Leeds defend ownership structure

The Elland Road official was one of several football figures to give evidence to the Culture, Media and Sport Committee at yesterday’s hearing at Turf Moor.

Standing in for Ken Bates after the United chairman was unable to attend due to a bout of bronchitis, Harvey was quizzed by the MPs about the set-up that sees Forward Sports Fund Ltd, a company registered in the Caribbean island of Nevis whose shareholders are anonymous, own 73 per cent of the issued shares in United.

FSF, in turn, are owned by three discretionary trusts based in Switzerland – a situation that two years ago led to the Football League writing to Leeds for clarification over who was in ultimate charge.

United subsequently provided documentation that allowed the club’s owners to pass the League’s fit and proper persons test.

Despite that, the ownership structure at Elland Road has come under criticism with a section of supporters remaining unhappy at what they perceive to be a lack of transparency.

The subject reached Parliamentary level at Burnley yesterday when Harvey was grilled by the MPs as part of their inquiry into how football is governed.

Asked if he knew who the individuals behind FSF are, Harvey said: “I don’t know who the beneficiaries of this discretionary trust are, no.”

The Leeds chief executive added: “That is not particularly strange. If I was the chief executive of a company on the Stock Market, I would not expect to know every shareholder. The Football League has exactly the same information as has been made public.

“There is no individual (owner), that is the nature of discretionary trusts – it is a perfectly legal and much-used ownership structure in many different industries, not just football.”

Damian Collins, Conservative MP for Folkestone and Hyth, said: “With a club like Leeds United, the majority shareholding is owned by a mysterious trust and we don’t know who the investors are and I think that is a legitimate concern.”

Harvey replied: “It depends what you mean by concern. At the moment, we are fifth in the Championship and people are comfortable with how the club is progressing.”

The Leeds chief, on being asked about the owners’ future intentions towards the club, added: “There is no indication that there is any desire to move away from the investment.”

Harvey is in his seventh season at Elland Road after having previously worked for Scarborough and Bradford City.

He was initially brought in by then director David Richmond at a time when the board was led by Gerald Krasner and remained with United after Bates’s own arrival in January, 2005.

It means Harvey has the inside track on one of English football’s most spectacular collapses, something the Committee were keen to discuss due to one of their remits being to investigate the problems being caused in the game by debt.

Tom Watson, Labour MP for West Bromwich East, asked what had brought about the financial problems that culminated in Leeds going into administration in the summer of 2007.

Harvey said: “The club going into administration could be traced back to the time of the PLC.

“It was poor financial management. The gamble was just too big. They raised £60m against future ticket sales. The club then got into trouble and was sold to a group of local businessmen (led by Gerald Krasner).

“They got into trouble very quickly because they didn’t have sufficient funds.”

Harvey was joined by Burnley chairman Barry Kilby, Crewe chairman John Bowler and Julian Tagg, vice-chairman of Exeter City. They were grilled on subjects including salary caps, parachute payments distorting competition in the Championship, the impact of the EU possibly outlawing exclusive television deals and the role of Supporters’ Trusts.

Harvey was asked if he felt fan involvement on a club board would be a positive move. He replied: “Not for me, no. I think the best model is a small, dynamic board that can make decisions quickly.”

The four club officials agreed there was a need to maintain preferential creditor status for football clubs and players when a club goes under.

There was also broad agreement among them as to the importance of youth development.

Leeds have had several promising youngsters tempted away by Premier League clubs and Harvey said: “We are playing with dynamite. The system breaks down when clubs lose the opportunity to produce kids in their Academy. By that, I mean clubs coming in and taking them away to their own Academies.

“If we are not careful, what will happen is many clubs will stop their youth policies and instead pick up players cast aside by the Premier League clubs.”