The Political Economy of Football V2

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,...

Wigan are in trouble after sinking deep into another financial hole. Relegation from the Championship, confirmed in late April, has become the least of their concerns. A club that was dragged to the brink as recently as 2020 is back on the slide under owners who promised the same would never be allowed to happen again. Phoenix 2021 Limited, an ownership group based in Bahrain, might have delivered the League One title during their first full season in English football, but that success has been bookended by suffering. Wigan are back in the mire, battling the woes they hoped never to see again. The drip, drip, drip of financial mismanagement has filled the sink and without a takeover this summer, there are fears of the water spilling over and flooding the DW Stadium. Debts owed to Her Majesty’s Revenue and Customs (HMRC) are understood to stand at £2.5million ($3.14million). Anxiety is on the rise and trust in the owner, Abdulrahman Al-Jasmi, and his son-in-law and chairman, T...

 A deal has been agreed to sell Wigan Athletic to a new buyer:  https://www.manchestereveningnews.co.uk/sport/football/football-news/wigan-athletic-new-owners-efl-27054905

Wigan Athletic manager Shan Maloney admitted his players are still yet to be paid and the club are braced for an “expected” points deduction. Wigan confirmed on March 10 that there had been a delay in wage payments to players and staff due to “liquidity issues”. It is the fourth time in nine months that wage payments have been late. Maloney will fly to Bahrain on Saturday night to meet with Wigan chief executive Malachy Brannigan. The Wigan manager said he hoped the trip would provide “clarity”.

Wigan are a club whose owners no longer regularly pay its players and staff on time. For the fourth time since promotion to the Championship was wrapped up last spring, salaries did not arrive on the scheduled payday last week. An EFL charge is in the post and a three-point deduction is seemingly unavoidable. The Professional Footballers’ Association, too, are monitoring the delays. Wigan’s supporters are anxious, angry and, ultimately, conflicted. An ownership group that saved the club is giving cause to worry. They no longer have a presence at the DW Stadium and long-term motives are being questioned. The rawness of Wigan’s last financial meltdown exacerbates their plight. Less than three years ago, the club was placed in administration after a Hong Kong-based consortium, Next Leader Fund (NLF), saw no other option available within a month of taking over from International Entertainment Corporation (IEC).    The new owners had passed the EFL test which is suppo...

Wigan new owners Phoenix 2021 publish 2022 accounts, the first full figures since former owner (Au Yeung, put the club into administration weeks after buying it for unknown reasons, reports Kieran Maguire. Wigan have only broken even once in the last decade on a day to day operational basis. Even in the Premier League the club was losing money. Revenue down compared to 2019 (last year for which full figures available) due to being in L1. Down 85% on WAFC final season in Premier League. Broadcast income is by far the largest component for a club such as Wigan in Premier League and whilst receiving parachutes. Once in L1, only get 12% of the EFL deal compared to 80% in Championship. Ticket sales generate less than £100k a match.   Commercial income, which includes sponsorship, hospitality, academy grants and others, appears to be an area addressed by the new owners. Wages are biggest expense for a club. Relegation is usually accompanied by a big fall but Wigan still paid £1...

The Athletic has published a fascinating in depth account of the administration process at Wigan Athletic.  I do find The Athletic good value with high standards of writing and I can recommend a subscription. Here are a few highlights which show just how dire Wigan's situation was and it's good to see it resolved. 'There have been plenty of bumps in the road over the last eight and a half months and the takeover is still not quite complete — although it is just a formality now — but when Wigan line up for their first game of next season they will do so at their own ground, having prepared at their own training ground, with a team stocked with talent from their own academy, with no debts and every chance of still being in League One. But Stanley [administrator] also cares about his reputation, so he wants people to know how he achieved this and why he believes he and his colleagues at business recovery firm Begbies Traynor are worth every penny of the £2 million or so they...

The Athletic has reported that a  group fronted by former Manchester United and Everton star Darron Gibson has emerged as the new favourite to buy League One side Wigan Athletic.  He  is part of a group that includes a management team with a strong track record in British football and it is backed by a foreign investor with British links. The group is understood to have shown it has the required funding to complete the deal and is scheduled to meet the English Football League this week. The asking price for the club is £3 million but a prospective new owner also has to show the EFL they have £4 million to fund the club for two seasons. Gibson’s group, which might be joined by two other footballers, is understood to have the funds to purchase the club in a bank account and a loan lined to fund the club going forward. Bolton-based businessman Martin Halsall is still in the mix, as is a group that includes South African-based British businessman Saul Loggenberg. In the meant...

Charlton's new owner Thomas Sandgaard had a 40 minute interview with Jim White and Simon Jordan on Talksport today starting at about 12.20 pm.  Sandgaard said that he has put about £11m of working capital into Charlton.  He spends five hours a day on the club. He was asked about the various individuals who claim to be the real owners of Charlton.  He dismissed this as 'entertainment', noting that Roland Duchatelet would not have granted him a fifteen year lease if he was not in control.   Roland had a 'big legal team' who would have spotted anything awry.   He said, 'Nobody is messing with Charlton any more.' Over the fifteen year period he did not rule out moving to a new stadium if that was what was needed, but bearing in mind the example of West Ham, he was aware of the need to take the fans with him. He had taken a serious interest in Wigan and also looked at Coventry and Sunderland, but decided that the problems at Wigan were too great and they co...

As we have suggested before, the 'Spanish' takeover of Wigan Athletic might not be all that it seemed and the EFL has refused to clear it, one individual having apparently failed the Owners' and Directors' test:  https://www.wigantoday.net/sport/football/efl-release-wigan-athletic-takeover-statement-3058652 This means that the club will remain in administration. MP for Wigan and Shadow Foreign Secretary Lisa Nandy looked at the positives from the outcome, believing the club can now move forward to find the right buyer. "This decision will finally allow us to move forwards and secure the long-term future of the club," she tweeted. "We now need the administrators to open up the process and press ahead with the right solution for Wigan Athletic."

If I was a Wigan fan, I would be concerned by the news that Chris Farnell is getting involved in the club's takeover.  We have experience of him at Charlton and one fan made a complaint to the Solictors Regulation Authority about an alleged conflict of interest:  https://london-post.co.uk/wigan-athletic-takeover-in-chaos-as-former-charlton-athletic-director-looks-to-gain-control/ 'Sources understand [named purchaser] Garrido Cristo is to be connected to Manchester based IPS law firm owner Chris Farnell. Former Wigan Athletic director Farnell (who was involved in the club in 2013) was also previously involved in the liquidation of Northern English club, Bury, and has a string of associations with other clubs including Charlton Athletic, who have suffered huge mismanagement.'

The identity of the London-based Spanish businessman who has taken over Wigan has been revealed.  He has been involved in two Spanish clubs:  https://www.thebusinessdesk.com/northwest/news/2067372-new-owner-of-wigan-athletic-revealed

The administrators of Wigan have reached agreement with a preferred bidder from Spain.   Non-football creditors can be paid, avoiding a 15 point penalty:  https://wiganathletic.com/news/2020/september/Update-Statement-From-The-Joint-Administrators-30-09-20-/

Football league chairman Rick Parry discusses events at Wigan Athletic, saying that English football has been disrespected.   .   He makes it clear that the owners' and directors' test can't be expected to do everything.  A more fundamental problem is the finances of the Championship and the fact that clubs are not sustainable:  https://www.bbc.co.uk/sport/football/53341269 The Guardian argues that the fundamental problem is the distorting effect of Premier League finances and calls for 'proper financial fair play rules' that would allow clubs only to spend what they raise in revenue:  https://www.theguardian.com/football/2020/jul/08/wigan-debacle-exposes-unsustainable-excesses-of-the-football-league Premier League clubs, particularly the top six, have very considerable broadcasting and commercial revenues so such a rule might pose more problems for lower league clubs.

Wigan have appealed against their 12 point deduction by the EFL.  However, they could face a further 15 point deduction next season depending on the terms of the CVA according to administrator Gerald Krasner:  https://www.skysports.com/football/news/11682/12022798/wigan-athletic-appeal-12-point-deduction-wigan-warriors-intend-to-bid-for-football-club Wigan Warriors intend to make a bid for the club.

Gerald Krasner, joint administrator of Wigan Athletic, has predicted that six more clubs across the EFL could go into administration because of the Covid-19 lockdown. He told the Financial Times that new owners should be required by the EFL to provide a five year bond which could pay out if they did not keep to their commitments. However, lawyer Roger Elford told the Pink 'Un that a bond 'may act as a significant deterrent to investment in EFL clubs, and may result in clubs failing that might otherwise have been rescued by wealthy investors or benefactors.' Local MP and shadow foreign secretary Lisa Nandy has asked the Government to provide funds to enable the Lactics to play their remaining games.  However, it is a slippery slope when governments start subsidising football clubs.  Their funds come from taxpayers, many of whom are not football fans.

The events surrounding the entry into administration of Wigan Athletic have become even murkier after EFL chairman Rick Parry was secretly filmed discussed an alleged bet on the club's relegation which may have been placed in the Philippines:  https://www.bbc.co.uk/sport/football/53261368 Experienced administration practitioner Gerald Krasner commented: ' Every administration I have been involved in had its peculiarities, but this is a first. Four weeks is a record that will stand for some time.' 'We are aware of concerns that have been raised. The investigation won't go away. It will be done. Once I know we have saved the club and got non-disclosure letters out [to prospective buyers] - we're talking about two weeks - we will sit down with our lawyers to see if there is any litigation there that will be for the benefit of the creditors.' A good analysis of these mirky events here:  https://twohundredpercent.net/wigan-athletic-plot-thickens/amp/?__twitter_im...

Wigan Athletic faced fundamental financial problems which have simply been accelerated by the pandemic.   In November 2018 long-term funder of the club Dave Whelan sold the club to International Entertainment Corporation (IEC), a Hong Kong-based, Cayman Islands-registered company whose majority shareholder was Dr Choi Chiu Fui Stanley.   The sale price was £15.9m. Last month the club was sold on to Next Leader Fund (NLF), another Hong Kong-based consortium of which Dr Choi was also the majority owner.  The price was £17.5m plus repayments of £24.36m that the company had invested in the club. On June 24th Wai Kay Au Yeung, previously a minority shareholder in NLF, replaced Dr Choi as majority shareholder, since when funding of the Lactics appears to have been withdrawn.  The Hong Kong stock exchange was notified that the reason for the club's sale was its failure to reach the Premiership; Brexit uncertainty; and the suspension of football. Wigan recorded a loss of £9....

There are special factors affecting the administration at Wigan which I will discuss in a later post.  Nevertheless, there are fears that it could represent the tip of an iceberg with perhaps as many as 10-15 clubs in danger:  https://www.bbc.co.uk/sport/football/53256015 As usual there have been calls for the Premier League to pay up.  It already does so to the tune of £400m a year, although the greater part of that money goes on parachute payments which have a distorting effect on competition in the Championship. Football is a very unusual sector of the economy in that the producers (clubs) very rarely disappear altogether.  A new buyer is found or a phoenix club appears.   Liquidations are very rare.  We remember examples like Third Lanark in Scotland because they are so unusual. In strict economic terms, the market is over supplied.  As Szymanski notes, 'It has long been said that there are too many professional football clubs in England.'  ...

Football finance expert Kieran Maguire discusses Championship finances and asks whether the coronavirus pandemic could mean the end of the Championship as we know it. David Sharpe, the former chairman of Wigan Athletic, contributes to the discussion: The future of the Championship