The news just keeps getting worse for Leeds United Football Club (LUFC). The club has called in administrators and is facing a major financial crisis. LUFC had made a public appeal for would-be investors to contact the club as a last-gasp chance to stave off administration. With a Supporters Trust in place it looked as if the club was going to be spared but that deal has fallen apart for reasons that are currently unknown.
By Football League rules, entering administration means that LUFC are automatically docked 10 league points. The decision to go into administration during the current season will mean that LUFC will be docked 10 points now while the team is still in the Championship, rather than when it started next season in League One.
LUFC has been struggling with its finances in recent years and relegation from the Championship will certainly eat into earnings for the coming year. The club had already sold its Elland Road home ground and its Thorp Arch training ground to cover previous cash shortfalls. The fact that contracts for a number of high-price players run out this summer also means that the club will run short of valuable assets later this year. Entering administration gives the club a chance to restructure and clear off debts. LUFC would then be a more attractive investment and takeover target because any new owner would not have to take on its entire debt burden.