Wigan Athletic’s ‘Slow Motion’ Administration

by | Jan 22, 2021

Tucked away near the foot of League One is a football club in deep crisis. Wigan Athletic are in deep trouble, none of it on account of anything done by anything whatsoever to do with football. What is truly shocking about the events at Wigan Athletic over the course of the last six months is that this could happen so suddenly, so devastatingly, and so heartlessly to a beloved community institution. The story of what has happened to Wigan Athletic since the start of June has been an absolute scandal, a living embodiment of the increasingly widely-held feeling that the professional game has lost touch with financial reality and has finally started to cannibalise itself.

On the 1st July 2020, Wigan Athletic, from out of nowhere, entered into administration, with Begbies Traynor appointed. The Covid-19 pandemic gave some degree of cover for the story, although the suddenness of it all did seem jarring. It was reasonably common knowledge that times would have been tough this year for football clubs, but Wigan had only taken on new owners a month earlier and normally when a club is looking like it might enter into administration it gives off signs, first. Such is the very public nature of football, especially in this day and age, that clubs have a certain aroma in the weeks building up to entering into the arrival of an insolvency event.

All the weirder, EFL chairman Rick Parry was secretly filmed suggesting that it all could have been linked to ‘a bet in the Philippines on them being relegated’. A independent commission looking into Wigan’s appeal against their twelve point deduction – the club claimed, unsuccessfully, that their insolvency was a “force majeure” event – stated that Parry had acted ‘perhaps unwisely’ in discussing this with a supporter, and that, “Given the way in which international betting markets operate, we recognise that this is not impossible, but it is wholly unsubstantiated as an explanation for what happened here.”

It’s been six months now, and it’s been a disastrous six months for Wigan Athletic. The twelve point deduction imposed by the EFL pushed the team into the Championship’s relegation places. A 1-1 draw against Fulham on the last day of the season ended up sending them down, when a win would have kept them up on goal difference above Barnsley. This season has been, if anything, even worse. With 21 games of their season played, Wigan Athletic are in 22nd place in the League One table. Things are better than they were. Wigan went on a run of ten matches between the start of October to the start of December during which they picked up just two points.

Manager John Sheridan departed for Swindon Town on the 13th November, and form started to lift a little after that. Indeed, immediately after Sheridan left Wigan lost twice and drew once in the three matches, but they’ve only lost once since then, and that’s a period of seven games. Wigan have struggled in front of goal all season, with just 24 goals in 21 games. They may only be two points from safety and they seem to be on the right trajectory on the pitch with more than half the season is left to play, but Wigan’s position remains precarious. Relegation to League Two remains a possibility, though it hasn’t yet quite become a probability.

Meanwhile, administrator Gerald Krasner began his search for a new owner for the club, and in September Begbies Traynor confirmed that they had reached an agreement with a “preferred bidder from Spain” fronted by the Leganes owner Felipe Moreno to purchase the club, but the deal dragged on and at the start of December the EFL issued a terse statement confirming that they had rejected the takeover for the tantalisingly mysterious reason that, “the League’s requirements have not been satisfied.” The window for optimism that the League required could be satisfied was closing, and on the 5th January, a further statement from Begbies Traynor, it snapped shut:

As of 11am today, the administrators have broken off negotiations with the Spanish bidder. The facts are that as late as Christmas Eve the bidder indicated that they wanted to complete the deal immediately and had wired money from Spain to their UK solicitors.

This was confirmed as being received by their solicitors over the Christmas period. The sale contract was agreed, the documentation had been signed in relation to the assignment of the leases with the council (stadium) and college (training ground) and completion was planned to take place in between Christmas and New Year.

It later emerged that Moreno had halved his offer for the club at the very last minute, leading to Begbies Traynor terminating the conversation. At the same time, the administrators confirmed that any future bidder would have to show proof of funds and go through the EFL’s Owners & Directors Test before getting exclusivity to purchase the club. This, it was said, was designed to save time and avoid a long exclusivity process. There wasn’t time for another late collapse, like the first time around.

With Christmas and the New Year out of the way, new interest in buying the club did start to make itself known. By the middle of January, there were 11 “active interested parties”, two of which had “provided verifiable or certified proof of funds” but had yet made an offer. A Far Eastern consortium fronted by Wigan-based businessman Tony Frampton had been the early front-runner, but Frampton had complained about the exclusivity clauses inserted by the administrators. A Non Disclosure Agreement reportedly now prevents him from talking about it.

All of which leaves Wigan Athletic a week off having been in administration for seven months. And then, at possibly the very worst moment, the six month report from the administrators landed. Much has been made of the amount of money that Begbies Traynor, but these don’t seem out of the ordinary in such case. Here’s a story about administration costs over a twelve month period from Portsmouth FC, in 2013. Appointing administrators is an expensive business.

Away from those headline-grabbing costs, though, the six month report told us a thing or two about the club’s financial position during the time of Covid-19. Wigan had raised £9.27m from player sales, but amongst their expenditure was £403,833, made up of £228,833 in counsel fees and £175,000 in legal fees, spent on appealing the EFL’s twelve point deduction and £98,708 on Covid testing. Combined, these two amounts alone comfortably eclipse the £280,763 received from all TV revenues, including I-Stream. Those TV revenues are less than twice the £145,836 that the club shop took in over the same period of time. The club had managed to pay its football creditors £5.345m, but only has £1.132m left in the bank, not even a couple of months wages, if the figures for the first half of the season are anything to go by. The joint administrators’ report confirmed that the owners were interviewed over the circumstances of the administration, and that no further action is planned against them.

Gerald Krasner still seems to be sanguine about it all, though. Speaking to Talksport, he sought  to reassure supporters that “Unfortunately in terms of football administrations, six months is not a long time – especially with a global pandemic going on”, and that, with eleven potential buyers having revealed themselves, even if the Spanish bid turned out to be duff and the Frampton bid’s feet got too cold, there remain plenty of options for the club to exit administration under new ownership, and with a brighter future to look forward to. The fire sale of Wigan players has slowed, with the administrators having turned down offers for prized young players Tom Pearce and striker Kyle Joseph, and Krasner said that, “There is enough interest that leads me to believe we will come out of this with what I said on day one… that football will be played in Wigan this season, and also next season.”

There is still interest, and while it is understandable that there has been growing tetchiness amongst the club’s fanbase since the collapse of the Spanish bid, Gerald Krasner was quite correct in saying that six (or seven) months isn’t especially unusual as a period of time for an insolvent football club to remain in administration. For example, Port Vale’s 2012/13 administration lasted for eight months, as did Plymouth Argyle’s, a couple of years earlier. Leicester City, who entered into administration in the immediate fallout of the ITV Digital collapse, spent two years and one month there. In short, administration can take as long as it takes, and the circumstances of every club that finds itself in this position is different.

There is still interest, and while it is understandable that there has been growing tetchiness amongst the club’s fanbase since the collapse of the Spanish bid, Gerald Krasner was quite correct in saying that six (or seven) months isn’t especially unusual as a period of time for an insolvent football club to remain in administration. For example, Port Vale’s 2012/13 administration lasted for eight months, as did Plymouth Argyle’s, a couple of years earlier. Leicester City, who entered into administration in the immediate fallout of the ITV Digital collapse, spent two years and one month there. In short, administration can take as long as it takes, and the circumstances of every club that finds itself in this position is different.

Allowances have to be made for delays in the process of selling Wigan Athletic under the current circumstances. Selling a football club is a minefield at the best of times. Doing so in the current environment, in which the British economy is undergoing a hit that it has not seen for hundreds of years, certainly seems to be becoming a thankless task for the administrators. Insolvency is expensive. Maintaining a League One football club with no match day income whatsoever is very expensive. The question now hanging in the air is, what happens at the end of this month when the players’ wages fall due again? That money has to come from somewhere, and with no preferred buyer at present it is not entirely clear how the club can be funded as an ongoing concern with the sale process having been shunted back to square one by the Spanish bid having collapsed at the start of the year.

But the regulators need to look very closely at what has happened to Wigan Athletic over the last seven or eight months or so. As with what happened at Bury in 2019, what happened there last year would have been completely avoidable, had regulation surrounding the sale of clubs from one party to another been tightly regulated enough. It’s not enough to ask for proof of forward funding, if that funding can be withdrawn at the drop of a hat and a club can be plunged into insolvency in the way that happened at Wigan last summer. These are difficult times for everybody, and at time when many clubs are suffering financially, it should be incumbent upon the game’s governing bodies to tighten their rules in order to ensure that no other clubs are dragged into this particular version of hell.

The problem is with the system, from top to bottom, and for so long as football clubs can be treated as pawns in the world of wild west capitalism, the likelihood of casualties will remain high. When Bury were expelled from the EFL, almost a year and a half ago, there was considerable hand-wringing about how things had to change. Nothing has, though, and this has led us to Wigan Athletic finding themselves in the precarious position in which they do today. Furthermore, with few signs of normality returning to public life any time soon, there is a strong likelihood that other clubs will find themselves skirting close to insolvency over the course of this year. In finding against Wigan’s appeal against their 12 point deduction during the summer, the independent panel concluded by saying:

We cannot, however, end without repeating our expression of sympathy for all who have loyally supported the club for so long. It is a tragedy that they have been let down by those who appear to have seen the club and English football as an opportunity for investment and profit and no more and who may, for whatever reasons, have decided to leave the club to its fate when their interest changed or faded.

No truer words were ever spoken, and one of football’s greatest tragedies of the 21st century has been the extent to which a failure of oversight has allowed such people to enter into the game in the first place.