What does 49ers Enterprises takeover mean for Leeds United?

White smoke from Elland Road and finally, a takeover that had to happen has reached the point of no return.

49ers Enterprises has formalities to complete before it officially becomes owner of Leeds United, but an agreement in principle with Andrea Radrizzani, announced by the club this evening, effectively spells the end of Radrizzani’s six-year reign.

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In some ways, this buy-out has been five years in the making for 49ers Enterprises, the endpoint of the small investment the U.S. fund first made before Leeds were promoted to the Premier League. But what does the takeover mean for the club and what happens next? How has relegation altered 49ers Enterprises’ vision and how will it set about getting the club promoted again?

Here, The Athletic answers some of the questions arising from today’s breakthrough.

Who or what is 49ers Enterprises?

The name itself needs no introduction. The U.S. fund has been on the scene at Leeds as a shareholder since 2018 and its takeover — always planned as a phased process — has been in the pipeline since it increased its stake to more than 30 per cent at the end of 2020.

One point to deal with first: 49ers Enterprises, despite the title, is not the same as the San Francisco 49ers NFL franchise. It is controlled by the owners of the 49ers and its president, Paraag Marathe, has responsibilities across both organisations, but 49ers Enterprises is an investment vehicle, set up to seek private equity opportunities away from NFL. In the past, for example, it has invested in renewable energy technology (albeit with far less fanfare than English football). Leeds, by a distance, are its most high-profile purchase.

For different projects, 49ers Enterprises pulls together different pools of investors, meaning the make-up of the group funding the purchase of Leeds is unique and specific for this deal. The demographic is one of high-net-worth individuals, venture capitalists and private equity firms, merged together as a consortium to finance the buy-out of Leeds. At least one of the major parties has a background in U.S. professional sport. So while there is a clear link to the 49ers NFL team, the NFL team is not itself taking over.

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Because of Leeds’ relegation last month, dropping from the Premier League to the Championship, the investment group courted by 49ers Enterprises has changed in the period leading up to Radrizzani’s sale. For instance, one prominent venture capitalist company based on America’s west coast stepped away from the bid. It was prepared to buy into a Premier League team but not one in the EFL. Nonetheless, 49ers Enterprises still had the cash it needed to finalise the deal.

At the core of its group are a collection of around 11 key investors, the big players in this takeover and the source of a high percentage of the cash needed to buy Leeds. The Lowy Group, the Australian family and property empire represented by Leeds director Peter Lowy, has been part of the project for two years now. These are the most relevant people in the project, the biggest sources of finance and those with the strongest influence.

Behind them is a larger collection of more minor investors, seen as bringing “added value” to the buy-out. Many of those injections are far smaller, around the six-figure mark. Some are athletes and most are well-known in either business or celebrity circles. The New Orleans Pelicans basketball player, Larry Nance Jr, gave firm hints about his involvement on Twitter this week. But their influence on strategic matters at Elland Road will be minimal, if indeed they have any.

😏 https://t.co/m9ZqEKJ0jw

— Larry Nance (@Larrydn22) June 5, 2023

That is an important aspect of the takeover: as much as there are numerous individuals behind 49ers Enterprises’ acquisition, Leeds will not be run by the whole collective as a committee. Marathe, Leeds’ existing vice-president, becomes club chairman and will have active responsibility for the overall management of United. Collin Meador, a colleague of Marathe’s and another senior figure at 49ers Enterprises, could join the Elland Road board too. In total, there could be as many as five new directors appointed, representing the investment group.

Marathe and Meador will spend time in England but are expected to be predominantly U.S.-based. As a result, 49ers Enterprises will retain existing Leeds CEO Angus Kinnear to oversee day-to-day operations, ultimately answering to Marathe. Kinnear was heavily involved in bringing the complicated buy-out of Radrizzani to a successful conclusion and is seen as an asset by the Americans, irrespective of the decline in the club’s performance over the past two seasons. One thing 49ers Enterprises is clear about is the need for a larger senior management team at Elland Road.

How much has 49ers Enterprises paid?

What it has paid in this particular transaction and what Leeds United are valued at are two different things. In the end, 49ers Enterprises and Radrizzani were able to agree on a valuation of close to £170million ($213.2m). The exact figure being quoted in the U.S. by people with knowledge of the deal, who remain anonymous to protect relationships, is $209million. That is what Leeds would have cost had 49ers Enterprises been starting from scratch and coming into this process cold.

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But prior to shaking hands with Radrizzani, it already owned more than 44 per cent of Leeds so the amount actually due to the Italian for his majority shareholding, equates to somewhere between £90million and £100m. Even then, balancing club losses and liabilities — potentially including the cost of the transfer debacle involving Jean-Kevin Augustin — means the final sum received by Radrizzani will be lower again, closer to £70million. That figure would still mean he walks away with a profit on the £45million he paid Massimo Cellino for Leeds in 2017.

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It is, evidently, a far cry from the sum he stood to receive from 49ers Enterprises had Leeds retained Premier League status. The club’s valuation has dropped significantly from the figure of close to £500million which was negotiated as part of the option 49ers Enterprises had to buy Radrizzani out in January 2024. Discussions between them over the past week or so included talks about a minor bonus payment for Radrizzani if Leeds secure promotion and certain conditions are met but even that will not cover all of the money relegation has cost him.

Is Elland Road included?

Yes. To quickly recap on the ownership structure of Elland Road stadium, rather than being controlled by Leeds United, since 2017 it has been owned by Elland Road Limited, a firm in which Andrea Radrizzani was the major shareholder. In essence, the stadium belonged to him rather than Leeds and the club have been paying a seven-figure sum of rent to Elland Road Limited since they were promoted.

49ers Enterprises already held a minority stake in the company, however, and Meador is one of its board members. The U.S. fund was adamant that if it struck a deal to acquire full control of Leeds, Elland Road would have to be part of the agreement. 49ers Enterprises has major plans for redevelopment of the ground — plans which will now be delayed by relegation — and it had no desire to spend tens of millions of pounds upgrading an arena that was controlled by a third party. Whether Leeds continue to pay annual rent now is another matter.

Last week, The Athletic revealed how Radrizzani had offered to use Elland Road as collateral for a bank loan that would have been used to fund the takeover of Sampdoria, which he is trying to complete. While that loan does not appear to have been processed, the news caused major friction with 49ers Enterprises and hardened its insistence that Elland Road be included in a takeover of Leeds. While the ground is likely to remain in the hands of Elland Road Limited, and therefore become 49ers Enterprises property, it should at least be fully in the hands of the club’s owner.

Will Radrizzani have any further involvement at Leeds?

No. There were periods when 49ers Enterprises was open to the idea of it moving into a majority position while Radrizzani retained a smaller shareholding but, as relegation drew closer and their relationship became more tense, it was adamant a full handover was needed. 49ers Enterprises was no longer prepared to do a deal in which Radrizzani maintained ties to Leeds or retained any meaningful authority.

For Radrizzani’s part, he is working on a different front to try and bring his purchase of Sampdoria to a conclusion. There are other parties involved in his bidding group but even so, that project — assuming it proceeds as planned — will take up a large amount of his time and money. So a complete exit from Elland Road after six years running the club makes sense to him as much as anyone, even if he seemed reluctant to go. This is the end of his era.

What are 49ers Enterprises’ immediate priorities?

The first, by a clear distance, is the appointment of a head coach. It’s already the middle of June and Leeds are talking about a return date of July 2 for the start of pre-season training. While Kinnear has done the initial groundwork on finding a new first-team boss, the club were unable to make a final offer or nail down a decision while the takeover was pending.

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49ers Enterprises, having briefly contemplated making an offer to bring back Marcelo Bielsa, is very keen on Brendan Rodgers but the indications are that the Northern Irishman is not tempted to work in the Championship. Other candidates have been under discussion too — Carlos Corberan, Scott Parker, Steven Gerrard, Daniel Farke — and that list of names suggests the club are minded to go with a fairly obvious option, rather than gambling on something unexpected or serving up a bona fide show-stopper. Whatever 49ers Enterprises decides, an appointment should materialise rapidly now.

On the director-of-football and recruitment front, the attitude is slightly different. Leeds know that they need to restructure after parting company with Victor Orta last month but they are prepared to take more time in working out who would fit best at the top of their scouting department and how they want their recruitment model to look. For the past fortnight, more urgency has been given to engaging potential head coaches.

Beyond that, transfer business in and out will have to begin rapidly. Departures will be high in number — most likely clearing double figures — and substantial rebuilding of the squad is necessary to get Leeds ready for the start of the Championship season. While 49ers Enterprises has much it wants to change in the infrastructure side, football is what matters here and now.

What does this mean for Leeds’ summer budget?

Had Radrizzani remained in charge, Leeds were preparing to be self-sufficient during the coming transfer window. Radrizzani did not appear to have significant amounts of money left to invest in the club and preparing for next season would have involved using player sales and parachute payments to finance business. Parachute payments in year one in the Championship are worth around £45million to Leeds.

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Those sources of income will still be used by 49ers Enterprises but this takeover is expected to lead to an injection of working capital by the U.S. fund, allowing Leeds to have a more active or aggressive window than they might otherwise have had. That is not to say that spending will be lavish or wildly excessive, and don’t be surprised if the club make use of the loan market, but they should be better placed to recruit and sell, and the takeover should give them more chance of retaining certain key players.

Will the Owners’ and Directors’ Test (O&DT) be an issue?

There is no suggestion it will cause any problems. Marathe and Lowy are already on the board at Leeds so the EFL is not going to obstruct them. The likes of Meador should come through the test quickly too. Only the major members of the investment group, the 11 or so main parties, will have to meet O&DT criteria. The more minor members will not be subject to it. Given that the fund is made up of established corporate figures, digging into their backgrounds and securing assurances about their wealth should be fairly straightforward.

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Beyond the here and now, what is the grand plan?

Needless to say, 49ers Enterprises’ vision has had to be adjusted somewhat. Starting in the Championship means it cannot implement the plans it would have activated in the Premier League. Those plans have not been shelved as such but the timeframe can no longer be the same. Stadium expansion, for example, might be delayed by at least two years.

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But the bigger picture is the same as before. 49ers Enterprises wants to re-establish Leeds as a Premier League club and find a firmer footing in the division. It wants to rebuild Elland Road to create a ground with a capacity in the region of 60,000 and vastly improved facilities. In the long term, it wants to significantly increase annual turnover, hiking it closer to £400million to give Leeds an overall valuation, based on multiples of revenue, of somewhere between £1billion and £1.5bn. And in a lot of areas, not least commercially, it wants to see the club modernise.

Nobody involved with 49ers Enterprises has ever pretended this is a forever project. If the trajectory goes in the intended direction and Leeds do acquire the sort of value the fund envisages, there would most likely come a day when another buy-out was needed to drive the club onto the highest levels of European competition. But that is all for another day, a far-off vision as 49ers Enterprises steps into the breach with nothing bigger to aim for initially than promotion next season. For its first year as owner, the Championship promises to be quite a baptism.

(Top photo: Michael Zagaris, San Francisco 49ers, Getty Images, Visionhaus; Design: Eamonn Dalton)

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