Ready for Brentford? The challenge for Paul Cook and his squad

What a tempestuous week it has been.

A wonderful performance by the Latics team in blowing away Stoke City raised our hopes of at least a mid-table finish, with lots of optimism for the coming season. Then it was all turned upside down by that stunning announcement of the club going into administration. The Wigan Athletic community is still reeling from that news.

Brentford away is hardly the fixture that one would choose following the turbulence of the last three days. They outplayed Latics at the DW Stadium in November to the tune of a resounding 3-0 scoreline. They have won their last four games and still have a chance of automatic promotion.

Latics were on the crest of a wave following the Stoke game on Tuesday evening. Hopes were high that they could go to west London and give the Bees a run for their money. But now we learn that the players, who had deferred 30% of their salaries in the lockdown period, will only receive a fraction of their salaries today. Paul Cook must somehow lift his players to concentrate on the here and now, despite the uncertain futures at the club that they all now face.

Sam Morsy’s rallying call was admirable and we can only hope that captain, manager and coaches can maintain morale in this difficult hour.

The news and social media have been awash with stories about what has happened to the club.

The EFL’s prompt notification that there will be an automatic 12-point deduction did not go down well with Latics fans. Questions abound how their “Fit and Proper Persons” criteria allowed a shady change of ownership leading to administration within a month of Next Leader Fund taking ownership.

The reasons for NLF opting for administration remain unknown although there is no shortage of conspiracy theories being put forward.

Fans have been putting forward their views on the social media and message boards. Some fear for the very existence of the club. Others are concerned that the points deduction will lead the club back to League 1, although there are optimists who believe the team can gather some 13-14 points from the last 6 games to avoid that happening.

In the meantime, Latics must find the funding to help them complete the season, by no means an easy matter with no money coming into the club from the owners and minimal revenues available from playing behind closed doors.

Should the club manage its way to complete its fixtures and somehow gather enough points to avoid relegation it would be a big step forward. A Championship club is more attractive to a prospective buyer than one in League 1. Moreover, the broadcasting revenues and larger away supporter attendances make it financially more viable, even if the club were going to run on a shoestring budget for a period.

My concern is that the very survival of the club is at stake. After following them to places like Congleton, Winsford and Oswestry I can deal with the likes of Rochdale and Oldham should the club manage to get through this sticky period.

It is a stressful and difficult time for us all who care so much for our club. The game at Brentford tomorrow pales in comparison with the mountain the club must climb to stay in operation. However, a win could really lift our spirits and give us a little more hope for what lies ahead.

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?