“Alan, some of the stuff is so off the wall…”
Gerald Krasner, Wigan Athletic Administrator, 27th August 2020.
Imagine standing on the edge of a cliff, peering at the rocks below, there’s a biting cold rain and a bitter wind at your back. A strange rasping voice in your ear tells you it’s only a matter of time before the ground crumbles at your feet. There are other voices, kinder voices telling you that it’s ok, some people are building a net that will catch you and other people clearing the rocks, so that if you fall, at least you’ll have a soft landing.
The rasping voice responds telling you that the nets aren’t good enough and the people making them aren’t serious. There are other voices too, all telling you something different, all pointing the finger at each other all saying different things, none of them caring that you’re stood there in the middle, peering over a cliff, the ground crumbling beneath your feet.
Got it? Then you’ve probably got a sense of what it’s like to be a Wigan Athletic fan right now, what it’s been like being a Wigan Athletic fan for the last seven months.
We’ve been through too much in that time to catch you up on everything that’s gone on. Suffice to say that there have been plenty of interested parties and tyre kickers. Admittedly there have been fewer bidders, let alone “credible” ones, but there has been the odd person who has given our administrators sight of their bank account. Even if it was only in the shape of a seven-figure sum written on a folded piece of paper pushed across the table.
Yet, every single one of them has eventually walked away with a couple, including the only group to have got past the EFL Owners and Directors Test, allegedly, trying to cut their offer once the full details of the deal has been exposed to them. The speculation that follows has usually pointed at the administrators as inflexible, difficult to work with and unable to help the bidders get their deal over the line.
And, I suppose, the admins have no obligation to help prospective new owners. Their only obligations are to those with a vested interest in the company they are dealing with, the creditors, to a lesser extent the shareholders and to the process of administration itself. A process that, despite the extensive reading available and the experience of other football clubs and their fans, us mere mortals don’t have the capacity to understand.
And with no-one to teach us, or walk us through it in an honest, open and consistent way then all we are left with are questions. Questions like…
- Why do we keep getting so close to deals only to see them evaporate?
- Why does no one have any kind words for the administrators?
- Is the best deal they can get for creditors going to be one that means the end of Wigan Athletic as a going concern?
- And, just exactly how close are we to the edge of that precipice?
Questions that lead to stresses aplenty, to chatter, to speculation and to people pouring over whatever documents they can get hold of and putting their own meaning on them. Just like the latest administrators’ update for the football club that estimates the administrators salaries at around £2.5m a figure that has understandably perturbed plenty of people, after all it’s nearly as much as it would cost someone to buy Wigan Athletic.
“Not to worry” say representatives of Begbies Traynor, “the football club aren’t paying our fees, that’s all coming from the property company which only had creditors in Hong Kong, the money we’re taking would only end up with them if we didn’t take it”.
Which is all well and good, don’t forget that the company structure was deliberately put together to separate assets from the football club to essentially protect them should one (or the other, I suppose) go belly up. It’s probably worth reminding ourselves of the company structure, so bear with me:
Wigan Football Company – The “holding” company. Basically, the shell that combines all the bits into one. Its only assets of note being shares in the other companies.
Wigan Athletic Holdings – A company that, according to the administrators report to creditors, owns the football ground.
Wigan Property Holdings – A company that, again according to the administrators report to creditors, owned the Euxton training ground, Sharpies Chippy (both now sold) and Christopher Park
Wigan Athletic Football Club – The part of the structure that makes the rest meaningful, the football club, the company set up to own Wigan Athletic’s football league share. The thing without which Wigan Athletic would cease to exist and all that would be left would be a future trying to rebuild from the bottom of the pyramid.
The other thing worth remembering is that, on any number of occasions, Begbies (mainly in the shape of Gerald Krasner or Paul Stanley) have told us that once they have found buyers, the companies above will be dissolved, and the new owners will set up companies of their own. The inference there being that what is/was actually for sale as part of this process isn’t actually those companies but the assets of each of them. Mainly…
- The football league share
- The players and their contracts
- The ground
- Christopher Park
- Euxton and
- Sharpies chippy
We know the Euxton training ground and Sharpy’s have gone. My best guess is for around £1.5m – £2m. We also know that none of that money has flowed into the football club, despite Gerald Krasner’s claim back in August that “we’ll complete the sale of the training ground in September, that will allow the September wages to be paid”.
A statement which might not be that relevant, but certainly points away from the notion that the admins fees were always going to come from “the property company” and that if that weren’t the case the money would go to Hong Kong. At one stage it seems the plan included running the club with that money. The other thing we can say with some certainty is that, even at the very top end the sale of these two assets come nowhere near covering the £4.7m potential administration costs (of which £2.5m are the wages of the administrators) detailed in the latest update from Begbies.
That same update tells us that all the “football debt” has been cleared, that we’ve not got money flowing from the EFL and that we’ve over £1m in working capital that will go some way to keeping the club going for a while yet. So that only leaves a couple of things to clear:
- The £4.7m admin costs and
- Around £1.25m in “non-football” debts (the figure owed is actually around £5m, but, as part of administration that can be negotiated down. Popular wisdom is that figure of 25p in £1 will be paid to avoid further penalties from the EFL, but there’s also an option to pay nothing and take a 15-point penalty)
So, roughly £6m in total and to pay for that we’ve got…
- Up to £2m from the sale of Euxton and Sharpies
- Whatever Begbies can generate from the sale of the remaining assets.
It’s easy to fall into the trap of replacing that second point with “whatever Begbies get from selling the club” but that’s not true. What is for sale are three separate things…
- A football club (the league share and players contracts)
- A football ground and
- A training ground.
We know the asking price is around £3m for the lot but, apart from Krasner’s claims (again back in August) that the properties were valued at £4m and if he could get that then someone could have the club for a pound, we don’t know how that £3m is broken down. What we do know is that in rough terms…
- The sale of Sharpies and Euxton (£1.5 to £2m) isn’t enough to pay the admin costs (£4.7m)
- The sale of the remaining assets, if the asking price is met (£3m) is more than enough than is needed to cover 25p in £1 of the non-football debts.
- Even given a best case (£2m) for the sale of Euxton and Sharpies there doesn’t seem to be enough from the known asking price of the remaining assets (£3m) to cover the likely requirements to pay Begbies (£4.7m) and non-football creditors (£1.25m)
It’s at this point, I should probably admit that Paul Stanley is right. I’m not educated in the ways of the administrator neither am I an accountant. I’m just trying to understand the numbers that are in the public domain, looking for a crumb of comfort on the future of my football club, looking for some answers.
But, five months on from the quote that opened this article, so much of this is still so off the wall. There is little comfort, I’m still grasping for answers and all I’m left with are assumptions and questions. It all feels muggy and speculative but right now the questions going around in my head are…
- If £3m buys you more than just a football club, then what’s the value of the league share in the deal?
- And how much is the DW stadium and Christopher Park worth?
- How does that money get cut between the “property company” and the “football company”?
- If there isn’t enough money from all the sales, who doesn’t get paid?
- Assuming that the creditors of the football club are the ones who’ll lose out, are prospective buyers being asked to pay something on top of the purchase price to avoid a 15-point penalty and the inevitable relegation that follows?
- If there is money left in the “property company”, who gets it? Is it Kenneth Au Yeung?
- How much leeway and flexibility do the administrators have in answering the above questions depending on who is asking them and when?
As I said at the start, being a Wigan Athletic supporter right now is confusing, it’s like staring into an abyss and being asked to be happy about it. I was foolish enough to think that writing this might help. Please accept my apologies.
Postscript – Since this article was completed, the Administrators have issued a further statement in which they have clarified that none of their fees will be paid by “the football club” and will come from the property companies. They have claimed that, if the sale of assets doesn’t cover the admin costs then any surplus will be written off and that none of the bidders have been asked to pay any of the administration costs. Whilst this is interesting, it simply repeats what’s been said already and unfortunately doesn’t help me answer any of the questions I’m struggling with.
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