Investing in Wigan Athletic –what comes next?

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

dave whelan espn

I read a quip the other day that amused me.

It is relatively easy to take out £1m by being the owner of a football club. All you have to do is first put in £2m.

Dave Whelan reportedly put £100 m into underpinning Wigan Athletic’s success over these past two decades. One wonders what he will get back.

Football clubs are probably the worst run businesses to invest in. So few make a profit because of mismanagement within and the pressure on clubs to spend to keep up with others. So many are kept afloat by their owners and benefactors.

According to Sir John Madejski, Reading chairman, the ideal football club owner is “someone with deep pockets, mercurial, and not faint-hearted.”

That could well describe Whelan over these years. His generosity to his home town club has been exceptional. Through converting debt to equity he has effectively given the club financial stability.

The case of Bolton Wanderers differs. They currently owe Eddie Davies over £165 m. Davies, now 67 years old, made his money out of thermostats for kettles and moved out of Bolton in his twenties. When he bought the club in 2004 fans expressed concern that they were now owned by an Isle of Man tax exile via a trust listed in Bermuda.

Davies has not actually given the money to the club, but has provided loans on which they have had to pay interest payments every year. The last time Wanderers made a profit was in 2006 and even that was close to breakeven. Put simply they have been living beyond their means for so long and if Davies were to pull the plug the very existence of the club would be at severe risk. Today’s Daily Telegraph reveals that Davies would be willing to sell the club, should he right buyer come along. But is any potential buyer going to be willing to takeover so much debt?

Dave Whelan’s silence over the past couple of months has caused unease among so many Wigan Athletic supporters. We had become so reliant on him to provide the financial backing needed for the club to make forward strides. However, over the past four years he has insisted on the club at least breaking even financially. The profits made over the past three seasons have made Latics a beacon among the dark and shady world of mismanagement typical at so many football clubs. Breaking even this season will be more of a challenge, but the selling off of assets and the reduction in liabilities that happened during the January transfer window will surely put things back on track.

The apathy by which fans have witnessed the selling off of many of the most accomplished players can be viewed as a sign that people are beginning to lower their expectations for Wigan Athletic Football Club. The notice boards and social media are awash with comments amounting to something like the club being bigger than just one man and that it can be run with dignity in the lower divisions. As always there are the cynics who suggest Whelan is pocketing profits, getting some money back after so many years of putting it in.

One thing we can expect over these coming weeks is for Whelan to step down as chairman. It remains to be seen if his grandson, David Sharpe, will take over the role.

The big question is whether the Whelan family will continue to pull the strings at the club in the long-term, or whether the house is being put in order for a sell off.

Should the Whelan dynasty continue we can expect the club to continue to be run on a breakeven basis.  After all could any of us reasonably expect the Whelans to pour in more funds in the hope of restoring past glories?

However, for a business to be run on even a breakeven basis there needs to be some kind of strategic plan. This would involve the fashioning of a new identity for the club that fits its current situation.

Gone is the romantic idea of “Little Wigan” holding its own in the world’s most wealthy football division. In its place needs to come a more grassroots identity, a club noted for its coaching and development of players who can be sold on in a systematic basis rather than the awful fire sale we have recently witnessed. The club as a finder of raw talent that it hones into a lustrous product that it cashes in on to keep itself moving forward.

The alternative is to stand still, which tends to inevitably lead to dropping back.

A key strategic issue that needs to be addressed is the development of an academy at Charnock Richard. Apart from the capital costs, which can be covered by incoming transfer dealings over the past year, will it be a moot point because of the operating costs it entails?

However, the probability is that Latics will be in League 1 next year. The FFP rules differ significantly there from those of the Championship division. Clubs are only allowed to spend up to 60% of their revenue on player salaries. Moreover standing costs for the club will need to be thinned down proportionate to the drop in revenue. Should that be done effectively it would surely leave some wiggle room for an academy which would cost around £2m to operate.

The starting lineup that faced Cardiff City on Tuesday night included only three players with contracts that go beyond this summer. The likelihood is that few of those short term signings or loanees have a future at the club. Moreover should relegation become reality Latics are going to have to shed not only those at the ends of their contracts, but a significant number of the players who were signed on contracts that could be considered lucrative by Championship standards.

When Wolves were in a similar situation in the summer of 2013 they released seven players, sold two and sent seven more out on loan. By the end of the season they had done seventeen loan deals of their players out to other clubs, They brought in three new players over the summer, with another five coming in January, including Leon Clarke and Nouha Dicko. They had only two incoming loans, both short-term in the first half of the season.

The key for Wolves turned out to be the appointment of manager Kenny Jackett, who remains in charge as they sit in eighth place in the Championship table. It remains to be seen whether Malky Mackay would be entrusted to try to follow Jackett’s lead should Latics get relegated.

Many fans are nervous about the possibility of the club being sold. Even if Latics are in League 1 next year the club will be a possible target for purchase. Through its successes, particularly in the past decade, the Wigan Athletic “brand” has gained considerable prestige. Moreover the club is close to being debt free. The fan base might pale in comparison with big city clubs, but has grown so much over these years. The club has a fine stadium and has bought a potentially excellent site for a youth academy.

Fears of the club being taken over by a foreign owner may be justified to some degree. However, with a new owner willing to invest in the club like Whelan did before, Latics would have a competitive edge compared with an austerity-laden approach that might operate under a Whelan dynasty regime.

Put simply, were Latics to be relegated they would have to compete with at least half a dozen ex-Premier League clubs in League 1. What would give them any kind of competitive advantage over those clubs and others in the division?

Without Whelan’s financial backing Latics would not have achieved what they did over the past twenty years. Without an owner willing to invest significant funds into the club it is going to considerably lower the odds of them getting remotely back to where they were three years ago.

Where Wigan Athletic will be ten years from now is impossible to predict – Premier League or Northern Premier League?

No matter who owns the club it will need to refine its vision and direction.

Without that it will meander into mediocrity.

Latics in a quagmire

Posted by JJ (Tony) in Match Previews and tagged with , , , ,

Mud

Rugby League has never really appealed to me. In my pre-adolescent days Wigan RLFC used to have a good deal for kids. You could go and watch the famous Cherry and Whites for threepence in the ‘hen pen’ behind the goals. I did it twice, once when they beat Hull and finally when Ryan Giggs’ father, Danny Wilson, inspired Salford to victory there.

Central Park was just five minutes’ walk from where I lived, right next to the town centre. So when my dad asked me if I would like to make the longer crosstown walk over to Springfield Park on a rainy day I had to think twice about it. But from the moment I watched Latics that first time, as an eleven year old, there was no way I was going back to the hen pen.

I have maintained little interest in watching the local rugby team playing a sport that I have rarely found entertaining. But on Saturday I tuned into the second half of the World Club Challenge game between the Warriors and the Brisbane Broncos. The commentators were waxing lyrically about what a good game it was, but all I could see was the Warriors penned into their own half, unable to move forward on a quagmire of a pitch. It was dull stuff until they surprisingly broke away from their own half and equalized near the end of the game. By that time the pitch was totally ruined, so a little bit more punishment caused by the game going into extra time was not going to make that much difference.

It is the first rugby league game I have watched for ten years and a similar time period could elapse before I watch another. The pitch clearly made things difficult for both teams. It made me wonder if the Warriors would have been able to hold the Broncos to such a tight margin if the pitch had been better. Then my thoughts turned to the Cardiff match. Could it be that the quagmire pitch might actually help Latics?

The term ‘quagmire’ can be used to describe not only the DW Stadium pitch, but also the current plight of Wigan Athletic. They are stuck in a quagmire in their fight to avoid relegation. Most of the more skilful players in the squad have deserted a sinking ship and the manager has the most unenviable record in the Football League of W2 D3 L10. Moreover Malky Mackay’s plans have been hit by long term injuries to Emyr Huws, Chris Herd and Leon Clarke, plus a two week absence for William Kvist who has been the team’s most consistent performer over recent weeks. Having shipped the likes of Delort, Kiernan, Riera and Tavernier off on loan he is left with a squad that is starting to look threadbare.

Mackay and Latics are certainly in a quagmire and there appears no way out of it. The manager has dismantled the old squad, brought in new players, but performances continue to be well below par. Latics have got worse, not better, during Mackay’s tenure. Dave Whelan is back in town and clearly worried about results. If Latics do not beat Cardiff tonight will he be showing Mackay the door?

Cardiff City’s form has also slumped over the past couple of months, so Latics will face another side low on confidence like themselves. It would appear to be a real opportunity to pick up three precious points, but over recent weeks Latics have thrown away games against teams in similar situations. The home defeats to struggling Rotherham and Charlton sides were a bitter pill to swallow. But can they actually win tonight playing on that quagmire of a pitch?

The critics would say that good football has not been evident since Mackay’s arrival, with goals from set pieces the order of the day. The pitch could stifle any attacking moves from the opposition and a goal from a set piece could win it. Mackay will rue the absence of Kvist, with his long throw-ins.

It is likely to be a grim night for lovers of good football tonight at the DW Stadium. But it is the result that is paramount. A win for Latics would provide at least a ray of hope for the future. Less than that will surely bog them down even more in the quagmire that Mackay finds himself in.

Attendances and finances at Wigan Athletic

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

2012-moneyball

“There was nothing like it. Running down the tunnel and hearing the roar of a 3,000 crowd. Springfield Park was the best place in the world for me.”

Meeting Harry Lyon in the early 1980s was like a dream come true. It had been a chance encounter with the man for whom the title “legend” would be an understatement for me.

My father had continued to live in the south of Wigan, then rugby league territory, so the pubs around us were steeped in that kind of nostalgia. One of those was ‘The Waterwheel’, run by ex-Great Britain rugby player, John Stopford. Although he never played for Wigan RLFC, Stopford would draw rugby enthusiasts to his pub. We mostly avoided such places, preferring to walk further afield to pubs that were more salubrious for Wigan Athletic supporters.

But one rainy night we succumbed, and tried ‘The Waterwheel’. Upon opening the door and the sight of the scrum surrounding the bar we started to think twice about it. There were some burly men there, faces like boxers, some with arms in slings. We were just about to walk out when my father said “Look it’s Harry Lyon over there.” It was indeed my hero from my teenage years. Chatting with Harry was easy. He just made you feel comfortable talking with him. Although he had left the club a decade before it was obvious that Wigan Athletic was his first love. He remains the club’s leading scorer of all time, with 243 goals to his credit.

Harry’s quote was straight from the heart, but the reality was that a 3,000 crowd was not the norm at the time. True, Latics had the best home attendances in the Cheshire League and their traveling support would so often ensure that clubs like Oswestry and Stalybridge would get their best crowds of the season. But for clubs at that level of English football it was a hand to mouth existence, but somehow most clubs survived.

Gate receipts were the main source of revenue, which gave Latics an advantage, given their stronger support. But the reality was that most of the time the attendances were not a lot above the 2,000 mark. The club survived through the efforts of the Supporters Club and the Board of Directors dipping into their pockets.

Financial survival has never been easy for Latics. In their inaugural season in the Football League, 1978-79, they averaged a healthy 6,701. The club’s attendances the season before, their final one in the Northern Premier League, had dropped to an alarming 1,334. The move up clearly had a major impact upon the town.

Since then Latics’ highest average league attendance was 20,160 in their first season in the Premier League. Ironically their second highest was 19,345 in the relegation season of 2012-13. But the gloss was to wear off and Latics slumped to their lowest attendance levels of their Football League era with just 1,748 in 1994-95.

If it had not been for the arrival of Dave Whelan in 1995 where would Wigan Athletic have been now? Attendances had been woefully inadequate and the club was sinking into a seemingly inexorable financial quagmire.

But ten years later Latics were playing in the Premier League against Chelsea and a crowd of 23,575 was present despite the game being broadcast. It was a taste of things to come as the club’s attendances eclipsed those of the local rugby club that season and have done ever since, even last season despite relegation to the Championship.

Football season Rugby season Wigan Athletic Wigan Warriors
2005-2006 2006 20,160 14,464
2006-2007 2007 18,159 16,040
2007-2008 2008 19,045 13,995
2008-2009 2009 18,350 14,080
2009-2010 2010 17,848 15,181
2010-2011 2011 16,976 16,125
2011-2012 2012 18,634 16,043
2012-2013 2013 19,375 13,556
2013-2014 2014 15,176 14,102

Latics’ gate money in the Premier League days was always dwarfed by the TV revenues they were receiving and from a purely financial viewpoint attendances were not much of an issue. In their last season in the Premier League match day revenues covered no more than 10% of total revenue of £56.4m. Without the television revenues, the club could never have seriously competed for eight long seasons in the elite division.

In my article Finances, FFP and the long term future of Wigan Athletic, published in May 2014, I put forward figures needed to stay afloat in the Championship. To keep a team in mid-table would typically involve a wage bill in excess of £20 million. Whereas to get into the top six would cost around £30 million, which is precisely what it cost Latics last season.

With a significant drop in parachute payments to be received this season it looked likely that the club would start to trim its wage bill. The departures of ex-Premier League players Jean Beausejour, Jordi Gomez and James McArthur must have helped. However, manager Uwe Rosler was to bring in nine new players over the summer. Although some were younger players, probably not on relatively high earning contracts, the competition in the transfer market forced the club to offer more tempting salaries to the rest. The result was a squad that was larger than the club needed with a wage bill close to that £30 million of last year.

Dave Whelan clearly had promotion within his sights when he released some £8-9 million in transfer fees for Oriol Riera, Andy Delort, Emyr Huws and Adam Forshaw. Much of the outlay was covered by the fee received from Crystal Palace for James McArthur, but their arrivals put more pressure on the wage bill.

It was a gamble which was to fail, but Whelan is the shrewdest of businessmen and he knows if you don’t take risks you are likely to stand still. Huws was constantly bothered by an ankle injury and never reached top form, despite having moments of showing his true potential. He remains one for the future, despite being sidelined for the rest of the season with another ankle injury. Sadly Delort and Riera have been dispatched to their home countries on loan and Forshaw has been sold cut-price to Middlesbrough.

Whelan had made the gamble, backing a manager who had performed admirably in the previous season. After being criticised by fans for hoarding the cash from the James McCarthy transfer the season before he had stuck his neck out in allowing Rosler to bring in so many players and run the risk of expenses heavily outweighing revenue.

Following the departure of Rosler and the continuing downturn in results under Malky Mackay, the club made huge strides in getting its financial situation back on an even keel during the month of January. Just a few months before no one could have anticipated the fire sale that was to occur. Ten players were to leave, four of whom were members of the team that won the FA Cup Final.

That famous cup final man of the match, Callum McManaman, went to West Bromwich Albion for around £4.5 million. Putting back the clock, what might have happened if he had not injured his ankle in the Arsenal match that followed the Cup Final and put Latics down? Following his Wembley display he could well have gone to a big club for some £15 million, if he had been fit. Sadly it did not happen and the ankle injury had a major impact on his fitness the next season. The rest is history.

Such a fire sale would have brought huge protests from the fans under normal circumstances. But the “hatchet man” Mackay was able to do it with hardly a whimper from supporters who were thoroughly disillusioned with the lack of commitment shown by players whom many viewed as overpaid and overrated.

The fire sale has put Latics back on track financially. Apart from the transfer fees received they have cut the wage bill down significantly, to probably around £20 million on an annual basis. Mackay paid transfer fees for two players – Billy Mackay and Jason Pearce – but the outlay for the two was less than £1 million. The rest of his acquisitions are loanees or players on short term contracts.

For the coming season – no matter what division they are in – Latics will receive £8 million in parachute payments, plus around £2.5 million from TV money. The rest will need to come from gate receipts and commercial revenue.

The latter has not been a major factor over these years, so gate revenue becomes increasingly important.

Should they stay in the Championship, crowds of around 12,000 would most likely be the order of the day. That is providing a squad that will cost considerably less to maintain than those of the past two seasons can hold its own. Relegation would almost certainly mean a decrease in attendances, even if the team were to do well. Revenue from the visiting support would most likely nosedive.

Gate money will clearly play a more major role for Latics next year than it has for more than a decade. Put simply it is going to be a more proportionate part of revenue than it has been.

But then again, for Latics gate money does not correlate with attendance in the same way that it does for most clubs. The club had wisely kept admission prices relatively low during its most successful years and they remain so. It helped them compete for support within the town and build up a level of hard-core support that the club had never previously enjoyed. However, continuing the policy is not necessarily the right ploy for the club. At some time in the future it is going to have to start moving its prices more in line with that of its competitors, at the risk of losing some support.

For the coming season the revenue and spending numbers need to add up. A £20 million wage bill is out of the question. Austerity will be the order of the day, no matter which division the club is in.

However, the good news is that the club has become a model for others to follow in its financial management, which serves to safeguard its long term future. A profit of £2.6 million was announced for the 2013-14 season, following two previous campaigns in the black.

The big question regarding revenue streams is whether Latics will be able to afford to run the Charnock Richard facility, assuming it will be completed. If it dies a death it will be much harder for Latics to put in place an Academy that providesthe first team with players, the best of whom can be sold off to keep the club afloat. Should Latics suffer relegation it could be one of the cut backs.

Much will depend on the ability of Mackay’s current team to avoid relegation. If they can the outlook will be brighter.

Attendances and revenue remain inextricably linked, even if not as strongly as they were during the Harry Lyon era.

A lifeline for Malky? Reading 0 Wigan Athletic 1

Posted by JJ (Tony) in Match reactions and tagged with , , ,
Jason Pearce celebrates hsi goal with james Perch. Photo courtsey of Daily Mail.

Jason Pearce celebrates his goal with James Perch. Photo courtesy of Daily Mail.

‘It’s a brand new group over the last three weeks. It closes the gap. There are a lot of points to play for. It’s about personality and character and we’re beginning to show that”.

So said Malky Mackay after his team of scrappers had thrown him a lifeline, with the reemergence of Dave Whelan breathing down his neck. The beleaguered Wigan Athletic manager was delighted – not just with the 1-0 win, but with the fight that his players showed.

After seven games without a win it had looked like Latics were going to be marooned in that relegation zone, with little indication that a lifeline would appear. They are now six points behind Brighton in 21st place and the Seagulls are due to visit the DW on April 18th. Will that be a crunch match or will things have changed significantly by then?

There are now 15 games remaining. They include four away ties for Wigan against clubs hovering close to them in the relegation zone – Blackpool, Fulham, Millwall and Rotherham.

Once again Mackay did not include new striker Billy McKay in the starting lineup, the goal-shy Marco Fortune being preferred. Another hamstring injury to Leon Barnett and the departure of Liam Ridgewell led him to introduce a new central defensive pairing in the combative Harry Maguire and Jason Pearce. They are the types of uncompromising defenders that bless so many Championship clubs. At 6 ft 4 in the 21 year old Maguire is not surprisingly good in the air and he was given lots of practice last night. For once the centre of defence looked solid.

Ironically Latics’ other 6 ft 4 in central defender, Thomas Rogne, has not played in a single league game this season. Rogne might not be as physically imposing as Maguire, but he is certainly good in the air and his presence might have prevented some of the “soft” goals that Latics have given away to high crosses. One wonders what the Norwegian has done to upset the powers that be at the club. He continues to languish in the development squad

Maguire and Pearce are not going to allow burly opposition strikers to dictate play, as has been too often the case for Latics this year. One wonders if Bournemouth’s Callum Wilson would have been able to run round them in the way he did at the DW ten days prior. The test for the partnership will come when they play the more skillful teams and Latics have a home encounter with Derby County and an away game at Middlesbrough to negotiate still.

McKay was once again brought on in the second half, this time in the 81st minute. What is it at the club that has them treat their strikers this way? Fortune has his attributes and plays his part as a tireless worker. However, goal scorer he is not and never has been. However, he has already seen off the challenges of Andy Delort and Oriol Riera. Will McKay be the latest in the line of Wigan Athletic strikers who have been badly handled? He has come into the club in good goalscoring form in the SPL, as did Delort and Riera in France and Spain, so why not put him in the starting lineup?

The victory at Reading still leaves Latics a steep hill to climb. A win against Charlton at the DW on Friday night would give cause for genuine hope of avoiding relegation. Last time Latics won a game – a 2-0 win at Leeds on Boxing Day – they followed it up with an abject 1-0 home defeat by Sheffield Wednesday.

Fans will therefore be wary of building up their hopes too high for Friday. However, the win at Leeds could be described as somewhat fortuitous, with a bizarre own goal putting Latics ahead. Most Latics fans who saw last night’s match would say that the victory was well earned, despite some of the reports on national media. They hope it will be the springboard for a genuine rally.

Who knows – another win on Friday might even provide the impetus for the “Believe” motto to blossom again.

But at the same time it could be another false dawn. Let’s hope not.

 

Whelan’s final fling

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

Whelan

Sometimes we lose sight of things that happened not so long ago.

“He is the man to lead us back into the Premier League.”

Looking at Dave Whelan’s comment when Malky Mackay was appointed brings perspective. The chairman was looking at salvaging a season that had gone awry under the leadership of Uwe Rosler. He had acted in a timely manner to keep the promotion dream alive. How could he have expected that fourteen games later Latics would stand second from bottom nine points from safety?

Whelan has spent almost £100 million on Wigan Athletic over the past two decades. Only the naïve could argue that Latics could have achieved what they did without his funding.

But Whelan did much more than that. His vision and leadership turned a struggling lower division club into an entity to be respected at national level. It was the driving force that is not so apparent now as it was before.

Wigan Athletic’s success has brought it a larger fan base than could have been imagined twenty years ago. Wigan was a rugby town – at least in terms of attendances – when he first took over, but he turned it around. The football club’s attendances over the past decade have consistently bettered those of their rugby counterparts.

Moreover support has not just grown inside the town, but the club has become known on a global basis. Eight years in the Premier League and reaching the League Cup Final helped, but winning the FA Cup was the icing on the cake.

However, through those successes, expectations heightened. Latics wisely courted the young supporters who would provide the backbone when their more senior equivalents would no longer be around. But the younger support was brought on Premier League football. They were not there when Latics visited the likes of Prescot Cables and Earlestown. They don’t expect the club to be struggling to stay in the Championship division.

Whelan pumped so much money into the club for so long. In recent years he has insisted on the club balancing its books and his Chief Executive Jonathan Jackson has played a major role in making that happen. Old timers will know of his father Stan, ex club President, who did so much for Latics in his time. It could be said that Stan Jackson’s greatest achievement was persuading Whelan to buy the club those years ago.

The traditionalists will say that a football club belongs to the fans. But the reality is that, at the highest level of English football, the fans take the back seat. There are no clubs who can challenge in elite circles without massive financial backing. Some clubs have become supporters’ trusts, but they too have face financial reality. The concept of fans owning a club is appealing in many ways, but the reality is that those clubs continue to struggle.

There is a large degree of uncertainly this moment in time at Wigan Athletic. People are waiting for leadership from Whelan. Where is the club heading now? Will he be selling up or handing the reins to his grandson?

Above all, what is his vision for the club’s future?

At 78 years of age, and after achieving more than could have possibly been imagined, does he have the energy for one final fling? The “racism saga” with the FA must surely have taken a lot of out him.

In the coming week he might well make the decision to relieve Malky Mackay of his duties. But what would follow if he did?

Maybe Whelan has had enough and is ready to pass on to someone else. That would be perfectly understandable.

However, if that is to be the case, can he please set some direction beforehand?

The direction would identify what kind of club Wigan Athletic should be in the future. Without big financial backing it would surely need to be a club that can be self-sufficient, holding its own but surviving economically on selling off its top talent.

Where is the club heading? Not only for League 1 but the non-fulfillment of the Academy scheme at Charnock Richard?

Dave Whelan has enabled amazing things to happen at Wigan Athletic, but it could well be that the time has come to pass the reins to someone else.

However, let’s hope that it will not be the immediate case.

Whelan’s final fling could well involve the dismissal of Mackay and the appointment of someone who could motivate and organize the players into saving this sad season for the club.

Anything more than that would be a bonus.