(Yorkshire Post Via Thomson Dialog NewsEdge) Leeds United's immediate future will be settled at what is likely to be a stormy meeting of creditors tomorrow. But the headlines of the club's financial collapse into administration reveal little of the mystery surrounding the real powerbrokers at Elland Road.

IF morality had any part to play in a game bloated with more money than it knows sensibly what to do with, the sorry, messy tale of Leeds United's demise would probably lead to root and branch reform of the nation's most popular sport.

At tomorrow's critical meeting of creditors of the debt-ridden club, schools, the St John Ambulance, window cleaners, a local mobile disco, Leeds Council, even a local balloon supplier will be among a list of more than 1,300 businesses and individuals expected to take just a penny for every pound they are owed - all for the greater good of keeping Leeds United afloat.

Assuming the potential deal goes through, under football's rules governing clubs in administration, a former player, Danny Mills, will be guaranteed to receive every penny of the GBP216,667 in wages he is owed. Mills, one of several players given long, lucrative contracts when the club was notoriously "living the dream" of former chairman Peter Ridsdale, last played for Leeds four years ago.

Essentially, footballers come first when clubs hit difficulties. If their unpaid wages and monies owed to other clubs aren't paid in full, Leeds will not be allowed the privilege of playing in English football's third tier for the first time next season.

But the basic, even offensive, incongruity of multi-millionaire footballers getting every penny when the likes of St Gemma's Hospice in Leeds is asked to accept GBP8.51 instead of GBP851 tells barely a fraction of the story behind Leeds's complete and utter financial mess.

This is a club with a proud history, but very little current identity. No-one's entirely sure who owns it, no-one knows who owns the Elland Road ground, no-one knows who the biggest creditor is - even though the company concerned practically has a controlling hand to play at tomorrow's meeting.

It would be a shocking state of affairs for any business to find itself in but this is one that is woven into the fabric of everyday life in Leeds, part of its wider identity and one that matters to many thousands of people.

The controversial figure of Ken Bates, who ran Chelsea before selling out to Roman Abramovich, is currently the chairman and public face of Leeds United. He was the prime mover behind the club's decision to push the club into administration when relegation became inevitable before the final match of the season. It was a decision which meant Leeds could take the mandatory 10-point penalty for going into administration straightaway rather than start 10 points behind everyone else next season. Manipulative and hardly moral to many, but it was an open goal that even Leeds, enduring their worst season in memory, couldn't miss.

And yet Bates is not even officially a shareholder. Instead, Leeds United is owned by the Forward Sports Fund, registered in the Cayman Islands with a Swiss-based company named as its director. Bates is a director of the company the administrator - accountants KPMG - agreed to sell the club to almost immediately after it was declared insolvent. But that company is owned by Forward Sports Fund.

Quite how the administrators, within minutes, were able to agree to essentially sell the club back to its current owners, potentially wiping off most of its GBP35m debt in the process, remains something of an accounting mystery.

Perhaps part of the answer lies in the role of two of the largest creditors - Krato Trust and Astor Investment Holdings. Krato, registered in Nevis, in the West Indies, lent the club GBP2.25m between December 2005 and June last year and claims to be owed GBP2.5m. Astor, registered in the British Virgin Islands, lent the club over GBP11m between August 2005 and October last year and claims to be owed nearly GBP13m.

The administrator has been unable to find out who owns Astor but both companies have insisted they have no connection with Bates.

Yet both have agreed to the administrator's penny in a pound deal proposed as part of the resale to Forward Sports and have even gone further with Astor agreeing to halve its claim and Krato agreeing to accept nothing at all. Why they should apparently be happy to write off such large sums of money remains, currently, distinctly unclear.

But the companies do have a key say in the creditors' meeting which needs 75 per cent of them to agree to the deal currently on the table. When the GBP2.4m claimed by Forward Sports is also taken into account, the offshore companies have well in excess of the 25 per cent needed to exert influence on the decision.

Bates has warned that if the creditors refuse the penny in a pound deal, Leeds United would be likely to fold completely. It would be a disastrous outcome but one that also seems unlikely given the uncanny ability of football clubs to defy the usual laws of economics even in the harshest of financial circumstances.

Other businessmen are preparing to put offers to the administrator, with local property developer Simon Morris the most outspoken of those so far coming forward. Whether they can jump the hurdle put in place by Bates and the offshore companies is open to question but it is not hard to see how, with a clean financial slate, Leeds United could start to make significant amounts of money in the future.

Aside from increased football income should the team's fortunes improve, Elland Road and its immediate surrounding area is one of the prime development sites in the city. Morris foresees a huge entertainment complex, including a new 50,000 capacity ground.

However, true to form, one key stumbling block is no-one knows who owns the ground. Prior to Bates taking over in 2005, the ground was sold on a lease-back basis to Manchester-based businessman Jacob Adler. He has since sold it on to Teak Trading Corporation, a company based in the British Virgin Islands.

Their identity is unknown - a major factor in Leeds City Council's recent decision to refuse to bail out the club with a loan to help them rebuy the ground. With the council set to suffer a significant loss on the GBP200,000 it is already owed by the club, the likelihood of it doling out millions to be passed on to who knows who was always likely to be slim.

Tomorrow's meeting will be critical for the future of Leeds United and if it goes according to Bates's plan, no doubt the rallying call of a new, debt-free club heading for a brighter tomorrow will be heard far and wide.

However, many decent, hardworking businesses will suffer as a result, along with the public purse - not least the taxman who is owed nearly GBP7m. It's hardly fair and the outcome will leave many onlookers both inside and outside football shaking their heads.

Many will hope that the sorry saga leads to much tighter regulations governing the running of the multi-million pound businesses that football clubs have become. But when concepts like morality, ethics and transparency challenge the power of money, in today's game at least, there appears to be only one winner.

Copyright 2007 Johnston Press Plc, Source: The Financial Times Limited

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