Wigan go into administration four weeks after Hong Kong takeover | Wigan Athletic

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.

Any insolvency event such as administration carries an automatic 12-point penalty, which would send Wigan bottom of the table from 14th, although the EFL has not yet confirmed the penalty will apply.

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 owners since November 2018, International Entertainment Corporation (IEC), another 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 and Paul Stanley, of insolvency practitioners 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. Wigan Athletic has been a focal point and source of pride for the town since 1932 and anyone who is interested in buying this historic sporting institution should contact the joint administrators.”

Krasner told the Guardian he was still gathering full information about the club’s financial position and the cause of its collapse into administration, having only been approached about the appointment last week.

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 on 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 Rovers player who made his corporate fortune with his retail empire JJB Sports, bought Wigan, his local club, in 1995, building a new stadium and funding a rise from League Two to eight years in the Premier League, before relegation in 2013 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 they were “a suitable owner with the funds and ambition to carry on the family legacy.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *