Companies House (Away)

A few people have asked me to look into this, so here goes.

There is some paperwork doing the rounds at Companies House suggesting changes are afoot at Wigan Athletic, which should come as no great surprise given a takeover is imminent. I’d like to just break it down into simple terms for mine and your benefit what I think is happening here.

It’s worth pointing out that even the simplest company structures can quickly get very complex but in theory there are just three companies in the Wigan Athletic group – the football club, the property company and the holding company. However, these companies funnel up into the wider Whelan empire which also funnels back down into a whole host of other Whelan companies, both current and historic. Generally these days, you don’t set up a company to manage all your affairs, you set up a new company for each purpose or project to mitigate risk and enable easy valuation and sell off.

I’m going to focus on three areas: the secured charges (i.e. debt security), the ownership structure and the people (directors) for each of the three companies.

I’m no expert in corporate restructure, debt securitisations or acquisitions but I’ve tried to trawl through where we are and where we might be headed….

WIGAN ATHLETIC AFC

So first, Wigan Athletic AFC Ltd, established 1932. Effectively, there two sets of two similar documents confirming that “a charge has been satisfied” and that “all of the property or undertaking has been released from the charge”.

There is not a lot to be gleaned from these documents, apart from the obvious, however strangely enough in both cases, one of the statements relate to the DW Stadium and the other Springfield Park, which presumably had been sold by the club to Dorbcrest Homes a good 18 years earlier.

Anyway, what several online commentators have taken this to mean is that “Wigan Athletic are debt free” and this is partly true. This statement does indeed suggest that Wigan Athletic does not have any secured debt, as the fixed and floating debt charges that Wigan Athletic AFC have were secured against the property and assets that it owns. Basically, if you can’t pay your bills, we’ll repossess your ground.

Except it is not Wigan Athletic AFC’s ground, it is Wigan Football Company Ltd’s ground, which is also owned by the same holding company.

So far from releasing debt from Wigan Athletic AFC, it is more a case that Wigan Athletic AFC no longer has any assets to secure it’s borrowing against and still has debts, an overdraft with Barclays for example.

Yet from this point onwards, if we can’t pay our debts, nobody can come around and take our ground off us. Like a mortgage with no property to repossess if we default on our payments.

Is this a good or a bad thing? Well, you could argue both ways here.

Positively, the club will be sold on free from any secured debt, leaving any new owners with a clean slate to set up the future club’s funding structure with.

Negatively however, whereas the club and the ground have always been owned by separate companies, the ground has always been used as security jointly and separately to secure the debts of both the football club and Wigan Football Club company, who actually owns the ground.

This all points to the new owners buying Wigan Athletic AFC Ltd but not buying the DW Stadium, and the Wigan Football Company Ltd will continue to be its landlords (and the rugby’s).

Does this mean that Wigan Athletic AFC are free from secured financial charges then? Well, not quite. Again, on Companies House under the Charges section, there is a list of 12 secured charges of which 10 have been settled, 2 of them in the last two weeks as mentioned above.

Of the two charges outstanding not satisfied (i.e. still active) , one was set up in 1993 and basically agrees that in the event of default, Barclays will come along and take ownership of our cash, assets, debtors, inflatable Beanies stock and anything else that isn’t nailed down.

The second one is a lengthier guarantee and debenture charge set up in 2005, which although it makes interesting reading and continues to operate, again does not feel like it will be around for very long.

Essentially, it states that a number of companies under the Whelan umbrella have their debts jointly secured by Whelco Holdings Ltd. These companies include Wigan Athletic AFC Ltd, Wigan Football Company Ltd, Orrell RUFC and amusingly, Pooles of Wigan and Garbo Ladies Fashion.

The first thing to note is that Whelco was dissolved some years ago, so ultimately it would fall to others within the group of companies to satisfy the debt itself if one defaulted. And there are still active companies in this group, albeit only Wigan Football Company Ltd. Sadly Garbo Fashions was struck off, Pooles Pies have been liquidated in their previous incarnation and Orrell RUFC are now community run.

I’m not sure if the agent company is dissolved that it would make this null and void but there is no similar “charge satisfied” notification against this agreement, so it would suggest it is still valid and all of the 10 companies are still part of the same pool where debt has been jointly secured by the holding company.

So you would obviously expect this to fall away too once Wigan Athletic AFC is no longer part of the shareholding of Whelco / Wigan Football Company / Wigan Athletic Holdings Ltd i.e when it passes over to new owners.

So, to summarise where we are:

Wigan Athletic AFC no longer has the ground as security over its debt

It does still have security over its other assets owed to Barclays Bank in case of financial difficulty.

This will still be underwritten ultimately by Mr Whelan (1993 secured charge), and of course that will remain the case, otherwise Wigan Athletic AFC Ltd would suddenly find itself unable to operate with a large overdraft like it currently does.

Eventually, if/when the new owners come in, they will set up new guarantees and fixed charges, either underwriting the existing overdraft or even changing banks completely.

WIGAN ATHLETIC HOLDINGS

Let us look briefly at the holding company, Wigan Athletic Holdings Ltd. This company as its name suggests is a group holding company consisting of Wigan Athletic AFC and The Wigan Football Company Ltd.

The Wigan Football Company despite its name has little to do with football and is simply the property side of the group. Wigan Athletic Holdings is the aggregate of Wigan Athletic AFC and Wigan Football Company.

Although the Whelan family own 100% of Wigan Athletic Holdings Ltd it does not own 100% of the two companies beneath it.

Wigan Athletic Holdings Ltd own around 85% of the two subsidiary companies, with Wigan Athletic AFC (the football club) having 15% of shares owned by other small investors, including many fans; and Wigan Football Company, being part owned by Wigan Council amongst others, due to the terms of its construction.

Neither Jonathan Jackson (nor Garry Cook – more on him later) are directors of Wigan Athletic Holdings Ltd, they are merely directors of Wigan Athletic AFC.

The three directors of the holding company are Dave Whelan, Pat Whelan and David Sharpe. However, Sharpe is only listed as “general manager” not a director of this business, even though he is clearly a director, as he is named as a person of significant influence or control on Companies House.

This kind of gives you an indication of where the segregation of duties is falling and where the end state lies, namely that the Whelan family could continue to be the landlords of the DW Stadium and continue to charge Wigan Athletic (and the rugby) rent. But if this maintained then Wigan Athletic would be an “arm’s length” tenant like the rugby.

As for secured debt. The Holding company has exactly the same Charge document as Athletic and the Football Company, however as the agent (acting on behalf of the other companies) the charge in this case has not been satisfied. This suggests that the Holding company is still liable for it’s debts in the event it cannot pay, but not for the debts of its subsidiaries.

There is one secured charge against Wigan Athletic Holdings Ltd who again, like Whelco are “the agent” acting on behalf of Holdings, Football Co and Athletic and being liable for the debts of all. However, Holdings unlike Athletic have the DW Stadium as security, which sits within the Wigan Football Company.

WIGAN FOOTBALL COMPANY LTD

So finally to Wigan Football Company and let’s talk people of influence, the first thing to note is that Garry Cook was appointed a director of Wigan Football Company Ltd in the summer but Jonathan Jackson has never been, which seems a little odd.

Perhaps this means that Garry Cook’s remit is to sell the football club to the “new” Wigan Athletic as well as the club itself at some point?

There’s also a council officer (to represent their share holding) and a long standing Finance Director on the board as well plus Sharpe and Whelan.

So if you’re still with me here, the charges held against Wigan Athletic and Wigan Football Company from 2011 have been satisfied but that same charge is still active against the Holding Company. Essentially, only Wigan Athletic Holdings has secured debt against the ground now, not the company which actually owns the ground (although the Holdings company indirectly owns 85% of the ground).

Good or bad? Well, the fact that the 2011 debenture charge has also been satisfied means that Wigan Football Company owns a ground but is no longer indebted to the banks should Wigan Athletic go bust (and vice versa).

However, the Football Company in isolation has another fixed charge against its property which was agree in 2003 and it also has an active 2005 secured charge, the same one mentioned above with the 10 companies (Pooles, Garbo etc)

So basically, the upshot of this whistle stop tour is that as it stands, Wigan Athletic FC and Wigan Football Company Ltd are still separately liable on any default of debts against other fixed charges but have been relieved of the joint secured charge placed on all the 3 companies (Athletic, Football Co and Holdings).

THE STATE OF PLAY

This would to me seem like everything is being set up to hive off one or both companies from Wigan Athletic Holdings with a clean slate, the big question is the one that has remained all along.

Are the new investors buying the football club only, which let’s face it is pretty worthless as it loses money year on year, or are they buying both the football club and the ground (or rather Whelan’s 85% shareholding in it?)

There are clues above to suggest either scenario could unfold. If these guys are serious and wealthy, then you would not believe for a minute that they would buy the football club but not the ground. However, Whelan may have other ideas and want to keep it within his property portfolio and earn a cool rental income each year.

The fact that David Sharpe is on the board of both Football Co. and Athletic is re-assuring but it’s quite possible he could stand down from both once the sale goes through.

Gary Cook is also on the board of both, and without investigating whether he was given equity when he became a director in the summer in this already lengthy piece, one has to assume that he will be due a nice slice of cash should a deal go through either via brokering a deal or share of recently gifted equity. And shares in the DW Stadium will be worth a lot more on the market than shares in the football club.

So again, this leans us into thinking that both the ground and the football club will be sold as separate companies but part of the same deal. They will both be sold by Wigan Athletic Holdings and purchased by Wigan Athletic New Co Ltd.

There is naturally uncertainty around this and lots of people are nervous about where the ground belongs and I understand these concerns.

On the positive side, whether the Whelans are the landlords or AN Other, there are only ever likely to be two tenants for this particular property and whereas it doesn’t generate big profits, unlike the football club it doesn’t lose much money either.

I suppose the concern comes, when you look decades into the future. The difficulty comes when the land itself is also of value. There’s already enough retail units lying empty nearby for that not to be a concern but I suppose you could potentially build a few hundred houses on the plot when you include car parks. Yes it’s flood prone but take a walk down the canal and there’s already houses everywhere.

A few hundred houses would be worth £50-60m, much more so that the £25m the DW was constructed for so it is not inconceivable that one day in the future, the DW could be flattened and sold on for non-football use. Look at all the areas around you that were once fields or factories and are now houses against a background of limited land and massive population growth.

Would I be devastated if the DW disappeared? No, if I’m honest for reasons I’ve covered many time.

Would I be devastated if Wigan Athletic didn’t have a football ground to call its own in the town. Yes I absolutely would.

Many fans’ groups at other clubs have gone down the route of securing their stadia as an ACV (Asset of Community Value) which would mean that this scenario could never unfold but there would have to be an organised, politicised element amongst our support to either propose such a thing or carry it through unfortunately and the abuse that those who have tried to mobilise fans in the past have got implies that you’d have to be stupid to try it again.

Even so, ACV status secures your football ground but not your football club. The theory goes that you have a large fanbase who love your ground and your team and will always turn up to support them, therefore it is a community asset. I’m not sure we have the fanbase, nor do we love the DW Stadium enough to warrant it.

If, for whatever reason, this takeover started to unwind very badly, crowds would drift and I don’t think anyone would step up and fight for the club. We demand investment but we are not invest very little as fans (with no offence meant to those who go). With crowds of 8,000 in this league or maybe 10,000 home fans in the Championship and even if we got to the Premier League I doubt we’d get anything like the gates we got last time.

Again, it feels like a doomsday scenario but it is up to us, as fans, to hold a mirror up to the club and it’s governance. I have no problem with the way things operate now but as for the future – for every story of millions/billions pumped in, there is an unscrupulous or disinterested owner who can load a club with debt and then pull away.

Other factions in the town such as the Council or the Rugby club wouldn’t be forthcoming in assisting us, we know this from previous history. We’re not powerless to stop it but in the same vein, we have so little influence in numbers of financial muscle to prevent it.

The safety blanket of the Whelan family is being pulled away and we don’t know whether we’ll land on a soft fluffy mattress full of cash or a trapdoor to oblivion.

Essentially, nothing good or bad has happen yet but things are being put into place so all we can do is stay vigilant as documents get uploaded to Companies House, directors come and go, debt and equity gets restructured and yes let’s hope it is the start of a brave new era and not something we need to worry about.

For me, it will always feel weird not to have Dave Whelan associated with Wigan Athletic, even though I grew up with Blaster Bill Kenyon running a tight ship.

The question as to who will own the DW Stadium in future will soon be resolved, and if it indeed it still is to be called the DW Stadium then DW had better start paying over for the naming rights.

If I had to put money on it, I’d suggest that perhaps the ground is going to be bought by the new owners, the main clue being that Garry Cook was also appointed to the board of Wigan Football Company Ltd. There are no guarantees however, and as I say, I’m no expert…..

Merry Christmas

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