Wigan Athletic: The Plot Thickens
Yesterday was a busy day for Wigan Athletic. Administrator Gerald Krasner confirmed that he’d had expressions of interest in buying the club from twelve different parties, and that he would be sending out Non-Disclosure Agreements for them to sign and return shortly. In addition to this, he said, “I’m going to ask for proof of funds because you get some very peculiar people wanting to buy football clubs who have no money.” Interpret that as you see fit.
Elsewhere, David Conn, the Godfather of this particular genre of investigation, published his initial findings in the Guardian earlier this evening. Conn clarifies some degree of what has been going on at Wigan Athletic over the last few weeks. It would appear that the previous owners, IEC, lent the club £20m which ballooned up to £24.6m with interest payable. They sold the club to Next Leader Fund LP, a deal that was eventually waved through by the EFL four weeks ago.
NLF paid IEC £17.5m and, it has been claimed, paid the £24.6m owed to the previous owners in full. With the shareholding structures of both companies changing in the background, Next Leader Fund then decided not to put any more money into the club, and put it into administration this week. As Conn says himself, “It is one of the most unlikely and baffling scenarios ever thrown up even among the frequently outlandish sagas of football’s relationship with money.”
A little more clarity has also been thrown up over the complex ownership situation between these companies. It seems that Stanley Choi, the chairman of IEC who was also a majority shareholder in Next Leader Fund, surrendered his shareholding to Au Yeung, who had been a minority shareholder in the company, last week. Having completed this de facto takeover, more or less the first thing that Yeung did was to stop any further funding of the club and call in Begbies Traynor to put the club into administration.
For the record, the company accounts for both Wigan Athletic AFC Ltd and Wigan Athletic Holdings Ltd were due on the 30th June. Being placed into administration allows an extension of up to six months on publishing that year’s company accounts on the Companies House website. The standard Companies House service level is to publish them within 2-10 days of receipt, so it’s possible that they have been sent and are still being processed. We may be waiting up to six months to see them, should an application be made to postpone filing them. We don’t know whether this is entirely coincidental or not.
The long, tall and short of it would seem to be that someone has spent £42.1m to own Wigan Athletic for a few weeks, but it might not quite be as simple as that, considering the interconnected nature of the two companies concerned. And yes, that is “baffling.” But there is at least something of a sequence events forming here, rather than the the shock that comes with icy chill of the club being put into administration out of the blue, which was about as far as we were with it all this time yesterday.
And last night, a video was published on Twitter which casts a whole new light on the story. In the video, a covertly videoed Rick Parry, the chair of the EFL, seems to be recorded saying that there is a rumour that this is happening because the owners of the club, who own casinos in the Philippines, have a large bet on Wigan being relegated at the end of this season. You can’t see a face in the video and it’s only a short clip so there’s no context given to the conversation that was being held, so for some time there was considerable conjecture that the video might have been faked, but the EFL did confirm in a statement last night that the person talking in the video was indeed Parry:
The EFL is aware of a video of its chairman posted on social media this evening that discusses recent developments at Wigan Athletic.
It was part of a much wider and impromptu discussion he was having with a Wigan supporter he does not know but who lives in the same area.
The private conversation focused around the events of the last 24-48 hours, how the EFL can assist and what happens next. The various rumours and reports that have been circulating throughout today were also discussed.
Whilst the chairman was unaware he was being filmed, he was happy to engage in the debate and appreciates this is a concerning and challenging time for all those associated with the club.
Parry only spoke of “rumours” and we will have to wait and see whether this is just the confection of somebody who’s spotted that IEC’s business is is Filipino casinos, or whether there’s any truth in it. If there is, a whole new can of worms opens. The idea of a professional football club being deliberately tanked to the point of administration in order to try and influence a bet should be so abhorrent that the EFL needs to investigate fully whether there is any truth to this rumour. And regardless of whether there is or isn’t, it should be absolutely crystal clear by now that the long-needed reform of ownership rules in this country needs to be carried out with urgency.
Under the current Owners & Directors Test, prospective new football club owners only have to provide that they have the means to be able to support it. There is no obligation on their part to actually put their money where their mouths are. It is clear that there needs to be a way of sanctioning football club owners who run clubs into the ground and then walk away leaving others to clean up their messes. Bans aren’t going to work on people with no interest in football beyond what they can pick from it. It’s time to require that prospective owners, who at that time are always full of promises of a golden future, pay a bond in order to run a club. They’d get it back should they sell, of course, and the money could be used to clear up the mess they leave behind, should that be the way in which it ends.
We can say with considerable confidence now that Covid-19 was almost certainly not a significant factor in the collapse of Wigan Athetic. Indeed, it looks increasingly as though both Covid-19 and Brexit – both of which will likely do significant harm to the economy of this country, but that’s another matter – were in this case used as a cover story for something else altogether, even if it hasn’t fully been concluded what this was, just yet. This will be the look of disaster capitalism for the foreseeable future. Sweeping into town with buckets full of money, promising a bright, golden future from which everybody can profit. When that fails, though (and in the EFL it too often does), the disaster capitalist will always ensure that he profits regardless, with the club itself collateral damage in their endless pursuit of money and the vanity of “glory.”
The administrators confirmed this morning that there will be an investigation carried out into how Wigan Athletic came to end up in this position so quickly. Gerald Krasner tole the BBC this morning that:
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 – 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.”
There is also uncertainty over the status of a £28.77m loan given to Wigan by IEC that attracted 8% interest. This loan now appears to have been repaid by a third party but it is not known what the Latics’ liability for it is.
There will be a lot of incredible things that come out when we get into the paperwork. On the loans, nothing appears to be registered at Companies House to say they are secured against anything. What we don’t know is whether the new owner has repaid that loan by putting his own money in, which would swap the loan over.
So, to assume that the loan referred to in the David Conn article is the £28.77m loan referred to by the administrators may be a little premature, and in truth we won’t know the full extent of the club’s position until the list of creditors is made available. Even at that point, of course, there’s a possibility that there might be other issues haven’t become apparent, and it may well be that Wigan’s accounts are so chaotic that the number of interested buyers drops upon seeing them. It’s too early to say anything definitive, but there does seem to be a reasonable chance that the club can emerge from this without too much damage having been caused. It is, of course, be be strongly hoped that the club’s backroom staff don’t pay the price of any required cost-cutting.
Vultures have always circled over Football League clubs, but the number of profiteers is likely to grow as EFL clubs continue without any income, and with any sense of solidarity between leagues and governing bodies being woefully absent. With prospective buyers already expressing an interest, it’s likely that Wigan Athletic will be rescued unless the administrators find something particularly unpleasant in their investigations. And, let’s not rule that out completely, just yet. But even if Wigan do pull through, someone else will get caught up, just as Bury were ten months ago. If the EFL believes that this is an acceptable situation, then perhaps the whole organisation is unfit for purpose.