Wigan go into administration four weeks after Hong Kong takeover
Wigan Athletic have become the first professional club in England to fall into administration during the Covid-19 crisis, only four weeks after a Hong Kong-based consortium took over the Championship club, promising to secure its future.
The EFL confirmed Wigan would incur a 12-point penalty, which automatically applies to any insolvency event, with a decision to be taken at the end of the season over whether it will apply this season or next. Such penalties are applied in a following season only if a club is already relegated. In Wigan’s case, with Paul Cook’s side 14th and eight points above the relegation zone, the penalty is likely to be applied this season and could push the club into League One.
As recently as 24 June, a businessman based in Hong Kong, Wai Kay Au Yeung, who had initially been a minority shareholder in the consortium Next Leader Fund (NLF), was registered as the owner of more than 75% of the club’s holding company.
The club stated on 4 June that under the EFL’s owners’ and directors’ test, the league had approved the sale to NLF by the owner since November 2018, International Entertainment Corporation (IEC), a Hong Kong-based, Cayman Islands-registered company which owns a hotel and casino in the Philippines.
The EFL’s test and takeover process involves determining that a 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. However less than a month later and a week since Au Yeung was announced as the majority owner, the club has appointed the administrators Gerald Krasner, Paul Stanley and Dean Watson of the insolvency practitioner Begbies Traynor.
In a statement, Krasner said: “Our immediate objectives are to ensure the club completes all its fixtures this season and to urgently find interested parties to save Wigan Athletic FC and the jobs of the people who work for the club. Obviously the suspension of the Championship season due to Covid-19 has had a significant impact on the recent fortunes of the club.”
Watson told the PA news agency that people interested in buying the club had been in touch immediately after the announcement of the administration.
IEC bought Wigan from the sports and retail magnate Dave Whelan for £15.9m, but despite winning promotion from League One last season, the company said it was dissatisfied with the loss-making finances of the Championship and the UK’s uncertain economic prospects after Brexit. IEC sold to Au Yeung’s consortium for £17.5m, plus repayment of £24.36m the company had invested in the club.
In a Hong Kong stock exchange document setting out its reasons for selling, IEC cited the “unsatisfactory financial performance” of the club, due to the punishing economics of the Championship, and also mentioned the suspension of football because of the coronavirus pandemic and the impact of Brexit. It said Brexit “could have material long-term impact on the economy and the future growth of the UK which may damage investors’ confidence in the UK and also reduce local consumer spending, which could further deteriorate the performance of the [club]”.
Since buying the club the company said it sustained increases in players’ wages to £17.5m, from £10m in 2017-18, and sustained a £9m loss for the 13 months to 30 June last year.
Initially NLF was majority owned by the same majority owner of IEC, Dr Choi Chiu Fai Stanley, with Au Yeung as a minority shareholder until Au Yeung was announced as the owner of more than 75%. He was described at the time of the takeover as having “relevant experience in business operations management and business leadership as he has worked in commodity and real estate investment management in Asia”.
Whelan, the former Blackburn player who made his corporate fortune with the retail empire JJB Sports, bought Wigan, his local club, in 1995, building a stadium and funding a rise from League Two to eight years in the Premier League and winning the FA Cup in 2013 before relegation that same season and the decision to sell five years later. The chairman in 2018, his grandson David Sharpe, said at the time of selling to IEC that it was “a suitable owner with the funds and ambition to carry on the family legacy”.
Whelan responded to the administration by saying he was “in total shock” and did not understand why the new owner had acted in this way. “I am going to have to see if I can help in any way, shape or form,” he told Talksport.