Discussion Forum

Are clubs facing th...
 

Are clubs facing the threat of administration

 

werdermouth
Site Creator Webmaster
Joined: 4 years ago
Posts: 560
Topic starter  

With matchday income impacted by having to play behind closed doors, many clubs are facing an uncertain future as they attempt to meet their running costs without gate receipts or hospitality income. For many in the Championship, the gamble on promotion has meant the wage bill of the players before Covid-19 struck normally exceeded their income, which has now become an even bigger gap.

Wigan Athletic have become the first club since the restart to go into administration and they may not be the last. The FT reported that EFL chairman Rick Parry warned in May that the league would be facing a £200m financial hole by the end of September, although he did not wish to speculate on how many clubs would go out of business. Parry told MPs back in May: “We need a complete reset and a rethink about how the business model works,” then raised the possibility of salary caps among measures that could be taken to remedy the situation.

So have Wigan been forced into administration or is it been done under the guise of a more complex gamble by the new owners in an attempt to reduce their debts in order to regroup?

Note: I've moved some earlier posts on the subject from the Hull v Boro match preview as this issue is likely to exist beyond that particular thread.

This topic was modified 12 months ago by werdermouth

Quote
werdermouth
Site Creator Webmaster
Joined: 4 years ago
Posts: 560
Topic starter  

Something seems not quite right with Wigan going into administration just four weeks after being taken over by a Hong Kong consortium called the 'Next Leader Fund' - especially if  you consider that the EFL’s test and takeover process requires that any new owner has the money to buy a club and support it financially for at least the remainder of the season and the whole of the following season.

Could this be a plan to ease Wigan's current debts by the new owners and start afresh without that burden. One would presume that the EFL saw evidence that 'Next Leader Fund' had the resources to finance the club otherwise why were they allowed to do so?

Incidentally, the 12 point deduction is only applied if Wigan finish outside the bottom three - otherwise the penalty is carried over to next season if they finish in the relegation places before a deduction, which is presumably designed to stop relegated clubs clearing their debts and then hoping for a quick promotion back to the Championship. Perhaps the owners are calculating that the team can still avoid relegation even with the 12 point deduction.

I should add that the new owners are essentially the old owners under a different financial vehicle - i.e. former owner Dr Choi Chiu Fai Stanley was the majority share holder of the new one but has since recently announced there is a new majority shareholder of Next Leader Fund - with the next leader being Au Yeung Wai Kay, a Hong Kong real estate investor.

This post was modified 12 months ago 6 times by werdermouth

ReplyQuote
Martin Bellamy
Member
Joined: 12 months ago
Posts: 180
 

According to the Administrators the problem at Wigan is that the new owners haven’t come up with the money they promised although no one seems sure why. I’ve been in contact with a few friends who are ‘Latics fans and none of them saw it coming. 

In an interview with Wigan Evening Post, Dave Whelan has ruled himself out of riding to the rescue apparently. In his interview he also failed to mention breaking his leg in the FA Cup Final. Which is a first, I think! 

This post was modified 12 months ago by Martin Bellamy

Liked by Redcar Red and jarkko
ReplyQuote
grovehillwallah
Member
Joined: 12 months ago
Posts: 561
 

Rest assured with the Wigan situation every scenario will have been scrutinised from a financial point of view. Football and the possibility of survival ( with enough points in the bag) and starting afresh in League One without a points deduction will have been “ spreadsheeted” to death.


Liked by Redcar Red
ReplyQuote
Redcar Red
Member
Joined: 1 year ago
Posts: 638
 

It may not be made easier if Wigan invoke a force majeure clause over their 12 point deduction because of Covid 19. I'm not sure if that holds any water but I would reckon if its only the virus that has caused this situation (which I doubt) they may possibly get a stay of execution?


ReplyQuote
werdermouth
Site Creator Webmaster
Joined: 4 years ago
Posts: 560
Topic starter  
Posted by: @redcarred

It may not be made easier if Wigan invoke a force majeure clause over their 12 point deduction because of Covid 19. I'm not sure if that holds any water but I would reckon if its only the virus that has caused this situation (which I doubt) they may possibly get a stay of execution?

I could perhaps see how existing owners of a club could possibly use the impact of Covid-19 to go into administration but given that the sale of Wigan only went through on 5 June, it's hard for them to argue that they as new owners have been adversely effected by Covid-19.

Nothing has changed since they bought the club and they will have known that the season was going to be played behind closed doors. In fact I presume they went into administration on 30 June, which was before they had to make any end of month payments as owners.

Indeed, the majority partner in the Next Leader Fund, Au Yeung Wai Kay, said at a recent board meeting that the owners "would not be making a payment". Whether that means the players will not be paid is not clear but that may impact on their performance.

It all sounds very odd if you consider that the Next Leader Fund was registered (according to documents filed at the Hong Kong stock exchange that I've read) in the Cayman Islands on 30 January by previous owner Dr Choi Chiu Fai Stanley, who held a 51% controlling interest through a British Virgin Islands registered company called 'Head and Shoulders Direct Investment' until the sale went through - with the other leading partner of NLF being Au Yeung, who held 48% though his 'Widespread Success Ltd' company.

The sale went through at what appears to be an agreed price of around £17.5m but whether that factors in the price of Au Yeung then buying more Wigan shares to become the majority holder is unclear. Although it also appears that a 'Disposal Company' (Newworth Ventures Limited, a British Virgin Islands wholly-owned subsidiary) held the club assets during the selling process and on completion they would become a loan owed of around £28m by the new owners.

The administrators now said that they aim to find a new buyer and it will be interesting to see if former owner Dr Choi steps back into the frame to pick the club back up for a knock-down price minus a chunk of Wigan's existing debts.

I think the EFL need to be held to account if they sanctioned a club sale to owners who failed to pay anything to the running cost at the first opportunity. Surely they have the resources to at minimum pay the running cost until the end of the season, which is after all only three weeks away?

 

This post was modified 12 months ago 5 times by werdermouth

Liked by Redcar Red
ReplyQuote
Ken Smith
Mr
Joined: 12 months ago
Posts: 793
 

I’m wondering if Wigan Athletic going into administration will have any affect on the use of their stadium for Wigan Warriors.


ReplyQuote
Martin Bellamy
Member
Joined: 12 months ago
Posts: 180
 
Posted by: @ken

I’m wondering if Wigan Athletic going into administration will have any affect on the use of their stadium for Wigan Warriors.

According to the local paper the Warriors won’t be affected but I guess it depends on what happens with potential new owners. 


Liked by Ken Smith
ReplyQuote
Redcar Red
Member
Joined: 1 year ago
Posts: 638
 

@werdermouth the more I read about this the more it looks like the EFL have totally, utterly and completely screwed up. It seems that they make rules but have nobody within their ranks with any professional competence that actually knows what to look for let alone how and where to look.


ReplyQuote
grovehillwallah
Member
Joined: 12 months ago
Posts: 561
 

Interesting.....

 

https://www.bbc.co.uk/sport/football/53261368


ReplyQuote
Ken Smith
Mr
Joined: 12 months ago
Posts: 793
 

I’m puzzled about the relegation situation in League 2. At the moment Stevenage are bottom, but Macclesfield may yet be deducted more points which place them below Stevenage. But will either club be relegated or Macclesfield start next season on a minus points position? As Barrow have been promoted the relegation of either Stevenage or Macclesfield will still leave an odd number of clubs unless another club is promoted from the National League. I haven’t read anywhere that one other National League club side is still to be promoted either via playoffs or current League positions despite that League having been declared null and void. The EFL have been quick to deduct Wigan points, but what about Sheffield Wednesday and any other clubs who might yet be deducted points? Surely all these decisions should be made during the current season instead of next season as they could affect playoff places or relegation issues. If not we might see several clubs starting next season on minus points.


ReplyQuote
Clive Hurren
Member
Joined: 12 months ago
Posts: 105
 

Boro might end up relying on Wigan being docked 12 points, which is what I really want to raise, to understand your views. 

I suppose if you’re daft enough to flog your well-run club to a Chinese gambling business, which subsequently flogs it on to another Chinese gambling business, ostensibly run by the same dodgy geezer, then you deserve everything you get.

But from what I’ve read, there are allegations that there's a possibility that someone in the Far East may have gambled heavily on Wigan going down this season, but it seems that once the Latics picked up a load of points and clawed up to somewhere near safety, then some are suggesting the second company threw it immediately into administration, having only been ‘in charge’ for a month, in order to attract the 12 point penalty from the EFL.

At least, that’s what some of the media are saying, and many people are now pointing an accusatory finger at the EFL for their haste in approving the second deal. So much for ‘fit and proper persons!’ Something somewhere absolutely stinks of rotting fish. 

So, I think I would have every sympathy with Wigan if the investigation by the administrators were to conclude that these Far Eastern companies have been less than honest in their dealings.

I might even think that, because the EFL has cocked up big style, they should not impose an immediate points penalty caused by their own lack of responsibility and due care and attention. Perhaps they should suspend the penalty pending a suitable rescue of the club?

So, I’m left hoping that Boro claw their way to safety without having to rely on Wigan being docked the points. That would clearly be the best outcome for us. I wouldn’t really want our staying up tainted by the Wigan affair  - ‘You only stayed up because Wigan went into administration’. It would feel like the way West Ham cheated their way to safety and cheated Sheffield United into relegation over the Tevez and Mascherano joint ownership business. What are your thoughts, fellow bloggists? 

This post was modified 11 months ago 2 times by werdermouth

ReplyQuote
grovehillwallah
Member
Joined: 12 months ago
Posts: 561
 

This has a long way to go yet....

 

https://www.bbc.co.uk/sport/football/53309675


ReplyQuote
Redcar Red
Member
Joined: 1 year ago
Posts: 638
 

I think the Sheffield Wednesday case looks like it may end up in a criminal prosecution for fraud (let alone the EFL point deductions) or at least Chansiri in court for signing off dodgy accounts.

I think that as the investigation has gone on the more it stinks and thats the reason for a delay in the EFL decision being announced. The timing of the "alleged" sale and the incorporation of the buying company compared to the year where the £60M proceeds turned a £2.5M profit for the Owls don't stack up allegedly.

If that is the case I would expect a far stricter punishment than Wigan's. Again its the fans who suffer for the unfit for purpose EFL scrutinisation of its fit and proper person criteria. 

This post was modified 11 months ago 2 times by Redcar Red

ReplyQuote
Ken Smith
Mr
Joined: 12 months ago
Posts: 793
 

For anyone interested Hartlepools last away League fixture is against Sutton United next Sunday 23rd May with a 12.45 pm kick off and will be televised on BT Sport. A win for Sutton will almost certainly gain them automatic promotion to Football League Division 2 for the first time in their history, but it’s almost a ‘must win’ game for Pools if they are to finish in the top 3 and avoid 2 extra playoff matches. Pools did beat Sutton at the Vic 1-0 earlier in the season.


ReplyQuote
Share: