The brutal, bizarre collapse of Wigan Athletic has raised many glaring and alarming questions, but one central contradiction lies in the ruins. The Championship club have become the first to fall into administration during the Covid-19 crisis which could claim many more, but Wigan’s own insolvency has little to do with the coronavirus shutdown.
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.
Wigan, formerly the epitome of traditional football club ownership by a wealthy local benefactor, are bust 19 months since the retail magnate Dave Whelan sold to International Entertainment Corporation, which he hoped would safeguard his legacy. Even at the time, it seemed an unlikely fit: Whelan, the former footballer, acme of Lancashire man-made-good, selling his home-built club to a company based in Hong Kong, registered in the Cayman Islands tax haven, which runs a casino in Manila.
The administrator Gerald Krasner, of Begbies Traynor, said on Thursday that once they have overcome the pressing challenge of completing Wigan’s six remaining matches, they will investigate the bewildering circumstances of the administration itself. IEC, listed on the Hong Kong stock exchange, announced as recently as 29 May that it had sold Wigan, for £17.5m – even showing a profit on the £15.9m they paid Whelan in November 2018. IEC stated that on the same day, less than five weeks ago, the £24.6m it had put into Wigan, funding players’ wages and heavy losses, had been repaid in full.
The club announced the takeover on 4 June, by Next Leader Fund, also based in Hong Kong and registered in the Cayman Islands. Supporters were told “the support from owners” would help the club through the current crisis. A new director, Au Yeung, said he was “excited to join the Wigan Athletic family”, that he looked forward to working with the board and staff, and: “Most importantly I hope to meet the club’s passionate fans.”
Initially the Hong Kong businessman Dr Choi Chiu Fai Stanley, chairman of IEC, owned more than 50% of both the seller, IEC, and the buyer, NLF. But then on 24 June – just last week – Au Yeung, initially a minority shareholder in NLF, was stated to have become the owner of more than 75%; he is thought to be the 100% owner: a complete takeover from IEC.
The EFL is understood to have approved both the initial NLF takeover and Au Yeung’s, so the Wigan calamity again raises questions over its vetting processes. The rules only require a buyer to show that they have the money to fund a club – not to actually provide that money, a bond, or insurance, to ensure the funding is there.
On that very same day, last Wednesday, according to Krasner, Au Yeung’s UK lawyers approached Begbies Traynor potentially to be administrators. No further money would be provided – the Wigan directors had projected that £6m was needed for future funding – and the club was going to be put into administration. The club directors are said to have had no notice of this until Tuesday. The insolvency practitioners were appointed on Wednesday morning, for a club newly taken over but suddenly bust, with a Championship-sized wage bill and at least £6m owed to non-football creditors, Krasner has estimated.
In Wigan, little is known of Au Yeung apart from the note in IEC’s sale document which 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”. Also that he “has been operating an amateur football team for more than 15 years, winning several awards”.
So, the facts as set out are that in the middle of the coronavirus crisis, while football was still shut down and many clubs fear going out of business, Au Yeung decided to buy Wigan Athletic, a club which even in normal times loses millions of pounds. At first in partnership with Choi, he paid £17.5m, giving IEC more than they paid for the club, and also ensured their £24m loan was repaid. But then, on the day he took ownership after this £41m purchase, he decided not to fund it and to put the club into administration, so losing control, the £17.5m, and probably the £24m too.
No explanation has been provided for this remarkable whirl of events. IEC noted when selling to NLF that the Championship’s punishing finances were the key reason for cutting their losses. But Au Yeung has not explained why he decided it was worth £41m to have a go at Wigan, then immediately dropped the club and put it into administration.
Krasner was asked whether he believed the sale could have been orchestrated by IEC, effectively to take Wigan off its books before it was dumped. He replied: “We have not started the investigation yet; we are aware of concerns that have been raised … Once I know that we have saved the club, all our resources will be put into [an investigation].”
IEC did not respond to questions from the Guardian about the sale to Au Yeung, and Au Yeung’s UK lawyers declined to comment.
Meanwhile Wigan, famously built up by Whelan for 23 years from League Two to the Premier League and 2013 FA Cup glory, are in wreckage, having being taken over, then put into administration, in a week.
(The Guardian)
