The circus goes on and on. Sport Capital are now suing GFH for £33m over an alleged breach of the Share Purchase Agreement (SPA) the two groups had made as Sport Capital attempted to buy a majority stake in the club late last year.
The Sport Capital group was a consortium including David Haigh and Andrew Flowers of our former shirt sponsors Enterprise Insurance, who spent almost three months in negotiations with GFH. The two parties originally agreed a purchase price £25m for a 75% stake, but Sport Capital reduced their offer when a due diligence exercise showed the shocking state the club’s finances had drifted into under GFH.
GFH then sold the 75% stake to Massimo Cellino instead, when the Italian did meet the £25m asking price, but Cellino has since tried to renegotiate the terms of this deal with GFH after he too discovered the true state of the club’s accounts. Sport Capital are now claiming that the alternative deal with Cellino breached the SPA and they are claiming £33m claim for damages against GFH over the collapse of their deal.
They issued a statement today claiming that they were funding the club during their negotiations and that the SPA should have prevented GFH from any discussions with any other parties at the same time. GFH allegedly breached this condition by entering into talks not only with Cellino but also
Khaled Al-Baltan, who was president of Al Shabab football club in Saudi Arabia.
Sport Capital are claiming that our situation would be much better today if the deal had gone through, rather than the chaos we have frequently sunk into under Cellino. "This was a deal which would have ensured a sustainable and successful future for the club and that included the almost immediate purchase of Elland Road, the terms of which had been agreed.”
They have lodged a £33m claim with the High Court in London, though they acknowledge they might have to go through diplomatic channels to get their money from GFH’s HQ in Dubai. But it’s bit worrying that they are trying to have GFH Capital’s English assets frozen, as it’s not clear what implication that would have for the club when they still hold a 25% stake in Leeds United.
But GFH responded by suggesting this is all just a smokescreen to deflect attention from the charges faced by David Haigh (who continues to languish in jail in Dubai) over the allegations he misused the club’s funds during his time as managing director.
They are quoted by the Yorkshire Post as saying "The latest press release issued by Sport Capital looks like an attempt to divert attention from the allegations against Mr Haigh which are being heard in the Dubai courts. As Mr Haigh is facing criminal and civil proceedings in Dubai we do not want to say anything which would jeopardise any proceedings.”
It’s not clear how Sport Capital have come up with the £33m figure they’re claiming, and they will be hard pressed to extract that amount from GFH even if they win the case in London, as the Bahraini bank aren’t exactly flush with money.
But none of us would be sorry to see the back of GFH, and perhaps the best outcome would be for GFH to be forced to surrender their 25% to Sport Capital, who might then be well placed to take over the rest of the club if Cellino is eventually forced out by the Football League. But no doubt that would be way too much to ask for.