Wigan Athletic & Football’s Addiction to ‘Investment’
“Investment” is a very 21st century word, isn’t it? There’s a hint of the warm and fuzzy about it, calling to mind such phrases as “investing in the future.” Investment offers a sense of security and support, of care and attention. It’s the sort of word that you hear on TV adverts during daytime these days, as snake oil salesmen seek to liberate the elderly from any equity in their houses.
Football has become addicted to investment. Below the Premier League, football clubs routinely spend more than they can raise through ordinary commercial channels alone, meaning that regular injections of money are required to keep a lot of clubs solvent. Investment, however, comes in different forms and businesses, on the whole, aren’t charities. Some make their investment in loans, and some charge interest on those loans or secure them against a club’s assets. Investment in itself is only a good thing if the money is spent wisely and the small print doesn’t add too many onerous clauses attached to it.
In recent years, there has been no shortage of individuals and companies prepared to invest in football. Even clubs with a proven track record of throwing good money after bad have been able to attract interest from those who believe that they can turn a club’s fortunes around. But what happens to football clubs when investment money dries up? What happens when the speculative calls from people prepared to sink a few million pounds into a football club in the hope of reviving it start to tail off? Football clubs might be about to find out the answer to that question, and as with the end of any addiction, the answers might not be terribly pretty to watch.
The collapse into administration of Wigan Athletic during the summer was a story that could only have been considered ‘just another news story’ in this particular hellscape of a year. At any other point in recent times, a football club that won the FA Cup just eight years ago being bought, sold, and then pushed into insolvency would have been a story that would have occupied the media for weeks, but 2020 isn’t like other years.
Such has been the surfeit of stories that read like a series of headlines from a dystopian near-future novel that the extraordinary events that took place at the club earlier this summer have slipped under the radar a little. They started the new season in League One last weekend. Those who don’t pay particularly close attention to this sort of thing could be forgiven for believing that everything in Wigan is something approaching normal.
Except, of course, everything isn’t something approaching normal in Wigan at the moment. The administrators of Bgebies Traynor are continuing to run the club on a day to day basis, and this week they have been explaining that the club’s route out of administration is far from guaranteed, at the moment. In an interview with the Guardian, administrator Paul Stanley laid out the problems that the administrators are facing in terms of securing the new investment required to save the club, and that at present there is a very real risk that Wigan might yet go the way of Macclesfield Town or Bury.
The problem, as Stanley explains, is a lack of interest during these pandemic-infected times. Wigan Athletic are up for sale for £3.3m, a price which includes the stadium, team and training ground. In an era when Premier League club supporters on social media routinely insist on their clubs spending ten or twenty times that amount on a player they’ve only seen on a YouTube highlights clip that seems like a relatively small amount of money. The problem, however, is that ultimately £3.3m isn’t that small an amount of money at all, it’s more that the finances of the game have become so distorted that comparing like with like has become effectively meaningless.
This distortion leads to dichotomous interpretations of events. The whole of Wigan Athletic, stadium and team included, is on offer for roughly the annual salary of one average Premier League footballer, but the £3.3m for which the club can be bought remains such a vast amount of money that the chances of any grassroots organisation (such as a supporters trust) being able to raise it in the required time-frame are next to zero. Both of these statements are equally true, and between them they sum up football in this country’s key inequality.
But Stanley’s comments on the matter make for grim reading for the supporters of all football clubs below the top six of the Premier League. All levels of the game below this rarefied air are completely reliant on “investment”, whether it’s Championship clubs selling their grounds to themselves, Newcastle supporters throwing their moral compasses in the Tyne in the pursuit of Saudi money, or non-league clubs requiring a constant drip-feeding of water by directors and sponsors just to keep their heads above water. Investment is critical to all levels of football, and this need becomes more critical the further away you get from that top six.
This time last year, it was Bury. Yesterday, it was Macclesfield Town. Will it be Wigan Athletic next? That may depend on Southend United. The one thing that all four of these clubs have in common is that their problems were not caused by Covid-19. Three of the four – Bury, Macclesfield and Southend – have lengthy histories of financial mismanagement. For two, this has ended up catching up with them, and the other is hanging by a thread, unless another large debt is repaid to the court in just under six weeks time.
Perhaps this is a consolation, of sorts. These clubs and others, such as Hull City and Charlton Athletic, could put into a pot marked ‘chronically mismanaged.’ Should anything happen to any of these clubs, it is unlikely that Covid-19 could be considered as anything more than a mildly exacerbating factor. Bury were expelled from the League before it started. Both Southend United and Macclesfield Town have been repeatedly hauled in front of the High Court over an inability or lack of will to pay their bills on time.
The other, however, is Wigan Athletic, who have been both an established Premier League and FA Cup winners within the last decade. The circumstances surrounding their collapse are unique, the result of a pair of business decisions about which we may never even find out the complete truth. But again, Covid-19 was not a direct impact upon the club’s day-to-day operations in a conventional sense, any more than it has been for any other club. Au Yeung decided to buy Wigan Athletic in partnership with Stanley Choi. He paid £17.5m, and also ensured that a £24m loan was repaid. But then, on the day he took ownership after this £41m purchase, Yeung decided not to fund it and to put the club into administration, so losing control, the £17.5m, and probably the £24m too. There are several different interpretations of what was actually going on here, but none of them are particularly dependent on the ongoing global pandemic.
Wigan Athletic, however, are paying the price of the professional game’s hopeless addiction to investment. Dave Whelan’s took the club to a new world, one to which the old Wigan Athletic was not invited. Reborn with a new stadium and awash with cash, they got into the Premier League and stayed there, lifted a major trophy, and played European football. But when Whelan finally retired, the club needed investment. And that murky world of companies who trade billions of pounds without often seem to impact upon the public’s consciousness became a part of Wigan’s world.
This summer, their supporters have had to become investigative financial journalists and accountants at the same time, trying to understand the counter-intuitive sequence of events that took them into administration and to a point at which no-one will pay £3.3m for the entire football club, including its stadium and training ground. Many are unhappy at the cost of this insolvency event, and at the fact that more than a team’s worth players have departed the club, some at prices that have made it look like a fire sale, after assurances were made that no such sale would take place. Their tetchiness is understandable, though, considering the speed with which their club has unravelled.
These are, however, amongst the fundamental problems with insolvency. Insolvency Practitioners are expensive, for one thing. We don’t have a full breakdown of their costs yet, but as a general rule Insolvency Practitioners have a legal obligation to be transparent over remuneration. And it is a fundamental misunderstanding that they are appointed in the best interests of supporters. From a business perspective, the administrators’ role is to represent the best interests of creditors whilst realising as much money as possible for them and maintaining it as a going concern.
And let’s be absolutely clear, here. Whilst what has happened to Wigan Athletic has a very specific story arc and there is still little indication that Covid-19 has directly led to the collapse of any clubs with no extraneous intervention, but their story remains part of a significant trend – a trend which has been for football clubs to need investment in order to either keep pace with or overtake others. Covid-19 may not directly kill a single football club, but it may well endanger many if the investment money that they are dependent upon completely dries up. It’s a potential crisis for which few within the game are prepared. Dark clouds may be starting to circle, such is the depth of football’s addiction to outside investment.