I haven’t been the most productive on the Latics front recently. To be honest, there is a perfect storm of other stuff going on in my life right now, which in some ways could be a distraction, but I suspect, like most people, my head is all over the place and getting anything done well, isn’t easy right now. I am told I am good at words and ideas, and I have been slightly more involved in the latter than the former at the minute. I’m going to try and keep it brief but try and do it more regularly, in the hope that it can add some value to a wider audience.
So today, let’s talk administration and how we got here. I have been unfortunate enough in my professional career to have worked at a company that was taken in and out of administration. I’m probably still under an NDA for it myself but all I can say is it tough, and heartbreaking, multiple times over, with each new event and things are never the same again.
You walk into work one day and there’s a bloke sat in your chair who you don’t recognise and in an instant, your world is torn apart. Staff are made redundant, customers rip up contracts, they feel no longer obliged to pay a dying company and suppliers remove any favourable terms. Company then struggles to trade, and more rounds of redundancies follow. Including myself inevitably, after sweating blood for twelve months to get it back to where it was.
Is a football club any different? Yes and no. It is a very different sort of business but much of the above still applies. The administrators are neither the good guys or the bad guys, they are just doing their job. I spent an hour on the phone to Dean Watson soon after the news broke, and he was both generous with his time and explanations, so I hope I don’t breach any confidence in the coming days.
So firstly, why were we put into administration? This is a $41m question in it’s own right that we may never get to the bottom of. So maybe it is better to ask HOW we were put into administration?
Au Yeung / Stanley Choi / Next Leader Fund advised their lawyers to put us, not into administration, but into LIQUIDATION, in effect locking the doors and shutting down the business for good in an instant. Wigan Athletic, gone, at the stroke of a pen, and as “owners” completely within their rights to do so.
Essentially, they are saying: WE ARE NO LONGER FUNDING THIS BUSINESS, THEREFORE IT NO LONGER EXISTS. Everything is sold off, and any money goes to those who are owed money.
At this point, the lawyers needed an insolvency practitioner to oversee the closure, this being Begbies Traynor, whose first reaction was literally “WTF?”
It seems that Begbies saw the madness in this and sought to convince our Far East overlords otherwise, presumably via the same arm’s length distant process, the UK board has been operating under. Usually a club gets into administration or insolvent due to the failure to pay a creditor, most evidently HMRC, who tend not to mess about when it comes to slapping down a winding up petition.
A winding up petition is effectively a creditor applying to the high court “this company is unwilling or unable to pay us what they owe us, so we want the courts to declare them insolvent” This forces the company to either pay up or get shut down (declared insolvent)*
*This also happened to me once, after I stopped paying a waste management company for their shoddy bin emptying skills at one of our offices. I’d have gone around and emptied it myself, had I known the grief it would cause
On this occasion, the owners themselves asked for it to happen, which is highly unusual but then as we know, the “Owners” be they two corrupt individuals from the Far East or the number of companies they have set up as majority shareholders in tax exiled areas, have put in a structure which is deliberately opaque.
Regardless of all the speculation, my two penny worth is that it all comes down to the punitive loan they tried to bestow upon us. This was their way of recouping their initial outlay.
Administration is a choice a company makes when it cannot settle it’s debts. But the only material debts WAFC had, were to it’s owners!!
So, how did we get there. My theory:
IEC originally bought the club using cash, then issued shares.
They then sold to NLF, transferring cash back (initial outlay) to IEC who are now clean, as an entity, not withstanding Stanley Choi having his mucky paws all over both.
NLF then sought to recover their investment by enforcing a loan on to Wigan Athletic both to get back their (or rather Stanley’s) initial outlay with hefty interest on top
Effectively, this is similar to the sort of leveraged buyout the Glazers did with United.
Buy a club with cash, then convert that cash to a loan, to be repaid at extortionate rates
The loan has to be repaid by the club and repaid to the club’s holding company, who is also the majority shareholder i.e. the owner of said club
Where this plan fell down is that, the UK based board members (let’s call them the football board members), recognised this would cripple the club financially, and refused to sign it.
Where it fell to pieces even more is that, one of the (non?) UK non-footballing board members saw it for what it was and also refused to approve it
At which point Choi and Yeung took their ball home
Their “ball” in this case being the funds to run a small but perfectly formed football club.
Their words to the lawyers along the lines of: Not a penny more is to be put in, put them into insolvency immediately.
Back to the administrators, who could hardly believe this and convinced the owners that administration would be a better option.
Of course, there are even better options: continuing to run the club whilst actively seeking a buyer; or indeed a pre-pack administration.
Although the latter uses the word administration, it is no different than seeking a buyer. It is just finding a buyer for specific assets and selling them to a NewCo on the cheap.
Effectively, players, their contracts, the ground and the all important EFL membership share.
Once that last bit is done, then yes Wigan Athletic can be made insolvent but Wigan Athletic (New) who hold the EFL membership with a new owner, avoid administration.
And there’s no point handing the old Wigan Athletic a deduction as they are no longer members of the league.
Ultimately, all of this would still cause a lot of pain and upheaval at a time when it is less than ideal but at least the savage 12 point deduction could have been avoided and we could have dealt with this over the summer.
I’m over my word count, so I’m going to stop there:
Administrators are appointed, club gets 12 point deduction and we have NO MONEY coming in, and little opportunity to raise it, being in the middle of a global pandemic as we are.
I was hoping to go a little bit into how our particular administration process has been working but I’m 1,200 words in already so that will keep till tomorrow.
Things are moving so fast, I may never catch up but I hope this at least has a logical flow to it.
Oh and DISCLAIMER: This is mainly my opinion and knowledge from a layperson point of view. I’m an accountant but not an administration / legal expert, and even those who are, are having problems trying to untangle this. So apologies for any inaccuracies.
Finally, please give what you can to the Supporter’s Club fund, it is making a huge difference in keeping the club moving from day to day: https://www.crowdfunder.co.uk/official-wigan-athletic-football-club-fundraiser
SUBSCRIBE TO THE PIE AT NIGHT PODCAST
We promise you that it’s easier to subscribe to the podcast so you don’t have to rely on us to remind you when a new episode comes out.
Apple sorts can find it on iTunes here – https://itunes.apple.com/gb/podcast/the-pie-at-night-podcast/id1097853442?mt=2
If you prefer a different podcast app then just search for “The Pie at Night Podcast”.
You can also find us on Stitcher, here – http://www.stitcher.com/podcast/the-pie-at-night-pocast/the-pie-at-night-podcast
If you’re that way out, you can find and subscribe to our RSS feed here – http://feeds.feedburner.com/thepieatnight
And if you just want to take pot luck then you can find all our episodes on our Soundcloud page