Risdale's Legacy - Division 3

Gerald Krasner, an insolvency specialist, led a consortium of local businessmen which took over Leeds and under his chairmanship oversaw the sale of the clubs' assets, including senior and emerging youth players of any value. Caretaker manager Gray was largely blameless for the performance of the team during the 2003-04 season as the majority of the squad was sold out from underneath him and despite his best efforts, Leeds were relegated after 14 years in the top flight. Following relegation, Gray's reign as caretaker manager was terminated, and Kevin Blackwell was appointed manager. Most of the remaining players were sold or released on free transfers to further reduce the wage bill. Leeds were eventually forced to sell both their training ground, for £4.2m, and their Elland Road stadium in the autumn of 2004.

The board finally sold the club to Ken Bates for £10m. Blackwell stabilized the team by signing players on free transfers and low wages and Leeds finished the 2004-05 season mid-table in the Championship. In the 2005-06 season Leeds finished in the top 6 and made the promotion playoff final, which they lost to Watford. On 10 September 2006, Kevin Blackwell announced that within a year the club would be debt-free. However, the 2006-07 season started badly and on 20 September 2006 Kevin Blackwell's contract as manager of Leeds United was terminated. Dennis Wise was eventually installed as his replacement after a month without a permanent manager, but was unable to lift the team out of the relegation zone for much of the season, despite bringing a number of experienced loan players into the squad . With relegation virtually assured, Leeds entered a Company Voluntary Arrangement (administration) on 4 May 2007, thus incurring a league imposed 10 point deduction which officially relegated the club to the third tier of English football.

The CVA was due to end on 3 July 2007 which would have allowed Bates to regain full control of the club. However HM Revenue & Customs challenged the CVA, a decision which could ultimately have resulted in the liquidation of the club. Under league rules, if the club were still in administration at the start of the next season, Leeds would have been prevented from starting their campaign by the Football League. Following the challenge by HMRC, the club was put up for sale by KPMG, and once again Ken Bates' bid was accepted. The league eventually sanctioned this under the "exceptional circumstances rule" but imposed a 15 point deduction due to the club not following football league rules on clubs entering administration. On 31 August 2007 HMRC decided not to pursue their legal challenge any further.

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