Three Sheffield Wednesday sponsors linked to owner are not commercially active
Sheffield Wednesday’s owner, Dejphon Chansiri, is putting more than £1m a year into the club through sponsorships by entities connected to him which are not currently commercially active companies, the Guardian understands.
The Wednesday shirt has Chansiri as the main sponsor across its chest, and Chansiri is branded as Wednesday’s “official club partner”, including on the club’s website. Although the owner does have a registered company, Chansiri Ltd, which is registered at Hillsborough, its most recent accounts state that it was dormant, not trading.
Another company owned by Chansiri, Sheffield Wednesday Holdings, registered in Hong Kong, has since June 2019 been his vehicle for owning the club. The Chansiri sponsorship on the Wednesday shirt and partnership with the club is simply the owner’s surname, rather than a commercial company bearing his name, according to sources with knowledge of it.
The brand name sponsor on the upper right of the club shirt, Elev8, is a clothing company owned by Chansiri and it does manufacture the kit, the club has said. Elev8 is also planned to be an energy drink and Chansiri has a company, Elev8 Energy Drink Ltd, registered in London’s Mayfair in August 2017, but it is understood to be not yet manufacturing an energy drink for public marketing.
A third sponsor, D Taxis, whose name is on the scoreboard and other areas of Hillsborough, is not yet set up as a functioning taxi company to drive passengers around; Chansiri is understood to be intending to set it up as a taxi business. A different firm, City Taxis, which does operate in Sheffield and across South Yorkshire and Derbyshire, is currently a main sponsor of the club.
The English Football League is clearly aware of these sponsorships but is understood not to be concerned about them in relation to its “profitability and sustainability” financial fair play rules, because their value is not excessive.
The rules, aimed at steadying finances in a ferociously unequal, generally overspending division, limit Championship clubs’ permitted losses to £13m per season. To protect against owners artificially covering losses by over-valued sponsorships, the rules require any connected commercial relationships to be for “fair value” – comparable to the amounts a club could earn from a commercial brand not connected to an owner.
Wednesday’s most recently published accounts, for the 14 months to 31 July 2018, suggest the revenues from the three sponsorships connected to Chansiri were £1.27m, not excessive for a main partner, kit manufacturer and scoreboard sponsor of a major club in the Championship. The club maintains the sponsorships are all for “fair value”.
Chansiri, 51, whose family owns the Thai Union Frozen Group, a giant tuna and seafood processing company in Thailand, bought Wednesday in 2015 for a reported £37.5m from Milan Mandaric and has since spent huge amounts of money trying to win promotion to the Premier League.
Last month the EFL charged Wednesday with misconduct over Chansiri buying the Hillsborough ground from the club in June this year for £60m. That sale, and a stated £38m profit to the club from it, was included in Wednesday’s accounts, and its submission under the financial fair play rules, for the previous year, 2017-18. The profit helped turn what would otherwise have been a £35.4m loss – very substantially in excess of the permitted loss so potentially incurring a serious penalty – into a £2.6m profit.
Wednesday responded to the charges this month with an emphatic statement, arguing that EFL executives authorised the sale and that the charges are therefore invalid.
“The club maintains that it consulted with the relevant executive officers of the EFL in connection with the stadium transaction and that it acted in good faith … The club is accordingly bringing its own claim against the EFL to establish that it is acting unlawfully, as well as standing ready, if necessary, to vigorously defend the charges.”
A Wednesday spokesman said the club was making no further comment and it declined to comment on the connected sponsorships to Chansiri.
Wednesday finished 15th in the Championship in 2017-18, despite increasing their wage bill to £42m, which along with other costs meant they spent almost double their entire revenues of £25m. The accounts for that period state that Chansiri’s loan to the club more than doubled, from £38m in 2016-17, to £78m. In September last year Chansiri also appears tohave paid £21m for new shares in the club.
The accounts note that Chansiri is a director of Elev8 Clothing and Elev8 Energy Drink, and state that the total paid to the club from “related parties” was £61.27m. As he bought Hillsborough for £60m, that suggests the total from sponsors connected to him, including the name Chansiri itself, was £1.27m.
Sales of a stadium to a club’s owner are allowed under EFL financial rules, despite reservations, known to be felt most strongly by the Middlesbrough owner Steve Gibson, about clubs and grounds being in separate ownership, and concerns that such sales are an artificial, one-off way of balancing the books.
The EFL is understood to be conducting a review of the £60m valuation for Hillsborough but that is separate from the misconduct charge, which relates to the timing of the sale and allocation of the £60m to the 2017-18 financial year.
Wednesday’s accounts for that year were initially required to be published at Companies House by the end of February this year, but then the annual year end for the figures, 31 May 2018, was extended to 31 July 2018, meaning the accounts were for a 14-month period and needed to be published by 30 April this year. They were not published on time, then nearly two months later on 21 June Chansiri formed a new company, Sheffield 3 Ltd, which a week later, on 28 June this year, was used to buy Hillsborough from the club. The £60m receipts were included in the 2017-18 accounts whose period had ended on 31 July 2018, 11 months earlier.
The EFL said when charging Wednesday that it had undertaken a formal investigation into financial information provided by the club following the sale of Hillsborough, and “reviewed a large number of documents” as part of the process.
“The EFL has … concluded there is sufficient evidence to justify issuing charges of misconduct … in respect of a number of allegations regarding the process of how and when the stadium was sold and the inclusion of the profits in the 2017-18 accounts,” the league said.