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Wigan debacle exposes need for reset of English football's finances

<span>Photograph: Ian Kington/AFP/Getty Images</span>
Photograph: Ian Kington/AFP/Getty Images

In the week since Wigan Athletic were dumped into administration like litter thrown from a speeding car, the tale of some underlying betting scandal became a compelling distraction from football’s real, pressing issues glinting in the wreckage. The EFL identified the cause – the ruinous structure of the game itself – in an unusually robust statement following the belated first public comments of Hong Kong-based Au Yeung, who took over the club then collapsed it in a week.

Rejecting his effort to cite the coronavirus crisis as an explanation, the EFL set out its case for wholesale reform, including a call for the Premier League to share money more fairly: “This set of circumstances,” the league said, “is more illustrative of the wider financial challenges facing EFL clubs, who, without a full and comprehensive reset of football’s finances, including how monies are distributed throughout the game, will continue to struggle to meet the demands of an outdated and unsustainable model.”

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The causes of the financial trap are glaringly clear. The Premier League clubs sit on an £8.64bn three‑year TV deal, dwarfing the EFL’s, but the huge wages they pay inflate those in the Championship, made worse by parachute payments for relegated clubs. So Championship clubs are drawn into overspending, to attract players who might win them promotion, and almost all lose millions and rely on owners to fund them. Wigan present another classic case study for proper financial fair play rules, requiring clubs to spend only what they make in revenues, but Championship club owners want to win the promotion lottery, so have set their allowed annual losses at an absurd, self‑destructive £13m.

The case for sharing money more evenly, which the old First Division did before breaking away from the Football League in 1992 to form the Premier League, is not just benevolence, to save the EFL from financial purgatory. Promotion and relegation means that many clubs relegated from the Premier League fall very hard, despite the parachutes. That can be seen from any past Premier League table; billionaire-owned clubs stocking the top places, while many clubs below that have since suffered financial crises after relegation. Wigan were a member until 2013, Bolton till 2012.

The ruthlessness with which Au Yeung dropped the club should focus minds on the fundamental cause, rather than some rumours about gambling. That was mused on by the EFL chairman, Rick Parry, to a neighbouring Wigan supporter who recorded the conversation, and it does not take much analysis to discount. Parry himself only mentioned it as a far-fetched rumour going around, in the context of Au Yeung’s conduct being inexplicable, rather than as a solid lead to follow.

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In his statement, Au Yeung confirmed the remarkable scenario already apparent from documents published on the Hong Kong stock exchange by the previous owner, Hong Kong-based casino company International Entertainment Corporation (IEC), whose major shareholder is the high stakes poker player Stanley Choi. Au Yeung, at first in partnership with Choi, apparently spent £41.5m buying the club, then opted to throw that money away immediately by putting the club into administration. His explanation that it was due to the coronavirus crisis looked bizarre – he bought the club on 4 June, during the crisis itself, taking full control on 24 June, after the Championship restarted. He put the club into administration on 1 July.

The EFL’s riposte bristled with irritation at that explanation, saying the league “fundamentally disagrees” it had anything to do with coronavirus, because Au Yeung had shown them he had the money to fund the club, as part of the takeover process. The flaw in the rules, that a prospective owner does not have to make that money available, is only a detail in football’s broader faultlines exposed by the crisis.

Leaving aside the way that Choi and Au Yeung engineered it, the key reason for IEC offloading the club to them was clearly the loss-making drain of the Championship. That was explained repeatedly in IEC’s sale document, published as recently as 8 May. IEC were introduced to the long-term owner, Dave Whelan, by Joe Royle’s son Darren, whom executives had met at a conference in 2017 and made chairman after they bought the club. They paid Whelan £15.9m, in the hope they would hit the jackpot by winning promotion to the Premier League. Within a year they realised they had chucked in a further £24.4m to pay excessive players’ wages, for no more return than bobbing in the depths of the Championship.

English football has 20 clubs sitting on the world’s largest TV deals, 24 in the division below losing £16m on average per year, and 47 in League One and League Two who could not afford to complete the season and are facing financial crises. The tale of gambling plots at Wigan became almost a comfort, distracting from the real lesson of the collapse: football’s financial structures do need that “reset” the EFL called for.