Failing Football Clubs: Wigan Athletic FC enter administration
July 16, 2020
3 min read
What's going on here?
The COVID-19 pandemic has rocked the footballing world. Project Restart heralded the return of football to our screens, but only for the top two English leagues (to read our article on that, click here). Despite being in England’s second tier, Wigan have succumbed to administration. The story is not as simple as it seems however, as there exist extremely suspicious circumstances surrounding Wigan’s demise.
What does this mean?
In the weeks leading up to administration suspicious activity occurred in relation to the ownership of Wigan Athletic FC. The club was previously owned by the wealthy local benefactor Dave Whelan for 23 years but in November 2018, the club was sold to International Entertainment Corporation (IEC), a Hong Kong-based company, registered in the Cayman Islands that owns a casino in the Philippines.
On 29 May 2020 it emerged that the club had been re-sold to Next Leader Fund (NLF), also based in Hong Kong and registered in the Cayman Islands. The sale for £17.5m actually generated a profit on the £15.9m initial purchase price and it is thought that the further £24.6m investment IEC had made in the club was repaid in full. Reports suggest that Hong Kong businessman Dr Choi Chiu Fai Stanley, chairman of IEC, owned a majority stake in both the buyer and the seller in this transaction. Later, on 24 June 2020 the new director of Wigan, Au Yeng, acquired more than 75% of NLF. This combined with his initial minority share is thought to have finalised a complete takeover. On the same day, Au Yeng’s UK lawyers approached Begbies Traynor as potential administrators for the club.
What's the big picture effect?
In a matter of weeks, Wigan as a business has gone from competitive outfit to commercial ruin, leaving £6m owed to a non-football creditor and a hefty unpaid wage bill. The game’s governing body, the EFL, is said to have approved both the initial NLF takeover and Au Yeung’s. This has raised serious concerns over the vetting process employed by the EFL. Current rules only require a buyer to show that they have the money to fund the club – not to actually provide that money in any form. It is clear that very suspicious circumstances existed around the purchases. Why would Au Yeng invest north of £41m into the club only to abandon it immediately? Surely any form of vetting process should have flagged this issue?
Many have questioned whether the sale to Au Yeng may have been orchestrated by IEC in order to take the club off their books. Suspicion has arisen because so little is known about Au Yeung’s business acumen and his suitability to run a football club. A note in IEC’s sale document stated he “has relevant experience in business operations management and business leadership as he has worked in commodity and real estate investment management in Asia”. It also states that he “has been operating an amateur football team for more than 15 years, winning several awards”. If there has been foul play, the administration procedure will make efforts to unearth the truth. On this point administrator Gerald Krasner has signalled his intent, saying “we are aware of concerns that have been raised … [and] once I know that we have saved the club, all our resources will be put into [an investigation].”
In the short term Lisa Nandy, MP for Wigan and Shadow Foreign Secretary, has urged a full inquiry into the matter. Additionally, the Mayor of Greater Manchester, Andy Burnham issued as statement saying: “I have written to the Chairman of the EFL requesting: an urgent investigation into the sale and administration of Wigan Athletic FC, a pausing of the administration process and sale of assets, and a suspension of the 12-point penalty.” With said investigation likely, the EFL will be hoping that no fault falls at their feet. For now, the governing body is likely to look at its approval process and consider reforms that will safeguard clubs in the future.
Report written by Kasey Cummings
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