Wigan survive and revive

Wigan’s trials and tribulations started when the Hong Kong-based International Entertainment Corporation (IEC), a company that runs hotel and casino business in the Philippines, acquired the club in November 2018 for £22m (a price of £15.9m plus taking on £6.5m loans), ending 23 years of ownership by the Whelan family.

In June 2020, ICE sold Wigan Athletic to the mysterious Hong Kong based Next Leader Fund (NLF) for £17.5m, giving ICE a £1.6m profit, plus the repayment of the £24.6m they had invested. However, the club was immediately put into administration, as a result of the new owners not putting any funds into the club.

The club was kept going during administration by the sale of some of its young players, thus losing some of its prized “assets”, while the Supporters Club launched a fighting fund, raising more than £800,000, with former players joining fans in helping keep Wigan Athletic afloat.

Wigan Athletic had been in the Premier League as recently as the 2021/13 season, enjoying eight years in England’s top flight.

Following relegation from the Premier League, Wigan only survived two seasons in the Championship before dropping down to League One in 2014/15, before embarking on a yo-yo existence between England’s second and third tiers over the next eight years.

They just about avoided relegation to League Two in the season when they exited administration, finishing one point above the relegation places, though Leam Richardson managed to guide Wigan to the League One title the following season in 2021/22.

However, this was at least in part due to the Bahrain-based ownership investing heavily in the squad, but this was ultimately the root cause of the club’s subsequent financial challenges.

In 2022/23 Wigan’s pre-tax loss increased from £7.7m to a club record £13.4m, despite revenue almost doubling from £8.3m to £15.9m following promotion from League One to the Championship, as operating expenses rose £14.9m (79%) from £18.8m to £33.7m and profit from player sales reduced from £2.8m to £0.4m.

Understandably, the club described this financial result as “disappointing”, though the loss would actually have been even higher at £17.5m without the £4.1m write-off of a shareholder loan  Even though £13.4m was a significant loss for Wigan, the reality is that very few clubs make money in the Championship, so it was only average for this very competitive division.

Wigan have not posted a profit since the 2016/17 season, though they have usually managed to restrict the size of the losses. That said, they lost a total of £21.1m in the two full seasons under Al Jasmi, which is quite a lot for a club of Wigan’s size.   Another sizeable loss is likely to be reported for the 2023/24 season.

Following promotion, Wigan’s average attendance increased from 10,343 to 12,210 in 2022/23, though this was still more than 7,000 lower than the 19,375 peak in the Premier League. Even after the increase, Wigan’s 12,210 attendance was one of the lowest in the Championship, less than half of Sunderland 38,480, Sheffield United 28,746, Norwich City 26,131 and Middlesbrough 26,012.  Even after the increase,   As might be expected, Wigan’s crowds fell after relegation to League One in 2023/24, though their 10,442 was actually the eighth highest in the division

One of the main drivers of Wigan’s financial problems was the club spending too much money on wages.   However, the issue at Wigan is not so much the absolute size of the wage bill, but how much this is in relation to the club’s relatively low revenue, leading to some horrifically high wages to turnover ratios.   In League One Wigan are responsible for two of the three highest ever wages to turnover ratios, including a barely credible 214% in 2020/21 and 176% in 2017/18.

Wigan have never really been major actors in the transfer market, averaging just £5.4m in the six years following relegation from the Premier League.

In the three years since the return from administration up to 2022/23, Wigan’s owners provided £26.6m between them. Most of this came from Danson with his £18.1m in 2022/23 plus another £8.5m from Al Jasmi in the previous two years.

The auditors noted a “material uncertainty” around the club’s ability to continue as a going concern if it no longer received support from the owner, Mark Danson.

This is clearly not ideal, given Wigan’s recent troubled history, but it is worth noting that eight other clubs in the Championship included a similar “material uncertainty” comment, so fans should not be too alarmed.

The club’s revised strategy is “to utilise the resources at its disposal at any point in time to achieve the highest possible league position and success in cup competitions for the first team, whilst at the same time employing prudent financial management to ensure a stable future.”

Given that Wigan Athletic have nearly gone out of business twice in the last few years, that seems fair enough.