The sudden collapse of Wigan Athletic

Wigan Athletic Fans Celebrating

Life has somewhat returned to normal over the last month. Almost all businesses have reopened, COVID cases have dropped immensely, and to the delight of football fans, the beautiful game has finally returned to our screens.

Fans of every team except Wigan Athletic, that is.

Having returned from the COVID break unbeaten in their last six games, Latics fans had every right to be more than optimistic about their clubs’ chances of survival. Despite being rock-bottom in the Championship at the turn of this treacherous year, a run of 8 wins in 12 propelled the Greater Manchester-based outfit to almost guaranteed safety. The DW faithful were again delighted when their owners, IEC ,agreed to sell the majority of their shares to Hong Kong based, Next Leader Fund (NLF). NLF assured Wigan fans that money would be injected into the club to boost the coffers. Having had a restricted income over lockdown, this came as a timely welcome for the club, itching to return to the promised land of the Premier League.

Albeit, on July 1st, any promotion hopes for the next year were instantly put to rest when it was suddenly announced that the club had been put into administration – with a subsequent 12-point deduction to follow. And, following a last minute Barnsley winner at Brentford on the final day of the season, Wigan’s fears were confirmed as they were relegated to the third tier of English football.

By becoming the first footballing victim of the COVID-19 recession, it is still unclear what’s going to happen behind the scenes at the DW Stadium. Having endured an era of financial stability under local tycoon Dave Whelan, the club has gone into turmoil just 19 months after his departure and has thrown his successful two-decade legacy into complete disarray.

Wigan’s Premier League tenure under Whelan will live long in the memory of many English football fans. Despite only being in the division for eight years, they created many iconic moments; Maynor Figueroa’s goal from inside his own half at Stoke, their 9-1 drubbing at Spurs, Jimmy Bullard’s crazy on-pitch antics and many great escapes from the relegation drop all come to mind – whilst also housing Premier League stalwarts Antonio Valencia, Leighton Baines and Victor Moses. Yet it’s their magical backs-to-the-wall victory over Manchester City under Wembley’s arch in 2013 that awarded them their first FA Cup and taste of European football that fans most fondly look back upon. Arguably, it’s also their most bittersweet moment. Since then, the club has followed a serious downhill trajectory. Just 4 years after their famous Wembley win, they were relegated to the third-tier of English football, and in recent seasons, their fortunes haven’t fared much better with a constant battle for Championship survival.

Dave Whelan, former Wigan Athletic Chairman lifts the FA Cup, 2013.

NLF’s newfound ‘investment’ promised so much for a side that doesn’t deserve to be scrapping it out annually for second-tier survival; their recent European adventures and national achievements pay testament to this.  However, the club still awaits this investment.

Yet they’re not the only former Premier League side to suffer the misfortune of corrupt and dismal ownership; local rivals Bolton Wanderers have recently been relegated to League Two for just the second time in their history after many administration stricken years, whilst Blackpool, Coventry City and Portsmouth have also carried the burden of falling like a sack of potatoes from the top-flight to fourth division football.

How has it been so easy for so many clubs to fall to similar fates?

The main reason that these clubs have been plunged into the doldrums of Leagues One and Two is the ineptness of the FA. The common denominator with all these clubs is their storyline; local investors have taken them as far as financially viable, and the club, wanting more support as they fight it out in highly competitive leagues, secures outside investment to take them to the next level. However, the FA’s execution of the ‘fit and proper’ test, in place to determine whether someone is fiscally sound to take over the financial reigns of a football club, has been shown ineffective time and time again.

Introduced in 2004, the due diligence test assesses prospective owners who want to take a 30% or higher control of a club. The assessment is based on a variety of factors; the potential owners’ business track-record, their involvement with other clubs in England, and even non-business factors such as convictions.

In Wigan’s case, there was a clear and obvious lack of due diligence as the crooked NLF slowly prised Wigan of their assets. Incredibly, the FA failed to spot that IEC’s owner, Stanley Choi, was also the majority shareholder in NLF – in essence, he sold the company to himself via a loan of £28 million with an interest rate of 8% (rising to 20% if not paid back in 12 months), all at Wigan’s expense. This worked out at £100,000 a week in repayments, which is of similar value to the club’s entire wage-bill per week – from star player to dinner lady. This left the club in arrears, but amazingly the takeover still went ahead.

A week later, the club changed majority stakeholders and administrators were called in to seize control. Unable to contact the new owners, administrators found it difficult to carry out their duties and it was widely acknowledged NLF had ‘done a runner’.

The general rhetoric in football is that whoever owns the most money generates the most success. This has coincided with the rise of investment tycoons not only in the Premier League, but also even in League One. Owners are coming in to try and power their way into the riches of top-flight football. In a similar way that the old adage of ‘The American Dream’ was branded to the United States in the 1900’s, potential owners come to England, notorious for its economic prosperity in football, to build their dynasty and rake in hundreds of millions in profit.

However, there are only so many places at the top of the table. The problem with this is that clubs will pay over the odds, year upon year, to try and earn their place within the world’s richest league; there will be success stories, such as Manchester City, Leicester City and Chelsea, while there’ll also be failures, such as Blackpool, Bolton and Portsmouth – still paying the price from going ‘all in’ for their proverbial slice of cake.

I held an interview with David Burgess, the Managing Director of third-tier outfit Accrington Stanley, who summed this situation up perfectly.

“We aren’t looking to shoot up the leagues; if we stay in League One for the next five years, we are happy. Our annual turnover is £3m, and by our reckoning we cannot spend any more than £1.6m per annum if we want to become a sustainable League One club. If we are not careful, as a smaller club than the majority of League One sides, our sponsorship income cannot then cover our astronomical losses, and we would potentially end up being a club such as Bury. There are owners in the Championship who treat it like a game of poker; if they put £20 million into the game and promotion doesn’t happen, they’ll put another chip in, again and again until they realise they have no chips left, which results in one thing and one thing only – liquidation”.

It’s anyone’s guess in terms of what’s going to happen to Wigan Athletic over the next couple of months, however, when their time in the Premier League comes again, be it 2 years or 20 years, football lovers will be overjoyed to see them back again.

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