Category Archives: Financial

The finances facing Joyce

Posted by JJ (Tony) in Financial and tagged with , , , ,
Photo courtesy of Wigan Athletic FC.

Photo courtesy of Wigan Athletic FC.

Just nine days ago Warren Joyce left a comfortable position at Manchester United to join a club struggling to avoid relegation whose budget ranks them at 19th in the Championship division.

Why would Joyce sever the link with Manchester United, a giant club where he had been held in high standing for more than eight years, to take over Wigan Athletic? How did David Sharpe sell the move to him?

A three and a half year contract probably helped, but what vision did Sharpe give him of where he expected the club to go in that time? What financial backing would the chairman be willing to provide to help Joyce compete for new players on an even keel against other clubs in the division?

Joyce has a fine reputation for developing young players, but it was at a club where funding was plentiful. If Wigan Athletic’s wage bill is already low compared with the majority of clubs in the division, what is it going to be a year from now when the inflow of parachute payments will have dried up?

It was Jonathan Jackson who mentioned the budget ranking at a recent Fans Advisory Board meeting, according to a reliable source. But how can this be the case when Latics are still receiving parachute payments?

Getting accurate financial data from football clubs is never easy and what you can get applies to years well gone by. But Jackson’s alleged statement certainly gives food for thought.

If a business were run like a typical Championship club it would soon find its way to bankruptcy. In 2014-15 Bournemouth spent lavishly on their ascent to the Premier League, making a loss of £39 million. From a financial point of view it could be said that the Cherries’ gamble came off and that the loss could be written off by the huge increase in revenue in the Premier League. But Fulham lost £27 million in finishing in 17th position, with Nottingham Forest losing £22 million and Blackburn Rovers £17 million only to hover around mid-table.

In fact 18 of the 24 clubs made losses that year. Of those in the black, Birmingham City and Wolves used their £10 million parachute payments to keep their heads above water, each making a profit of around £1 million. Three other clubs showed profits through transfers, revaluation of assets and owners writing off debt. Only Rotherham United, who made a tiny profit, did so without such inputs. They did well to narrowly escape relegation.

Wigan Athletic are one of 8 Championship clubs receiving parachute payments. The clubs that are newly relegated from the Premier League will receive around £28 million in their first season, whereas Latics are in their final parachute season and will receive around £10 million. Next season they will receive a solidarity payment of around £2.5million due to clubs in the division who are not in receipt of  parachute payments.

Last season in League 1 the parachute payments gave Latics a huge advantage over the other 23 clubs who did not have them. They were able to pay out major transfer fees and offer lucrative salaries to players who had completed their contracts at other clubs. The result was a squad too strong for the third tier.

However, the tables have now turned. Wigan Athletic find themselves in a division loaded not only with other clubs buoyed by parachute payments, but others whose owners are splashing out major money in a bid for promotion. In contrast Latics’  recruitment policy has had to be adapted according to the constraints of its finances.

Five players have been brought in on loan, another nine for either economical transfer fees or on free transfers. When Latics last started a Championship season under Owen Coyle the salary budget was around £30m.  The current budget could be as much as 40% less. The main factor is the reduction in the parachute payments from around £25m in the first year and £20m in the second to £10m in the third and fourth years. However, knowing that there will be a major drop in revenue next season, the club has had to be careful in offering long term contracts with lucrative salaries. One half of the players recruited this summer have contracts that expire before and or at the end of the season.

In a recent visit to Brentford to watch Latics fight I spoke at length with a group of their fans about their chances of reaching the Premier League. On paper it does not seem impossible. On coming up from League 1 the Bees finished 5th in 2014-15, reaching the playoffs. Last season saw them finish 9th. However, the Brentford fans were not optimistic about their club’s ability to reach the top division. They pointed out that they have a salary cap for individual players and have to sell off their top assets if realistic sums are offered. They surmised that owner Matthew Benham has put in over £90m into getting the club where it is today. Without his support they would surely flounder.

Brentford provides a model for comparison. Their average crowd last season was 10,700 which is close to what we can expect at Wigan this season. But in gaining promotion they made a loss of £7.7 million, which rose to £14.7 million that first season back in the Championship, with wages going from £10 million to £17.7 million.

The reality is that, without major input of funds from the owners on par with those of competitor clubs, Latics will not be able to compete on an even keel in the division.

Following a dire 3-0 home defeat to Reading, Wigan Athletic’s place in the Championship remains in jeopardy. There were always going to be questions over the ability of players from last season’s squad to replicate such form in a higher division. Moreover a more cash-strapped  recruitment process involved  a number of the players brought in have been short of first team exposure in the past year. This is not to suggest that those players do not have sufficient quality for the division, but it was always going to take them time for their match sharpness and overall fitness to reach a competitive level.

It is once more a period of transition for Wigan Athletic. For so many years Dave Whelan’s  financial backing, together with good management and terrific spirit, helped the club eclipse so many of the others currently in the Championship division. But times have changed and we will have to wait and see how the club will cut its cloth over the coming 12 months.

The first priority is for Joyce to get his new club out of the relegation zone and consolidate its place in the division. Should that happen we will then be looking at how the club is going to stay competitive in a division when the financial odds will have turned against their favour.

In his first full season David Sharpe brought back vitality and optimism to Wigan Athletic. His positivity shone through in his communications with the media and in his willingness to spend big in bringing players into the club who could help ensure promotion back to the Championship. When he appointed Gary Caldwell he talked about bringing back football played “The Wigan Way”, suggesting that the Scot would be there long-term. The chairman’s positivity was to be rewarded with a League 1 championship title.

But times and circumstances have changed.

In the summer of 2015 Sharpe had splashed out close to £1 million to bring a central striker, a hefty fee for a club about to begin anew in League 1. Moreover in the January transfer window he finalized the transfer of a player on loan for around £600,000. Without Will Grigg and Yanic Wildschut Latics would have been hard pressed to get promotion, let alone win the division.

This summer saw players brought in for modest fees, others being free agents or loanees. Granted Sharpe did stick his neck out to offer contracts which one assumes were close to the market rate for players like Jordi Gomez, Adam Le Fondre, Nick Powell and Stephen Warnock. Moreover a three year contract was offered to the 31 year old Jake Buxton who arrived on a free.

Sharpe’s recent comments about Joyce’s appointment and the club’s immediate future suggest that the Whelan family is unwilling to put in the kind of financial investment that is the norm in so many other clubs in the division. The chairman has made it clear that he is not going to throw money around in the style of clubs like Derby County, whilst emphasising the new manager’s skills at developing players. Put simply there is not the same vibe coming from the young chairman that we had a year ago.

The main aim for the current season must be consolidation in the Championship. It is to be hoped that Sharpe will avoid the kind of fire sale that we witnessed in January 2015 that led to relegation. It was an exercise based on cutting the wage budget by at least 30%. Significant money was saved in the short term, the club eventually losing £3.9 million for the season, substantially less than it would have been. But relegation was to mean that the club would only have one more year of a parachute buffer even if it were to regain Championship level status. With hindsight the scale of the clear out was a major mistake. But will history repeat itself this coming January?

In the meantime Joyce will try to get the best out of a squad that has enough quality to get out of the relegation zone. In the long-term, assuming he is given the longevity denied to Caldwell, he will most likely be working on a budget that will be dwarfed by those of the vast majority of clubs in the division. The strategy will involve selling off the pick of those young players the manager has developed in order to stay afloat.

Joyce’s immediate task of consolidation in the division is his most immediate challenge. Should he manage to do that he will face a more difficult task: that of achieving miracles on a shoestring budget.

Like us on Facebook, or follow us on twitter here.

Advertisement

Can Latics afford to keep Chris McCann?

Posted by JJ (Tony) in Financial, Specials and tagged with , , , ,
Whether McCann stays or not will provide an indicator on Wigan's financial outlook for the future.

Whether McCann stays or not will provide an indicator on Wigan’s financial outlook for the future.

Norway is a country that prides itself on financial transparency. In fact you can go online and look at the earnings that people post on their tax returns, the Prime Minister included.

But obtaining hard facts on player earnings at English football clubs is quite the opposite. Individual player salaries tend to be closely guarded by clubs who want to keep such things under their hats, for their own sakes as well as those of the players. Since salaries are so rarely divulged we usually to have to make guestimates for the figures involved.

According to the Daily Mail the average basic yearly salary for a Championship player in 2014-15 was £324,250. It was £69,500 in League 1.

Using those basic figures and assuming a first team squad of 25 players it would have cost an average Championship club around £8.1m that season for its basic wage bill for its senior players, let alone for bonuses and appearance money. Together with salaries of other players and staff and the general running costs of the club, the figures would most likely top £10m. A comparable figure for the average League 1 club would have been around £2.5m.

Chris McCann and Leon Barnett were signed by Owen Coyle in the season of 2013-14 when Wigan Athletic’s annual running costs were around £30m. Simple calculations suggest that most of the senior players in that squad would have been earning salaries around £1m.

According to an article in the Star a couple of weeks ago it was Sheffield United, not Wigan Athletic, who had the highest player salary costs in League 1 this past season. They estimated it to be around £6m.

If the Star’s estimate is correct it means that Latics operated on a salary bill no more than £6m last season, remarkable given that the combined salaries of Barnett and McCann would most likely have been between £1.5m and £2.0m. It suggests the remaining players were earning a fraction of the wages of the two Coyle recruits.

Last summer Wigan Athletic did a remarkable job in preparing themselves for the financial realities of League 1, following a 12 year period in the Championship and the Premier League. Players on Championship salaries were jettisoned for knockdown prices, whilst others were sent out on loan. Whether Barnett and McCann remained due to their value to the squad or that no acceptable offers came to them is open to conjecture. In the event Barnett had an indifferent season and will be going elsewhere. McCann on the other hand became a key player in the promotion season, given his flexibility in adjusting to playing in different positions.

The club has announced that it is offering McCann a new contract. The snag is that the salary on offer would mean a substantial pay cut for the Irishman. Given that he is a proven performer with a wealth of experience in the Championship he is likely to attract interest from other clubs in the division. The arrival of Owen Coyle at Blackburn could be a factor. McCann played under the Scot at Burnley before joining Coyle’s Latics. Moreover judging by their profit and loss accounts over the past seasons the East Lancashire club are not averse to offering attractive salaries.

Should McCann leave Wigan there will be fans who will question his loyalty. But the likelihood is that he will leave. There are at least three other players who still belong to Wigan who will still be on their previous Championship-level salaries. They are the loan players – Emyr Huws,  Billy Mckay and Andrew Taylor. But the kinds of salaries that Latics will want to offer this coming season might not be in line with what those players were used to earn before going on loan.

Having had wage bills of £30m in the Championship in 2013-14, then £20m in 2014-15, what kind of figure will Latics be aiming towards for the season ahead?

Wigan will be buffered by their final parachute payment in excess of £12m. However, the club does not have a great record in raising commercial revenues and gate receipts are likely to be well below the average for clubs in division. Offering low cost season tickets is a great way to foster goodwill among supporters and it could be argued that the lower prices will bring more people in, compensating for a reduction in price. However, there are questions about whether such a stance can be maintained without the cushion of parachute money. Even in their heyday in the Premier League the club struggled to reach an annual £3m in gate money.

Latics might stretch to a wage bill of around £15m for the coming season, but they must tread with caution with regards to salaries offered and lengths of contracts. The prospect looms of making significant losses two to three years from now.

Given these factors offering McCann a one year deal on a salary compatible to that of which he has become accustomed would be possible. But a contract of two to three years on such terms would be risky.

Last summer the staffing policy was clear – get rid of the highest earners and bring in players of sufficient quality to get the club out of League 1, but halving the wage bill. This summer it is not so clear. Does the club take the gamble of going for outright promotion or does it keep an eye on what are the longer term implications for its financial future?

Whether or not Chris McCann signs a new contract will provide us with a major indicator as to where the club intends to be heading over the coming years.

Losing money to win promotion

Posted by JJ (Tony) in Financial and tagged with , , , , , ,

benefactor

Figures can help provide startling comparisons, causing us to question underlying trends. Recent information and figures  from Wigan and Horwich have  once more caused questions to be raised.

Wigan Athletic lost £3.9m last season. Having to pay agents a total of £1,461,088 was a contributory factor towards the loss, which had come after three consecutive years of making a profit.

The last time Bolton Wanderers announced a profit was in 2006. Referring to their loss in 2014 the club stated that ”Net loss improved by £41.6million, down to £9.1million year on year.” A couple of weeks ago Wanderers were issued a winding-up petition by the HMRC, which goes to court on January 18th. Owner Eddie Davies has loaned the club £185m over recent years, but is not prepared to continue to pump money in. In the meantime they are looking for ways to pay their players and staff.

The scale of Latics’ loss for 2014-15 came as a surprise to most of us, although it is small compared with those suffered by other Championship clubs last season, not just Bolton.

In the summer of 2014 Dave Whelan made a calculated gamble in a bid to get Latics back into the Premier League. Is David Sharpe about to follow in his footsteps?

“The continued financial support of the Whelan family has allowed the club to continue pursuing long-term strategic goals and although the financial results for the year ended 31 May 2015 mirrored the disappointments on the field, the owners remain committed to developing and improving Wigan Athletic to enable the club to return to the highest level of English football.”

The words of Jonathan Jackson to Wigan Today after announcing last season’s financial loss.

It is certainly reassuring to hear that the owners – the Whelan family – remain committed towards getting the club back into the Premier League. The question is how they will be able to develop and improve things at the club to make it a possibility. Will the Whelan family remain the benefactors to Wigan Athletic that they have been in the past?

Last season Dave Whelan had given major backing in the transfer market to Uwe Rosler, who had taken Latics to the FA Cup semi-final and the Championship playoffs.  £7.3m was brought in through the sales of James McArthur and Callum McManaman. But £10m was spent on transfers into the club, the majority on Andy Delort, Adam Forshaw, Emyr Huws and Oriel Riera. Other signings were made at lesser prices, with some being free agents.  But not only was it the shelling out of money on transfer fees that was to cost the club, but Rosler had brought in eleven new players. The large squad that resulted was to eat away at the budget week by week.

Sadly things went pear-shaped for Rosler, who was sacked in November. Seeing his financial gamble starting to look less viable, Whelan was to embark on a huge cost cutting exercise in January. The hapless Malky Mackay was to be the manager who oversaw a fire sale that resulted in swathes of players leaving in the January transfer window.

But that too turned into a gamble that turned sour on Whelan as Latics’ severely pruned squad just did not have the quality to hold their own in the Championship under a manager who could not deliver.

With hindsight one could say that Whelan’s appointment of Malky Mackay caused more damage to the club on and off the field than anything previous in the club’s history. The January sales certainly helped rebalance the finances. If those players had stayed the budget would have been propelled much further into the red, anathema for a club that had prided itself on balancing its books. It could be argued that those players had lost the will to fight for the club and were happy to sit pretty on their inflated salaries at a time when the going was tough.

But it was the scale of the January clear out that was staggering. More than anything else it was a cost-cutting exercise, which helped reduce a potentially large budget loss for the season.

Did the January sales leave Latics in better shape for the future? The reality is that they were a major factor in the club losing its place in the Championship division.  Getting back there is not going to be easy and if Latics cannot gain promotion from League 1 this season or the next they will be in trouble. Parachute payments help provide a huge competitive advantage over other clubs but they will be at an end in the summer of 2016.

For the moment the hope is that the purge within the club and the advent of a young duo at the helm will bring forward a shining new era. But even if the dynamic duo of Gary Caldwell and David Sharpe can get Latics back into the Championship division, what would be the chances of them going further?

At the end of last season Championship clubs were over £1.1bn in debt, an average of £48.5m per club. The desire to reach the riches of the Premier League continues to drive so many clubs severely into the red. Having a benefactor owner is the key to getting out of the division. But there are clubs in the division who make every effort to live within their means, not an easy matter with the profligacy around. If Latics were to get back there, in which category would they stand?

Benefactor owners have made their mark even in League 1, where clubs live within their means much better than in the division above. Last year’s champions, Bristol City, have been bouyed by the funding of Steve Lansdown. Second place Milton Keynes Dons are owned by Pete Winkleman, who moved Wimbledon FC to Milton Keynes in 2001. Playoff winners Preston North End are supported by Trevor Hemmings, who has reduced their debt by more than £50m since 2010. During the 2013-14 financial year, he waived £18.7m of debt and £15m through a share issue.

Wigan Athletic will look towards breaking even financially on the current season. They are likely to continue to shed higher wage earners this January, as they did just over a year ago and in summer. Players on Championship-level salaries will be encouraged to leave. Squad size could also diminish.

A few miles away in Horwich, Bolton Wanderers will surely do something similar but on a larger scale. They have to drastically cut their costs and a fire sale like that one in Wigan just over a year ago is on the cards. They will surely be heading towards League 1 next season, but will they meet their local rivals there?

Whether Gary Caldwell can achieve promotion this season remains to be seen. Perhaps it will be next season, or perhaps Latics will be marooned in a division where they will no longer have a financial advantage over the rest.

But in the current climate of English football the level of elevation will depend on the funding of a benefactor. But Dave Whelan’s role in Wigan Athletic’s rise was not solely as a benefactor. He was a visionary who made it possible through his hard work, knowledge and dedication.

David Sharpe has a hard act to live up to. But he has already revealed a vision that can take the club forward, impressive for such a young man.

But is Sharpe capable of being the chairman who can not only run a balanced budget this season, but provide the benefactory backing for the club to eventually get back into the Premier League?

The Whelan family have done so much for Wigan Athletic over the past two decades. How much more can we expect from them?

Wigan Athletic’s future – can shrewdness outweigh cash?

Posted by JJ (Tony) in Financial and tagged with , , , ,

swissprofitand loss2013-14

In the 2013-14 season of the Championship only three clubs made a profit. They were Blackpool, Wigan Athletic and Yeovil Town. Each has since been relegated from the division.

At the time Queens Park Rangers had made the biggest loss of the promoted clubs (£70 million), with Leicester City losing £21 million and Burnley £8 million. Since then QPR’s loss has been cut to £10 million due to a write-off of shareholder debt of £60 million by chairman Tony Fernandes and his associates. Without that they would have faced a massive fine on their return to the Football League in 2015-16.

Many Wigan Athletic fans have written off the last two seasons in their minds, as a succession of bad decisions made by the club led to a slide into League 1.

Those decisions include the appointments of hapless managers in Owen Coyle and Malky Mackay and the departures of no less than thirteen players in the January transfer window of 2015. The result was a squad left short of quality that would have struggled to survive even if the manager had not been the seemingly oblivious Mackay.

In fact the 2013-14 season had turned out to be a relatively good one for Latics, despite a poor start under Coyle. It remains open to conjecture whether they could have challenged for an automatic promotion spot if they had made a different initial appointment.

The obvious choice would have been a manager who could have built upon the foundations left by Roberto Martinez, fine-tuning the playing style and philosophy as required. Ironically it did happen some 22 months later when Gary Caldwell was appointed, but sadly almost all of the players who had proved themselves under that philosophy of play had by then left the club.

It could be argued that apart from the appointment of Coyle, the season was a success in terms of a transition from the Premier League to the Championship. Shrewd financial management and the appointment of Uwe Rosler kept things on track. In comparison Blackburn Rovers were to make a loss of £42 million over a season in which they were to finish in 8th place. With a 5th place finish, a narrow playoff defeat and a valiant loss on penalties in an FA Cup semi-final, Rosler had made a very positive impression.

The 2014-15 season might well go down as the most memorable in the club’s history, albeit for the wrong reasons. Three managers, the selling off of the family silver, Dave Whelan’s awful happenings with the national media and his subsequent stepping down as chairman was to eventually lead an unhappy club to relegation to League 1.

In both the 2013-14 and 2014-15 seasons Latics were able to be competitive in the transfer market. This was partly due to incoming transfer fees, but more significantly down to parachute payments of £24 million in the first season and £18 million in the second. That meant that they were able to cope with a player wage bill of around £30 million, drastically cut down to around £20 million (on an annual basis) in January 2015. The Europa League campaign in 2013-14 and the FA Cup runs in both seasons added to the coffers.

However, in 2013-14 Latics’ gate receipts of around £4 million were close to the median for the division, whereas a paltry £1 million from commercial revenue was the lowest.

According to the Swiss Rambler the club had a net debt at the time of £23 million, significant but dwarfed by those of Bolton (£195 million), QPR (£158 million), Brighton (£131 million) and Ipswich (£86 million).

Swissdebt

For the coming season Wigan Athletic will have the advantage of the £9 million parachute payment over the other clubs in League 1. However, under the SCMP version of FFP used in Leagues 1 and 2, there is considerable amount of freedom for an owner to make cash injections.

If David Sharpe adopts the approach of recent years at the club he will run it on a tight budget and will not spend the kind of money that his grandfather splashed out some thirteen years ago when Latics were in the third tier. Latics will now be competing with clubs like Sheffield United, with higher match day and commercial revenues, but also with those with wealthy benefactors.

However, Latics are now in the hands of a young brigade that is optimistic about the future. Sharpe has talked about getting in “the right kind of player” after the nightmare of the season recently passed, when so many of them just didn’t seem to want to put in an effort commensurate to their salaries. If Latics are going to have future ambitions of getting back up there with the big guns a lot is going to depend on the recruitment team’s ability. Recruiting the “right kind” of hungry, talented young player from the lower leagues or Scotland is going to be the order of the day. A few hardened and seasoned pros are likely to be added to find a suitable blend, mostly on short term contracts

When Latics were in the third tier in the 1980’s they made some inspired signings of young players. So many were sold to keep the club afloat: a reflection of the club’s circumstances at the time. Most made their mark in higher levels of football.

It is that kind of expertise in picking out those young talents that is what Latics currently need. Sharpe might allow Caldwell a small number of players on higher salaries who have played in the upper echelons, but Latics will surely look to sign those up-and-coming players who can make the difference.

But even if Wigan Athletic can get promotion back to the Championship a year from now, what will be facing them?

The gap between the Premier League and the Championship continues to widen. Two of the three promoted teams were propelled back into the Championship, the third surviving with a “miraculous” end of season run, inaccurately paralleled with that of Latics in 2011-12 by the national media.

Moreover the massive increase in television money secured by the Premier League’s latest deal means that parachute payments will be much increased. It will be more difficult than ever for clubs without first or second year parachute payments to compete.

With shrewd management Latics can get promotion back to the Championship this season. Without it they are likely to be doomed to meandering in the lower leagues for years to come.

However, even if they are back in the Championship a year or so from now the picture will be vastly different than it was in 2013. They will be facing so many clubs with much bigger financial resources.

Can shrewdness outweigh cash?

It is the shrewdness that will make the difference.

Let’s hope that the young brigade currently running Wigan Athletic Football Club can show the kind of shrewdness that will be needed.

The jury is currently out.

 

 

 

 

Splashing money on a striker and the SCMP

Posted by JJ (Tony) in Financial and tagged with , , , , , , ,
Does the SCMP penalise the smaller clubs?
Does the SCMP penalise the smaller clubs?

Bristol Rovers were in dire straits in late January 2002. It was their first-ever season in the 4th tier of English football and they were doing badly, occupying the 87th place of the 92 league clubs.

A trip to a Premier League club in the FA Cup sounded like a recipe for disaster. But Rovers’ 3-1 victory at Pride Park was to prove the showcase for a young striker whose hat-trick destroyed Derby that day. Nathan Ellington was only 20 at the time, but was heading towards twenty goals for the season in a struggling side.

At the time Wigan Athletic were hovering around mid-table in League 2, the 3rd tier. Latics had finished in the top six the previous three seasons and manager Paul Jewell had spent freely in a bid to get promotion.

In summer he had paid Dundee United £500,000 for Jason de Vos, £750,000 to Wolves for Tony Dinning and £300,000 to Watford for Peter Kennedy. He had followed that up in December with the signings of John Filan from Blackburn for £600,000 and Gary Teale from Ayr United for £275,000.

However, Latics were just not scoring enough goals. They had scored a paltry 53 in 46 league matches the previous season and desperately needed someone who could put the ball in the back of the net.

Jewell’s signing of Ellington for £1.2 million a couple of months later raised eyebrows in the English football world at the time. It was an enormous fee for a club in the third tier, with an average attendance of around 6,000, to pay to one in the tier below them. However, in the following season Ellington’s 22 goals propelled Latics to winning the division. Ellington was to go on to form that wonderful partnership with ex-Bristol Rovers teammate, Jason Roberts, that was to help Latics reach the Premier League.

It had been Wigan’s sixth season in the third tier when Ellington was signed in 2002, but just over thirteen years on Wigan Athletic are contemplating life back there. But it is a different club now than it was then and the Financial Fair Play protocol has come into play. Can Latics once again get out of the third tier, albeit within a differing economic climate?

There have been many theories put forward as to why Latics were relegated this season. But, no matter what was going off the pitch, scoring only 39 goals in 46 league games was the main contributory factor. Dave Whelan had splashed some £8 million during the summer transfer window in signing strikers Andy Delort and Oriol Riera together with Adam Forshaw and Emyr Huws, who were expected to provide some creativity in midfield.

Sadly the gamble did not come off and none of the four was to play in the second half of the season. Forshaw was sold, Huws injured and the two strikers sent back to their home countries on loan. Given the failed investment made by Whelan, will his grandson and new chairman, David Sharpe, be brave enough to follow a similar path this summer by making major investments in players?

Whelan had splashed money around in both the 2001-02 and the 2014-15 seasons in bids for promotion. However, in 2001-02 there was little hope of a return on his investment. Over two decades he was to pour around £100 million into the club with little hope of getting any of it back. Not only was getting promotion to the Premier League at a considerable financial cost to him, but he had to keep pouring money into for the club to stay there.

In 2007 following the departure of Jewell and an unfortunate spell under Chris Hutchings, Whelan brought back Steve Bruce to steady the ship. Bruce did exactly that. Hutchings had presided over six successive defeats, taking Latics into the bottom three. Bruce arrived in November and managed to steer Latics into 14th place, well clear of relegation. In the 2009-09 season that followed they finished 11th. But Bruce’s success had come at a financial cost. The result was Wilson Palacios and Emile Heskey leaving in January and Antonio Valencia in July. Nevertheless Latics had made losses of £11.2 million and £5.8 million over the two seasons with Bruce in charge.

Roberto Martinez was appointed in the summer of 2009 with the brief of slashing the wage bill, but maintaining Wigan’s Premier League status. Even before the season had begun Lee Cattermole had been sold for £3.5 million. Martinez was to guide Latics into 16th place, with the operating loss for the season cut to £4 million.

The 2010-11 saw Latics finish in 16th place once again, with a loss of £7.2 million. But in the 2011-12 season they were to turn things around financially, finishing 15th with a profit of £4.3 million. A profit of £822,000 was made the following season when they won the FA Cup but were relegated from the Premier League.

Relegation to the Championship saw the club cut its cloth according to its changed circumstances. Wages for 2013-14 were cut from around £50 million the previous season to £30 million. A profit of £2.6 million was announced.

However, profit and loss statements do not tell the full story of a club’s finances. Accountancy uses the concept of amortisation, which tends to distort the picture.  In simple terms transfer fees are spread over the term of a player’s contract.

Let’s say that Wigan paid a £2.8 million transfer fee to sign Andy Delort in 2014, who was given a four year contract. The amortised value is therefore £700,000 per year. On the accounts for this year the transfer fee would therefore appear as an amortisation of £700,000. Delort’s amortised book value after one year would therefore be £2.8 million, less £700,000, equalling £2.1 million.

Now let’s say that Delort is sold for £2.0 million after being at the club for two years. After two years his amortised book value is £1.4 million, so the accounts for 2016-17 would show a profit on the sale of £2.0 million less £1.4 million, that is £0.6 million. Let’s also say Delort’s annual salary was £1million. For that year’s accounts Latics would actually show a profit improvement of £2.3million due to lower wage costs of  £1 million, lower amortization costs of £0.7 million and the £0.6 million profit on the transfer.

The use of amortization in accounting for football club profits and losses is an art unto itself. However, the declared profits shown by Wigan Athletic in the last three years of reporting suggest that the club has been heading in the right direction. In simple terms its long-term sustainability depends on nothing less than making sure that incomings outweigh outgoings.

The higher than usual level of transfer activity and changes in wage costs over the course of the season just finished will certainly keep the club’s accountants busy. However, in layman’s terms the transfer fees received through the sales of such as James McArthur and Callum McManaman outweighed those spent.  Moreover the January sales and departures enabled the club to drastically its wage bill.

Wigan Athletic today announced its new season ticket prices, David Sharpe stating that:

“Gary Caldwell and his staff will work tirelessly to get things right on the pitch, and I’m sure that our loyal supporters will support the players as they always do. We want to reward our supporters after a difficult season and by reducing prices by 5% we are demonstrating how much we appreciate the support we have received. Our fans will play a massive part in the new era of the club. Our season cards continue to be the most cost effective way of watching Wigan Athletic and remain extremely competitive compared to other clubs. We are committed to making the cost of watching football affordable to all.”

The club’s admission prices were among the lowest in the Championship division, where average attendance dropped to 12,882 from 15,176 the previous season. A further drop in attendance would appear inevitable, even if the club has a successful season. The prospective fall in attendances, together with reduced admission prices, means a significant further drop in gate receipts.

The average attendance in League 1 this year was 7,061. It was the larger city clubs – Sheffield United, Bradford City and Bristol City – who averaged over 10,000. Over their previous six seasons in the third tier Wigan Athletic averaged 5,841, with the highest yearly average of 7,287 in the promotion season 2002-03 and the lowest yearly average of 3,967 in the first season 1997-98.

With gate receipts becoming a more critical factor, Sharpe will be hoping he can maintain average attendances at least around the 8,000 mark. After their successes in the past decade in particular, Latics now have a greater fan base than before. However, he will be aware that he has to keep admission prices relatively low to compete with the local rugby club for support and not alienate fans who have loyally stuck by the club in the most horrendous of seasons that just passed.

For the next couple of years gate receipts will not be the main source of revenue, given parachute payments of £8 million per season. On the face of it Latics will have a significant financial advantage over the other 23 clubs in the division, none of whom have parachute payments. However, FFP protocols differ greatly between League 1 and the Championship. The Salary Cost Management Protocol (SCMP) system, operated in League 1, allows owners to inject funds in ways that would not be possible in the Championship.

League 1 winners Bristol City have been losing money steadily over recent years. In 2013-14 they lost £3.9m after being relegated to League 1. They had lost £12.9 million in the Championship the previous season, with big losses in the years prior to that. In January 2014 their major shareholder, Steve Lansdown, turned £35 million of debt into equity to keep the club afloat. Despite their lack of profitability they have been able to put funds into the redevelopment of their Ashton Gate ground, due to be completed in 2016-17.

In contrast Yeovil have not had that kind of financial support from their owners. Sadly they have suffered successive relegations and will play in League 2 next season. In March chairman John Fry claimed that their budget of £1.4 million was the 14th highest in League 1, the highest they had ever had in that division. They had started the season with a loss of £5 million hanging over them from the previous year in the Championship division. Fry has repeatedly stated his view that the SCMP penalises smaller clubs like his own, whose gate receipts cannot compete with those of bigger clubs.

David Sharpe continues to reiterate his desire to get immediate promotion back into the Championship.  Parachute payments notwithstanding, is he willing to give Gary Caldwell the kind of financial backing that his grandfather gave Paul Jewell more than a decade ago?

If he is then maybe we will see a young striker coming into the club who can make a difference in the way that Nathan Ellington did from 2002-2005.