Bolton Wanderers & The Opportunities, Costs & Risks of Administration
It’s saying something, when news that would under any other circumstances be treated as a disaster for a football club is instead considered an almighty relief. At just about any other club, confirmation of the appointment of administrators would be considered a new low point in series of calamitous events which now leads to the formal admission that a football club, as a business, has failed, and the beginning of a period of uncertainty from which the end result could be literally anything whatsoever. Bolton Wanderers, however, have not been just about any other football club for the last few years. The appointment of administrators at the perpetually stricken club that has just been relegated from the Championship has been treated with cautious optimism. Ken Anderson, who has only been the owner of the club for a couple of years but has already contrived to make himself persona non grata at The University of Bolton Stadium, is no longer running the club, and that is a cause for some degree of relief.
As ever, the appointment of administrators at a football club has been greeted in the football media with a reaction fixated upon what will now happens to the club in football terms. The Football League – which has already started numbering its statements regarding the club – has already confirmed that the club will be deducted twelve points for the start of next season in League One, but it’s also entirely possible that the club could face a further deduction for its failure to host their last home game of the season against Brentford. There isn’t any prize money awarded for finishing places in the Championship (in the same way that there is in the Premier League) so, with Bolton already relegated and Brentford comfortable in mid-table but already short of the play-offs, there was no structural issue with awarding Brentford a one-nil win, but this “result” did push the Bees up three places in the final Championship table, which in itself demonstrated – without really harming anybody – why the Football League takes clubs completely their fixtures as seriously as they do.
At this stage, no confirmation has been given of the penalty for Bolton’s failure to be able to host this match, but it’s entirely possible – expected, even – that the club will receive a further points deduction over this. The best educated guess that we can make is that a further three points will be deducted, but it could be more although, by the same token, it’s not completely implausible that the League will decide that the club has suffered enough for now. Bolton’s currently stricken financial position, however, means that a fine probably wouldn’t do anybody any good, and at least if any further sanction is announced soon, then any prospective new buyers for the club will know exactly where they stand well ahead of the start of next season. The days of the swingeing punishments such as the thirty points that Luton Town were deducted in 2008 which resulted ultimately in their relegation from the Football League, are probably over, but it wouldn’t be that much of a shock to see Bolton having to start next season on minus fifteen points or more. But what does it mean to “enter into administration”? Who’s affected? Who isn’t affected? And what outcomes are the most likely?
As much as anything else, entry into administration is an admission of failure. It is an “insolvency event”, where “insolvency” may be considered to be a state of being unable to pay debts as and when they fall due, or where a company’s liabilities outweigh its assets. In this case, it is the result of a rather tortuous series of events. A winding up petition brought against the club by HMRC – its sixth in eighteen months – had previously deferred on three occasions, the first two because it was believed that a deal between the Bolton owner Ken Anderson and the former Watford owner Laurence Bassini was imminent, and the third to grant the time for administrators to be appointed after the Bassini deal collapsed because, no surprises here, the formerly bankrupt would-have-been buyer who was banned from all football activity for three years from 2013 to 2016 couldn’t adequately demonstrate that he had the funds in place to proceed with the sale. Administration protects the club from any further petitions from being issued and renders this one unenforceable.
In this case, however, administrators have not been appointed by the club itself, but by former owner Eddie Davies’ trust fund, Fildraw. This is, on balance, probably good news for supporters. It shouldn’t make a great deal of difference in theory, but either directors of the company or shareholders can put an insolvent company into administrators and it’s probably for the best that, in a case in which the current directors of the club may also have “loaned” the club money, those administrators have been appointed by somebody else. To be clear, though, there are no quick, magical solutions at this point. The administrator’s responsibility is towards the club’s creditors, and not towards the club itself. They should seek to rescue the business as a going concern if at all possible, but they are not obliged to do so, and in addition to this secured creditors – ie, those whose loans have been secured against The University of Bolton Stadium – and “football creditors” – players unpaid wages, clubs owed money for transfer fees, and so on – are also excluded from this process by a combination of insolvency law and FA regulations.
The preferred exit route from administration should be a CVA (Company Voluntary Arrangement), a process by which an offer to repay creditors on a “pennies per pound” basis, to be repaid over time, although the entire amount can be paid upfront by the new owners. The prospective new owners are strongly rumoured to be a Chinese consortium which has been introduced by the club’s former head of science Mark Taylor, who’d previously been linked with an attempt to bring a Middle Eastern consortium into the club, but it is understood that this new group were not interested in getting involved with the club until it was in administration, which makes sense in its own way. After all, why buy into a failing football club with large unsecured debts when you can sit back, wait for its inevitable collapse, and then submit an offer of a few pennies in the pound to rid the club of its unsecured debts?
There are, however, further potential spanners that might yet be thrown in the works, here, as well. The exact extent of the club’s indebtedness will not become completely clear until the administrators have received all claims from creditors, and it’s not uncommon for these claims to throw up a few surprises, and in addition to this last year’s company accounts are already six weeks overdue with Companies House. Once an proposal has been reached that the administrator has been satisfied by, the unsecured creditors have the right to vote in favour of the proposal at a creditors meeting. The administrator in this case is Paul Appleton of David Rubin & Co Ltd, was previously involved in the 2013 administration of Coventry City, which resulted in the club being sold back to another arm of its previous owners. Whether this bodes well for the supporters of Bolton Wanderers is debatable, but it is worth reminding ourselves as the process gets under way that no two insolvency events with a football club are ever identical, and that history has since proved that Appleton could never have resolved the tangled web that was (and remains) Coventry City and the Ricoh Arena. We all know how intractable that all turned out to be. Perhaps he will be able to get Bolton Wanderers finally back on an even keel.
The club’s supporters have been so battered by the events of the last few seasons that just to see the back of Ken Anderson in terms of controlling the club will undoubtedly come as a relief. He remains, however, a creditor and will be able to exert some degree of influence over the administration process. The exact extent to which he can is difficult to calculate at present, but we will find out over the next few weeks or so. There is, however, a group which has apparently expressed an interest in the club, so who are they? They’re reported as being linked to the Chinese Super League club Shandong Luneng, which in turn is owned by two subsidiaries of China’s State Grid Corporation, the Shandong Electric Power Corporation and the Luneng Group.
The club is one of the wealthiest in the Chinese Super League and already has numerous links abroad, but none of this is provides any indication of what their intentions for the club might be. They may well be better for the club than Ken Anderson – it would be pretty difficult to argue that they wouldn’t be – but those with their fingers crossed for Bolton to have hundreds of millions of pounds thrown at them should be aware that in 2018 some owners and investors sold up their stakes in football clubs under pressure from the Chinese government. There have already been breathless reports that Sam Allardyce could be set to return to the club, but Allardyce would almost certainly be expensive, and it is definitely concerning that the early talk is of grand gestures such as this rather than the altogether more boring (but considerably more important) job of restructuring Bolton Wanderers in a sustainable manner, rather than piquing everyone’s interest with headline-grabbing stories about former managers “coming home again.” It’s difficult to avoid the conclusion that everyone needs to calm down a bit, and that Bolton Wanderers should probably be learning to walk before they attempt to run. After all, at the moment the club is barely even able to stand up straight unassisted. Will they, for example, this consortium fund the club as a going concern whilst it is in administration? Because somebody is going to need to.
As ever, a football club entering into administration raises as many questions as it answers. It is likely that Bolton Wanderers will, presuming they survive the summer (which isn’t guaranteed at the moment, although it would be surprising to see the club get liquidated from the position in which it currently finds itself), start next season amongst the bookmakers’ favourites for a second successive relegation on account of their points deduction alone, even though they were somewhat generously priced at 12/1 to avoid this fate with them as recently as the end of last month. But matters of promotion and relegation are not really what matters for Bolton Wanderers at present. What matters is the club’s survival. One hundred and thirty-one years on from the formation of the Football League, this month has already seen the loss of one its founder members, when Notts County’s fall into the National League made it the first of those twelve to lose its place since Accrington, in 1893.
This country prides itself on its position as the crucible the global professional game. To see those very founding members struggling in this way asks very serious questions about our commitment to that pride, when sentimentality wears off and only hard questions remain. Professional football is very good at remaining within its own bubble, but it’s likely – if not certain – that there will be staff redundancies within the club, whilst it has been reported this morning that food banks have been set up for those unpaid at the end of last month. Insolvency carries a human cost which is largely unreported because almost everybody, both inside and outside the game, is more interested in the spectacle of that game continuing with as little disruption as possible than anything else. It is likely that Bolton Wanderers will survive this financial disaster, but insolvency is seldom easy to negotiate a pathway through and comes at a significant cost. Points deductions are almost an irrelevance at the moment. Sam Allardyce most definitely is, for now. What matters is the survival of Bolton Wanderers Football Club, the wellbeing of their staff, and that this time, a period in administration draws a line under the wretched recent history of one of English football’s most storied clubs.