English Championship club Wigan Athletic has been placed into administration in what local MP Lisa Nandy labelled a “major global scandal”.
Barely a month after the club was sold to a mysterious owner, the 2013 FA Cup winners were thrown into administration out of the blue.
There are allegations of potential fraud, as well as staggering claims that the club’s financial troubles are linked to a rumoured bet on the club being relegated.
The club is facing a 12-point deduction – almost certain to send it down to League One – while players and staff are going without pay.
Watch European Football with beIN SPORTS and ESPN on Kayo. New to Kayo? Get your 14-day free trial & start streaming instantly >
In November 2018, beloved local businessman Dave Whelan finally sold the club after 23 successful years in charge.
Whelan had taken the club from fourth-tier minnows to the Premier League and even a remarkable FA Cup crown in 2013 — their most recent season in the top flight — but having reached his 80s Whelan decided it was time to pass the club on.
He sold the club to Hong Kong company International Entertainment Corporation (IEC), a gambling company fronted by professional poker player Stanley Choi. Choi owns 56 per cent of IEC and is the chairman of the company.
Choi never attended the club and was largely an absentee owner – which is not unusual by any means. The club registered a £9.2 million ($A16.5m) loss in the 2018-19 financial year- again, not great but far from unusual.
But everything changed at the start of June.
IEC sold the club to another Hong Kong-based company, Next Leader Fund (NLF). NLF had only been set up in January 2020 – with Choi having a 51% stake.
NLF paid IEC £17.5m ($A31.5m) – a profit on the £15.9m ($A28.5m) paid for the club in 2018.
As well as that fee, there’s a very strange £28.77m loan from IEC to the club.
The terms are remarkable – an annual interest rate of 8%, rising to 20% if the club did not meet its payment schedule. When NLF took over the club, they apparently paid off that loan in full – though this hasn’t been confirmed.
That means that NLF paid £17.5m plus the £28.77m loan – a total of over £46 million ($A83m) for a club that lost $A16.5m in the previous financial year. Given the financial uncertainty of the current pandemic, the decision to purchase the club for such a cost is bizarre to say the least.
The new ownership structure is also highly out of the ordinary. As previously stated, both IEC and new owner NLF were part-owned by Choi. Choi had a 51% stake in NLF, while a Chinese man named Au Yeung Wai Kay was reported to own the other 49%. However, by June 24 Au Yeung’s stake was reported to have increased to 75 per cent. It was on that same day that Au Yeung’s lawyers instructed the club to go into administration.
Yeung had never visited the club before the purchase (or since). His extremely limited conversations with the board came via phone calls – not even video calls. Since the club has been placed into administration, it is reported that administrators haven’t been able to contact Yeung, only his lawyers.
It gets murkier. Au Yeung is almost impossible to find on the internet. According to an investigation from The Athletic, journalists were only able to find two public traces of the owner. One was an application to the Republic of Philippines’ Department of Labour and Employment for an “alien employment permit” to work for a company named Superl Group. The other is a clipping from the Philippine Daily Inquirer on September 25, 2019, in which Au Yeung is named as a member of the same company.
The Times reports the new owners are linked to a 2012 bankruptcy case in Hong Kong, which administrators are investigating.
A rumour has widely circulated in recent days that the sale of the club and its subsequent placing into administration is linked to a major bet that the club would be relegated this season.
The logic is this: by placing the club into administration, the owner almost guaranteed the club would be hit with a 12-point penalty – thus greatly increasing their chances of dropping out of the Championship.
Given Wigan’s current league position, the expected penalty would place them just outside the relegation zone.
Furthermore, the previous owner – IEC and Choi – have strong gambling links. IEC operates a casino and hotel in the Philippines, where the bet was believed to have taken place.
England’s football leagues from the Championship down are run by the EFL (English Football League).
In a recent video circulating on social media, EFL chairman Rick Parry discussed the matter with a fan, saying: “There’s rumours that there is a bet in the Philippines on them being relegated, because the previous owner has got gambling interests in the Philippines.”
The EFL released a statement about the clip, saying: “The private conversation focused around the events of the last 24-48 hours, how the EFL can assist and what happens next. The various rumours and reports that have been circulating throughout today were also discussed.
“While the chairman was unaware he was being filmed, he was happy to engage in the debate and appreciates this is a concerning and challenging time for all those associated with the club.”
WHAT HAPPENS NEXT
Administrators have taken charge of the club, after being approached by lawyers of the new owners. The owners, whoever they are, have said they won’t provide a cent more in funding for the club.
They are now seeking to sell the club, with a dozen expressions of interest already submitted. The club is confident of playing out the season.
The administrators are investigating the bizarre sale of the club – and there’s even the chance that the club or its players could sue the owners.
Gerald Krasner, one of the three experienced administrators overseeing the club, spoke about the situation, saying he expects ‘incredible’ findings from documents surrounding the sale and the owners.
“Every administration I have been involved in had its peculiarities,” he said. “But this is a first. Four weeks (from sale to administration) is a record that will stand for some time.
“We are aware of concerns that have been raised. The investigation won’t go away. It will be done. Once I know we have saved the club and got nondisclosure letters out [to prospective buyers] – we’re talking about two weeks – we will sit down with our lawyers to see if there is any litigation there that will be for the benefit of the creditors.”
“There will be a lot of incredible things that come out when we get into the paperwork,” said Krasner.
EFL AT FAULT?
Meanwhile, questions are being asked of the EFL over its failure to properly scrutinise the new owner. Prospective owners must pass the owners’ and directors’ test, commonly known as the ‘fit and proper test’.
But it has been revealed that the body was warned about the unusual loan and the strange ownership structure of the new owners months ago – by a fan.
According to The Athletic, a fan twice wrote letters to the EFL noting that both Hong Kong companies were owned by Choi, revealing doubts about the unusual loan, and noting that the 104-page sale document offered no evidence of future funding. The EFL dismissed those concerns and ticked off on the sale.
Local MP Lisa Nandy labelled the matter a “major global scandal”.
“What has been allowed to happen in recent days is disgraceful,” she wrote in a public letter.
“It shows the complete failure of governance safeguards to protect clubs like ours.”
Nandy, the shadow foreign secretary, added: “Wigan Athletic FC has been a well-run, much-loved club at the heart of our community for almost 90 years.
“I am at a complete loss as to how the new ownership model could have been approved by the EFL. There must be a full inquiry.”