Wigan's extraordinary story

As they prepare to face Southampton in the FA Cup this afternoon, it is a good opportunity to reflect on Wigan Athletic's extraordinary story and take a look at their finances.

The club was elected to the Football League in 1978, displacing another Lancashire club, Southport, after an initial tied vote. Dave Whelan took over at Wigan in 1995 and helped direct the club's rise from the fourth tier to the Premier League a decade later. Under his guidance, Wigan enjoyed eight years in the top flight and won the FA Cup in 2013.

It has been agreed in principle to sell the club to a Hong Kong listed company. International Entertainment Corporation (IEC), an Asian hotel and casino operator, has been in takeover talks. Its chairman Stanley Choi is a poker champion who has tried to promote the game in Asia. IEC said in a statement: 'The proposed acquisition, if materialised, represents a good opportunity to diversify the income stream of the company and broaden its revenue base.'

The chief executive's report for 2016/17 stated: 'The 2016/17 season, in some ways, marked the end of an era for the football club ... Following relegation from the Premier League in 2013, the club continued to receive parachute payments for four years to allow an achievable transition to much lower turnover levels outside the top tier. May 2017 marked the final parachute payment and the financial landscape has changed markedly from that date.'

During the year to May 2017 the club received just £17.7m from the Premier League. In 2017-18 it will receive just £800,000 as a solidary payment. 'It is expected that the club will incur significant operating losses in 2017/18 due to maintaining a high player budget in League One compared to our rivals despite a forecasted reduction of almost 40 per cent in player wages compared to 2016/17.' The cup run may help to offset some of these losses, particularly if it continues.

The club's objective has been sustainability without significant shareholder funding since relegation from the Premier League. 'The challenge is to achieve success on the pitch at the same time as implementing this financial model.' The club has relied to a considerable extent on player trading in recent years. Not all player acquisitions in the last four seasons have 'yielded the investment returns that we anticipated or expected'.

Even so, £108m has been generated in transfer fees since 2008, which has allowed £127m to be invested in new players over the same period. The club admits, 'It has become more difficult to compete with other clubs to recruit talented players who appreciate in value as clubs use increasingly more sophisticated methods to identify targeted players.'

The target for 2016/17 had been break even, but the operating loss before profit on player sales (£4.3m) was £643,724. Compensation to departing football management staff generated unexpected costs, but a fourth round FA Cup tie with Manchester United at Old Trafford generated revenues in excess of £1m.

The cup run will help Wigan financially, but there is a risk that it will undermine their promotion push. Games in hands do not necessarily translate into points.

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The Political Economy of Football V2

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