Leeds Relegated After Entering Administration

Leeds United have called in the administrators, incurring an immediate 10-point penalty which confirms their relegation to League One as the bottom-placed team in the Championship.

The club, whose relegation became a near-certainty after last Saturday's 1-1 draw with Ipswich left them three points from safety with a significantly inferior goal difference, had an incentive to make the move quickly. Had they delayed beyond the final whistle of Sunday's closing game against Derby the points penalty would have been imposed next season, massively undermining their attempt to win immediate promotion back to English football's second tier.

The administrators immediately sold the club back to a newly-formed company called Leeds United Football Club Limited, led by the current chairman Ken Bates, the chief executive Shaun Harvey and board member Mark Taylor.

The sale however must be ratified by the Football League and the club's creditors, who will be asked to "forego a significant element of their debt in order to allow the club to continue trading under new ownership," according to a statement issued by the administrators, KPMG. The creditors will meet to consider the proposal before the end of May.

Before the move the club had debts of approximately £35m and required an immediate cash injection of approximately £10m to continue trading. Her Majesty's Revenue & Customs recently issued a winding-up order meaning the club would have gone into liquidation had they not settled the £5m bill by June 25.

"The administrators understand from discussions with the Football League that the administration will result in the immediate deduction of 10 points from the club's current points total in this year's Championship," the administrators said. "This means that next season the club will start the campaign in League One with no points deducted."

Richard Fleming, joint administrator and KPMG restructuring partner, added: "This agreement has been reached quickly to maximise the possibility of survival of this major football club, to minimise uncertainty for all the club's stakeholders and supporters and to allow the club to plan ahead for next season. There is now a big decision for the creditors to make at their forthcoming meeting."