Wigan Athletic: a club renting a stadium to survive?

“There’s an offer of £500,001 in.”

The Sun reports that the offer, presumably £500,000 for Christopher Park and £1 for the club has been made. We can assume it has been made by Frenchman Gauthier Ganaye on behalf of American businessmen Randy Frankel and Michael Kalt.

Although the administrators have stated their preference of selling the club and the stadium together the prospect of them having different owners is becoming more and more likely.

On July 7 news of an initiative to raise funds to buy Latics was made on the Wigan Warriors web site. It mentioned a “unique opportunity here to bring the ownership of these two great clubs together under one roof, each operating independently as before, but under a Wigan Sporting Partnership banner. It is envisaged that each club would retain all its training grounds, management and facilities.

The initiative was to be led by Ian Lenagan, Darryl Eales and Gary Speakman.They stated their belief that Wigan Athletic would be better locally-owned and as far the DW Stadium was concerned they stated that “sustainability and ownership of the stadium is equally important to both clubs, we are currently working with our longstanding advisers KPMG and talking to external parties.”

The communique was met with cynicism by the majority of Wigan Athletic fans who considered it to be an attempt by Lenagan to purchase the DW Stadium. What were Lenagan’s initial motives and what are they now?

Given the uncertainty surrounding the future of the football club it was understandable that Lenagan and the Warriors would want to safeguard their tenure at the stadium. Buying into it would be the obvious way to do so. Were Lenagan to succeed he would own 85% of the shares, with the council continuing to own a 15% portion.

However, the running costs of the stadium, including salaries, maintenance and local taxes are significant. In the past Warriors have perhaps had the better of the deal they made with Dave Whelan before the stadium opened in 1999. Warriors were given a long-term lease and it has been reported that they were to pay 10% of their gate receipts for the use of the ground.

Alan Nixon reported that the “French American team” and Lenagan “couldn’t agree on numbers between them”. If the deal were to go through and Lenagan were to take on the considerable costs of stadium ownership he would need incoming funds from the football club to avoid making heavy losses. Put simply, it would not be in Lenagan’s interests not to make a deal with Latics’ new owners.

Now Nixon is talking about an auction for the stadium. Are there other parties ready to bid against Lenagan?

The work of the Wigan Athletic Supporters Club through these tense and difficult months has been admirable. The ‘Save Our Club’ Crowdfunder currently stands at over £634,000 which is a terrific response from all associated with Wigan Athletic. Moreover, they have been involved in discussions with the administrators and parties interested in buying the club.

In their announcement on September 4 they stated that they “…have already met with one of the interested parties who have put in a bid to the administrators. They are very positive about working with us should their bid be successful, and they are keen to ensure that they have local partners working with them to make the Football Club a future success. We are also continuing to work with the council, the Community Trust, Jonathan Jackson, and other partners to ensure that there is a solution to the survival of our Football Club.”

The announcement makes no mention of the stadium but does indicate that the prospective new owners of the club appear to want to work together with them for the future benefit of the club.

However, Nixon’s comment about an auction for the stadium might suggest that there are other interested parties as well as Lenagan.

The prospect of the DW Stadium being owned by another party, especially one associated with the rugby club, is a bitter pill to swallow for Wigan Athletic supporters. However, at this moment in time it appears to be the best option to ensure the survival of the club.

Already there are people suggesting that Latics might eventually build their own new stadium with a smaller capacity. Much would depend on any agreement made between the new owners of the club and the current stadium. Were no agreement to be reached Latics would be forced to seek an alternative venue. Leigh Sports Village has been touted as a possible alternative.

When Dave Whelan built the stadium, he was ambitious for Latics to become a Premier League club able to attract attendances approaching its 25,000 plus capacity. In their first season in the top tier Latics attracted the highest attendances they have ever had, with an average of 20,160 per home game. In the first five years in the Premier League home attendances averaged between 18,000-20,000. Warriors at the time averaged between 14,000 and 16,000. Wigan Athletic could have increased their home attendances during that period had they allowed more away supporters, but they would have run the risk of being outnumbered in their own stadium.

Since then attendances have plummeted for both football and rugby clubs. In the 2018-19 season Latics averaged 11,663, dropping to 10,614 last season. In the 2018 and 2019 seasons the Warriors averaged 11,528 and 12,060.

In early July David Sharpe was interviewed on TalkSport. He gave an honest and realistic appraisal of the club being able to survive:

“If you look at what my granddad achieved, that makes people feel that Wigan is a bigger club than it is.  If you strip away the fact that we were in the Premier League for so long, we got to Europe and we won the FA Cup, it is really not a huge football club.

In reality, Wigan’s population is not huge, under 100,000 people, it’s surrounded by big football clubs, it’s a working-class town, the stadium for our fanbase is probably too big, it should only be around a 10,000.

So I feel, just for the football club to survive with a lower wages bill in League One I would very much be happy with that. As much as I’d love the team to stay in the Championship, with the wages they have in the Championship you have to be a very, very wealthy man to afford the running of that football club.

So, for me, the best person would be somebody who isn’t going to come with grand ambitions to say Premier League and European football, because that’s been and gone. As a Wigan supporter we’ve got to leave those days behind us and just concentrate on the club surviving.”

Over the past months Latics supporters, as a whole, have become more realistic about the club’s place in the football ladder. Most realise that the days of a benevolent owner in Dave Whelan are gone and that future owners are unlikely to put in the kind of funding that kept the club in at a level beyond what could have ever have been dreamed of.

For the moment we have to accept that selling off assets and bringing in new owners is the only way for the club to survive.

More players will depart as the administrators continue to get wages down towards those at a level appropriate to a League 1 club with the prospect of limited revenues in the coming season. Funds raised from transfers will be needed to defray the considerable costs of the administrators and legal fees.

Once the ownership issue is decided new players can be brought in. There are a lot of free agents out there, with so many clubs not renewing their contracts with the prospect of much decreased revenues coming in. Latics must build a team incorporating the fruits of the club’s excellent academy with the experience of senior professionals brought in to provide the backbone.

From a personal point of view, I just want the club to survive, albeit in much-changed circumstances. On the playing front the goal would be to avoid relegation to League 2. Anything more than that would be a bonus.

 

Thoughts on a trip to Fleetwood and Ian Lenagan

 

Click here to view the Administrators’ Press Conference.

What has been happening at Wigan Athletic over these weeks? Or perhaps we should say what has not been happening. Trying to get an accurate picture of what is going on is akin to that of finding a needle in a haystack.

The footage from the administrators’ conferences with the press and supporters club did little to clarify that picture.

Prior to that I had listened to Jonathan Jackson and Caroline Molyneux. The love the two of them have for the club shone through during the broadcast, even if the mechanism by which the funds donated by the fans would be used as a back-up to help the club survive did not really crystallise in my head after viewing.

The ins and outs of what we have heard from the administrators and Alan Nixon have left me confused. What is the real case scenario?

But Gerald Krasner had said that the club and the stadium would not be sold separately……….

With my mind in a state of confusion I found Jay Whittle’s interview with Wigan MP, Lisa Nandy:

Nandy’s clarification of events and procedures was welcome after the conflicting information that had preceded it. Nandy backs the Jackson/Molyneux initiative and sees a supporter-run club as an alternative if a buyer is not found. Her reference to the efforts of Warriors chairman, Ian Lenagan, to raise funds for a local buyout of the club was of particular interest.

My mind was boggled but then I remembered that the administrators said that we can at least start the incoming season. Of course, amid all the financial talk one can forget: we have a Carabao Cup game in eight days time at Fleetwood. What a pleasure to think of that, rather than the depressing, worrying stuff about the long-term future of the club.

I watched Wigan Athletic play at Fleetwood in my early teens. Decades have passed since then. It was when Fleetwood were in the Lancashire Combination and Latics in the supposedly-superior Cheshire League.

Despite having so many school friends who derided Latics as “tin-pot”  I used to love watching them as a non-league club and I built up a resentment towards those who thought everything in Wigan revolved around the cherry-and-whites at Central Park.

I must admit my mindset has not changed so much, despite the academic degrees I have accumulated and having lived and worked in far-flung beautiful countries around the world. To say that I retain a lack of empathy towards the rugby club is an understatement. It is nothing rational: it just is.

I was brought up just around the corner from St Patrick’s, a prolific breeding ground of rugby league players. Ian Lenagan went to primary school there before going to West Park Grammar School in St Helens, which provided him with a base to launch a distinguished career. Lenagan went on to academic success at Manchester and Liverpool universities before making his money in software products for workplace management on a global scale. He was also a successful theatre producer, with over 30 productions before becoming the major shareholder in Harlequins and Oxford United, then becoming chairman of the Football League. Lenagan bought the Wigan rugby league club from Dave Whelan in 2007 and his record speaks for itself.

The rumours of Lenagan trying to buy the DW Stadium this week have provoked a shockwave among Latics fans. Part of their anxiety rests in the problems that English football clubs have had after selling their stadium. But more of it lies in the enmity between football and rugby in the town of Wigan.

Football has had a hard time establishing itself over rugby over the decades. In August 2011 I wrote an article entitled “Is Wigan a Rugby Town” providing stats to show that the football club had better attendances in that era. Latics were in the Premier League and blue and white was starting to challenge cherry and white in the town centre.

Wigan is a small town, albeit in the massive conurbation that is Greater Manchester. Rugby League runs on low budgets and Warriors can excel at being a big fish in a small pond. Latics are a small fish in a huge pond. To spend eight years in the Premier League, reach the League Cup Final, win the FA Cup was a massive overachievement that will probably never happen again.

Part of Latics’ problem is that they have fans from that era who have high expectations, based on the years that were funded by Dave Whelan’s benevolence. It is hard for those fans to envisage a club that is probably never going to reach such levels again. Gate receipts over these years have been poor, despite generous season ticket prices. Attendances were never going to be high in an environment where not only rugby is competing, but thousands travel to Manchester and Liverpool to watch the elite clubs play.

But let’s get back to that perhaps irrational fear of Lenagan and the rugby taking over the DW Stadium.

We have heard that the stadium company loses money year upon year. So why would Lenagan like to take it on?

On the face of it Latics might be better served financially by a rugby takeover of the stadium. Reports suggest that Dave Whelan charged the Warriors 10% of their gate receipts to use the DW. Should Lenagan succeed he would have to deal with a Wigan Athletic on its knees, possibly unable to pay the kind of rent he would need. Why would he want to buy the stadium?

Some things don’t add up.

“We strongly believe that Wigan Athletic is better being locally-owned. As sustainability and ownership of the stadium is equally important to both clubs, we are currently working with our longstanding advisers KPMG and talking to external parties. Our intention is to identify other investors quickly and start due diligence on the football club with the intention of making a bid in due course. We have made the Administrators aware of our interest and hope to explore this with them further over the days ahead.

Wigan Warriors and Wigan Athletic are both local sporting institutions and it is our belief that this is a unique opportunity here to bring the ownership of these two great clubs together under one roof, each operating independently as before, but under a Wigan Sporting Partnership banner. It is envisaged that each club would retain all its training grounds, management and facilities.”

The announcement on July 7 came on the Warriors’ web site. It was light years away from that infamous 80’s interview with the controversial Maurice Lindsay that really stirred things up with the football aficionados of the town:

Lenagan has not adopted such a tone. He has been a breath of fresh air coming from a club that rarely provided it towards its football counterparts. His message in July was positive and conciliatory. But there has been a lack of communication since then.

The administrators today poured cold water on the prospect of somebody buying the stadium but not the football club. But will that position last if no club buyer comes through? Is Lenagan simply looking after the well-being of his own club by ensuring that they can continue to play at the DW Stadium whatever happens to the football club?

Ian Lenagan is a bright and talented businessman. The question is whether his motives towards Wigan Athletic are primarily well-intentioned or business- minded.

As an early teen I enjoyed the games at places like Fleetwood, Congleton and Hyde.

The Fleetwood club of those days has had reincarnations, the latest result being Andy Pilley’s Fleetwood Town. I would not be surprised if they beat Latics by a big score next week. But I will nevertheless make every effort to watch the game and stay hopeful. The circle has tuned halfway, Latics falling two divisions from their zenith, Town at their highest point.

I remain nervous about our club’s survival but look forward to the game at Fleetwood in eight days’ time.

In the meantime the Daily Mail reports that what Nixon referred to as the French American team are ready to buy the club. Let’s hope the deal happens soon and it includes the DW Stadium.

Why relegation to League 1 might not be such a bad thing for Wigan Athletic

Wigan Athletic’s wage bill in the 2018-19 season amounted to some £19.4m. The club’s revenue was £11.5m. The figures for the 2019-20 season recently completed are likely to be even more stark, given the impact of the Covid-19 pandemic on football revenues.

Were Ian Lenagan and his associates to take over Wigan Athletic we could expect a wage budget somewhere between 10-15% of what was paid last season. Lenegan would run the club within its means, in a stark contrast to what has happened over the recent years.

Stats courtesy of The Swiss Ramble

The Rugby Union’s Premiership has a salary cap of £7m per club whereas that of rugby league’s Super League is of £2.1m.

Clubs in the EFL are about to vote on salary caps for their three divisions. A cap of £2.5m is proposed for clubs in League 1, with £1.25m for League 2 clubs. The figure being quoted for the Championship is £18m.

The caps for the lower two divisions might well be accepted by the majority of the clubs involved, although a club like Sunderland, desperate to get out of League 1 and with a wage budget over £10m might not be happy about it.

Were Latics to continue with even a handful of players who regularly appeared last season and remain under contract there would be no way of staying within that £2.5m figure. We can therefore expect almost all of the current senior squad players to depart. Many of those players will already be considering their next move. It is typical to have relegation clauses in contracts which lower player salaries in the event. However, on the flip side players can have clauses inserted which give a maximum price for a transfer. Reports suggest that Antonee Robinson can leave for £1.5-£2m due to such a clause, whereas he was due to move to Milan in January for some £6m.

Existing players’ wages would be regarded as the divisional average as far as the salary cap is concerned. The average League 1 salary is around £1,800 per week. Latics could therefore keep some of their higher paid players without breaking the salary cap, although the big fall in revenues involved in dropping down a tier makes it unlikely that such luxuries be afforded. The last time Wigan were in League 1 they spent £11.7m on salaries in a bid to get out of the division. They made a loss of over £9m over that 2017-18 season as a result.

For the moment the administrators must bring in as much cash as possible through player sales. Transfer fees are typically paid in instalments, but Latics currently need cash upfront in order to pay salaries and repay their football debts of £6m. If salaries are not paid the club runs the risk of losing players without receiving transfer fees through not fulfilling contractual obligations. Given the situation we can expect players to be sold for fees well below market value or even released for free.

A period of austerity is coming for all clubs in the lower divisions. For Latics the situation is exacerbated by the extraordinary actions of the previous owners. In the long-term it is going to be of paramount importance that the academy is funded as it has been previously. The salary cap proposals exempt players under the age of 21 from the calculations.

The short-term picture for Wigan Athletic is grim as they struggle against the impact of the actions of the previous owners and the pandemic. The first step will be for new owners to take over and steer the club through a difficult 2020-21 season. Avoiding relegation to League 2 would be an achievement.

However, in the long-run the prospect of a club living within its means, producing home grown talent, is to be welcomed in terms of stability. Given the excellence of the academy it is to be hoped that new owners would not only continue to support it financially, but also employ a manager willing to give young players opportunities to a degree that we have rarely seen in recent years.

Building up a solid base in the lower levels of the EFL  over a period of years is essential to the survival of the club. It could well prove a blessing in disguise that the appeal against the 12 point penalty did not succeed. Another season in the financial lunacy of the Championship would not have been easy. But who knows – maybe in time even the Championship clubs will come to the agreement that things cannot continue as they have over these years.

 

 

 

Our thoughts, and those from social media, after another tough day for Wigan Athletic

Supporting Wigan Athletic has been such a rollercoaster ride. The highs have been marvellous: the lows have tested the resilience in us all.

Until the closing matches of the restarted season I had resigned myself to not worrying about what division Latics would be in next season. My main concern was for the survival of the club.

But I got hooked by the wonderful reaction of Paul Cook’s squad. Despite not having received their normal pay for months they played so well, making a wonderful effort to nullify that horrible 12-point penalty. Not having the fortune to get that second goal against Fulham was heart-breaking for players and fans alike.

Today’s decision by an appeal court regarding the 12-point deduction rubbed salt into the open wound.

Like many fans of “smaller” clubs I have become disillusioned with the way football in England has been going. Put simply, the rich are getting richer and the poor are getting poorer. There was always a “feeling” in the Premier League days that they really didn’t want a club like Wigan mingling with the elite and bloated. Since Latics have returned to the jurisdiction of the EFL that feeling has never gone away. Feelings are what they are: hard to substantiate, but one remains sceptical about the people in power in English, and indeed world, football.

Sometimes the heart can speak more loudly than the mind. The bottom line is that Latics still exist and long may that continue. It is heart-breaking to see staff laid off and players being sold for meagre prices, but other clubs have been through administration and come out of it stronger.

Paul Cook has gone and we can expect almost all of the senior squad to be on their way. The wage bill over summer must be drastically reduced so some players who would normally command a significant transfer fee will be freed from their contracts to get them off the wage bill.

Let’s take a brief look at how fans reacted to today’s news through the message boards and social media.

Our thanks go to the Cockney Latic Forum, the Vital Wigan – Latics Speyk Forum and Twitter for providing the media for the posts below to happen. Thanks go to all whose contributions are identified below.

Th10 on the Latics Speyk Forum commented:

It’s what we all expected, an absolute joke.

I really fear for the future of the club now. Only a few weeks till the start of the new season. We don’t have owners or a manager and won’t have many players left. What will the EFL do next when we’re not in a position to start the season? They’re going to destroy the club.

FrancosLoveChild on the Latics Speyk Forum said:

I wont stop loving Wigan, but I have fallen out with the sport, football was/is a big part of me, but as the years go on, you see how the sport is becoming more and more about keeping the big clubs happy for revenue than the integrity of the sport.

Cupwinners on the Cockney LaticForum said

I’m afraid this could be the final nail in the coffin for Wigan Athletic.

We need to find a new owner yesterday with mega deep bottomless pockets. We have no money, no crowd, no match day money, no manager, players leaving daily, TV funding slashed, players fire saled and clauses to allow them to leave cheap or free. Players been sold for nothing.

A new owner? J—s !! , as a business you would have to have your head seeing to take us on. I fear for our future truly fear. We need someone in asap or we will for sure be the new Bury.

Zeb2 on the Latics Speyk Forum said:

I don’t hate the DW/JJB but it will never feel the same to me as Springfield Park did.

All your childhood/teenage experiences are more intensely felt and burned into your memory than what comes afterwards.

The prospect of returning to L1 or L2 if we were at Springfield wouldn’t faze me one bit but is far more concern8ng rattling round a largely soulless stadium …..though to be absolutely fair we have had some cracking matches/atmospheres there as well, it’s just that you generally need 15k plus to generate that at the DW.

Of course we deserve a club, absolutely, it’s just profoundly more difficult for us as a 40 odd year ’League club’ to be located in this area which is a cauldron of English football.

It isn’t the Rugby that’s a problem for me it’s the born and bred Wiganers strutting around in their Utd/Liverpool/Everton/etc shirts (most of whom have never been)….I know Wiganers who are season ticket holders at Bolton, Burnley (fkn Burnley ?) and Blackpool , what’s that about ?

Clubs like Burnley, Stoke, Norwich, even Leicester enjoy the distinct advantage of being substantial towns/cities that are slap bang in the centre of “nowhereinparticularshire” ….draw a 20 mile radius round their grounds and who are they competing with ?….maybe one rival of a similar or bigger size or more likely none at all. Draw a 20 mile radius round Wigan and ….well !

Ideally we should be in a 12/15,000 stadium but we Can’t make that happen unfortunately.

Lets get past this current crisis and press on from there ….Onwards (but maybe not upwards for a bit just yet !)

 

What did IEC achieve at Wigan Athletic?

The IEC announcement of the sale of Wigan Athletic to Next Leader Fund L.P. was certainly carefully worded. However, it provided a chilling overview of the task facing the new ownership.

The IEC purchase of the club from the Whelan family was finalised in November 2018, but a little over a year later they gave notice of their intention to sell-up.

IEC had provided a vision of Latics becoming a club which would make itself sustainable by the development of home-grown talent through the academy system. Although they were not going to throw huge amounts of money around in a frantic rush, they nevertheless hoped to get the club back into the Premier League over a period of years, providing prudent financial backing.

The investments made by IEC in improving the academy facilities signaled a rise to Category 2 status, providing the U18 and U23 teams a healthier environment against more challenging opposition. IEC supported a wage bill that was modest by Championship standards, but far outweighed the revenue coming in. Moreover, last summer they provided money for the transfer market for Latics to sign players whose combined market value would surely appreciate. Four were in their early to mid-twenties: Antonee Robinson (22), Tom Pearce (22), Joe Williams (23), Jamal Lowe (25). Kieffer Moore was 27. Robinson, Pearce and Williams had played at Championship level before. Lowe and Moore had not played above League 1 and would need time to adjust to playing in the higher division. IEC’s investments in those players appeared well-judged at the time.

In order to do the above IEC say they invested over £44m in total in Wigan Athletic.

A wealth of information on the process by which IEC dealt with the sale of the club, its assets and debts can be found in the Investor Relations section of the IEC website. However, the documents are by no means easy reading for the layman.

It appears that IEC sold their shares to Next Leader for £17.5m. According to the document entitled Completion of Major and Connected Transactions of May 29, 2020 a “loan” of £24.36m provided by IEC to the club was repaid to them:

“In accordance with the Sale and Purchase Agreement, upon Completion, the Company (as the lender) and the Club (as the borrower) entered into the Loan Agreement in an aggregate principal amount of GBP24.36 million (equivalent to approximately HK$232.08 million),and the Deed of Guarantee was also entered into by the Purchaser in favour of the Company along with the Loan Agreement. Details and background of the Loan Agreement and Deed of Guarantee are set out in the Circular. Immediately subsequent to the entering into of the Loan Agreement, the Pre-Existing Loan in the amount GBP24.36 million (equivalent to approximately HK$232.08 million) has been repaid to the Company, and as a result, the Club is no longer indebted to the Company.”

The period of ownership of Wigan Athletic by IEC was some 19 months, during which the club has been in the Championship division. In November 2018 when IEC took over Latics were struggling on the field of play. That continued until a 2-1 away win at Leeds in April 2019 sparked a revival that saw them escape the relegation zone. However, accounts published in June 2019 showed that the club had made a net loss of £9.2m, their eighth consecutive loss for the season.

Given the effect of Covid-19 on EFL clubs, lowered average attendances at the DW Stadium and an imbalance in transfer revenues we can expect the losses for the current season to be well above those incurred in 2018-19.

Having bought the club and its debts Next Leader will face a mountain of a task getting the finances of the club in good order.

Were IEC over-optimistic in expecting more on the field of play during their period of ownership? Given the budget that Paul Cook was presented compared with those of rival clubs last season’s placing of 18th in the Championship was by no means a failure. Perhaps IEC, like many fans, were more hopeful of an improved placing this season, given the net investments made in the transfer market last summer? This has been a disappointing season, although the rally in the last six games before the EFL suspended its fixtures provide a ray of hope.

The priority for the club now that the season is about to restart is to avoid relegation. If this were to happen the market values of “prized asset” players would plummet. An added complication is that with the financial hardships that clubs will be facing market transfer values can be expected to decrease over these coming months.

Next Leader must cash in on its main transfer assets to cut down the cumbersome debt that the club has accumulated. If the club plays in the Championship next season it must set its staffing budget at a sustainable level, well below the £19m mark it currently has. The injection of young players from the U23 squad would be a viable option. The likelihood would be that Latics would struggle to avoid relegation under such circumstances, but other clubs will also struggle in the impending financial crisis.

The very existence of the club will be under threat. We can only hope that Next Leader can stay the course and judiciously steer the club back on an even keel. Can that IEC dream of the club sustaining itself through the fruits of its academy and sound investments become a reality?