again — and paying off some caterers seems like small beer compared to all he swore to do.
The unaccounted ‘other’ expenses, always eyewateringly high at Leeds United, and the one place you’d think Cellino’s infamous cost-cutting might have had some effect, actually increased again; up to £16.05m, from £15.54m. That is down from £17.09m in 2013/14, but the creep upwards suggests Cellino has given up his habitual game of hunt the lightswitch. It also leaves Cellino’s apparently thrifty Leeds with the highest administrative expenses in the Championship, based on most recent available numbers, on a par with Brighton and over £2.6m higher than Fulham, one of a group of just four clubs — with Norwich the fourth — breaking the £10m barrier in the ‘other’ column.
The overall loss on all this — £8.9m, up from £2m — isn’t too shabby in the context of a sport built on debt and wishful accounting. As long as the club’s ultimate owners — Eleonora Sport Limited — are prepared to absorb such losses, working now in tandem with Andrea Radrizzani, everything should be fine. Only, the accounts appear to show a distinct lack of support from ESL. At some point the club briefly borrowed £1.6m against its future income — a high-interest practice similar to pay-day borrowing — that surely could have been advanced from ESL interest free, the way the club advances the Cellinos? And as for the £8.9m loss, there were two simple options for mitigating that: investment from ESL, or selling Lewis Cook.
In many ways these accounts show a club that’s self-sufficient, running with no financial assistance from its owners. If there’s a cashflow problem, there’s a loan; if there’s a loss, there’s a player to sell. What we seem to have had, in Massimo Cellino, is an enthusiastic fan who bought the club but had no money to support it — indeed, it was loaning money to him — whose only hope of taking the club forward was by finding an additional investor. Which was always the argument against Leeds Fans United being in charge, and yet here we are.
The biggest barriers to sustainability remain the two things Cellino had at the top of his list to sort out: Elland Road and Gulf Finance House. Renting Elland Road continues to be a massive outgoing chunk of around £1.6m, increasing every year, as the buyback price increases every year, and buying it back continues to represent one simple step towards self-sufficiency and security. Surely a man of Massimo Cellino’s mean… well, perhaps we’ve flogged that horse enough.
As for GFH, the last set of accounts showed them firmly in the corner, something for which Cellino was rightly given credit. They’d get pretty much all their £17m in one go if the club won promotion to the Premier League, but for as long as Leeds were in the Championship, they had until 2032 to pay it off. Significantly, GFH had agreed that the loans would be “unsecured and interest free.”
For some reason — perhaps somebody at GFH actually read it — that deal has been torn up. As of 5th September 2016, £50,000 has been knocked off the £17m owed, which is nice, and there seems to have been a pause on repayments; but they’ll recommence in August this year, and continue until August 2029, whether Leeds are in the Premier League or not. The debt is now also interest bearing, although the rate isn’t given.
We did hear this at the time; “The club is delighted to confirm that Leeds United Football Club is now 100 per cent owned by Eleonora Sport Limited, it having purchased all of the shares previously held by GFH Capital,” is what we were told. The new deal came with a debenture, giving GFH right to Leeds United’s assets should the club default on payments, and denying Leeds the ability to use its assets as security for mortgages or loans, unless GFH give up their claim to that asset.
Which leaves the repurchase of Elland Road, part of the golden ticket to sustainability and one of Cellino’s key promises, further away than ever. The club can’t use any of its other assets to raise a mortgage to buy it, because those other assets are GFH’s security. And anyone coming in with cash to drop on buying the stadium — hi, Andrea, sold any £150m stakes lately? — would have to weigh up the benefit on the balance sheet to the disadvantage of Elland Road being added to GFH’s list of seizable assets. Somewhere near the top, I should imagine.
Andrea Radrizzani is, of course, the great hope in all of this. Two solutions have always presented themselves to all Leeds United’s financial problems: somebody so rich they could transform the club in a blink, or promotion to the Premier League. If we don’t get distracted by resurrecting the most fearsome rivalry in world football, Reading vs Leeds, and stay the course, then we might even get a double summer whammy; even if it’s just Radrizzani, we can hope he has the combination of cash and nous to deal with, at least, GFH. They’ve been ‘dealt with’ umpteen times already, so one more negotiation, preferably involving enough money to make them go away forever, ought to be possible.
Because they’re still there, which — apart from the court cases, the arguments, the sackings, the laugher (at us) — the most damning indictment of Cellino’s ownership. They were top of his list to sort out back in 2014; now, in 2017, we don’t even know if he has a list anymore, and can only hope Andrea Radrizzani is better at getting things done: starting with getting the other 50% of the club, and then outlining a to-do list, and then doing it. And not just being photographed near it.
Read more about Do You Want To Win? and pre-order here; and watch the trailer below.