Leeds secure another debt reprieve
LONDON, England (Reuters) -- Debt-laden Leeds United have been given another week's breathing space until February 6 to resolve their financial crisis and avoid going into administration.
Leeds, over $145 million in debt, have already been given two reprieves since the creditors' original January 19 deadline.
Chief executive Trevor Birch needs to find $9.1 million to keep the bottom-of-the-table club afloat until the end of the season. Failure to do so could lead to administration.
On Wednesday Leeds announced that their players had agreed to a wage deferral.
"The board of Leeds United announces that it has met the financial and other covenants (described in its announcements on 19 and 26 January 2004) and as a result the standstill period now extends to 6 February 2004," Leeds said in a statement to the stock exchange on Friday.
Leeds have been in negotiations this week with a consortium of local businessmen, whose representative Gerald Krasner said an "eight-figure sum" was available for a deal to save the club.
The club, which made losses of almost $91 million in the year to June 2003, got into difficulties after buying a stream of top players on high wages as it attempted to cement its place among Europe's elite.
Staff wages, including management, in the last financial year were $101.9 million, 88 percent of turnover.
Leeds owe $109.2 million to American firms Teachers and MetLife and UK firm M&G after taking out a 25-year bond securitized against gate receipts.
Player boost
Birch received a massive boost on Thursday when the players, some of whom earn as much as $90,000 pounds a week, agreed to a wage deferral of over 20 percent, saving the club millions of dollars.
Leeds were also helped on Wednesday when they accepted a final settlement of $2.7 million from Manchester United for the $54.6 million transfer of defender Rio Ferdinand in July 2002.
Former managers David O'Leary and Peter Reid have played a part by agreeing to defer their compensation payoffs.
Birch has been determined to hold on to his best players, such as striker Alan Smith, to help the team's priority of staying in the lucrative Premier League. Leeds are currently five points away from safety, with 16 matches to go.
Premier League chairmen have set a nine-point penalty for clubs going into administration, which is a form of creditor protection, to take effect from June 3. For clubs in the lower leagues the penalty is increased to 10 points.
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