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EFL update: Wigan Athletic

7 July 2020

The EFL continues to note the many comments and concerns in respect of the recent developments at Wigan Athletic Football Club from supporters, media and public figures.

Given the Club’s standing within the EFL and their local community there is, quite rightly, a significant strength of feeling of anger and frustration amongst all those connected to the Club.

The EFL has engaged with the Administrators and their advisors and is continuing to provide its full support in all ongoing matters, particularly how it can work through the requirements of the insolvency policy and assist the Club in exiting Administration at the earliest opportunity. In the short-term, those discussions will continue with the sale of the Club, player transfers and funding required in order to complete the 2019/20 season the immediate priorities.

In addition, we will also engage with the appropriate supporter groups, local politicians and other key stakeholders as appropriate to assist in helping achieve a long-term stable future for the Club and its local community.

The League fundamentally disagrees with the comments attributed earlier today to Mr Au Yeung Wai Kay where he stated that ‘the Covid-19 pandemic has undermined the ability to fund the Club’. Whilst it is clear that Covid-19 has undoubtedly presented significant financial challenges to the professional game, evidence of the required source and sufficiency of funding to be invested in or otherwise made available to the Club, was provided as part of the recent change of control process.

This set of circumstances 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finances, including how monies are distributed throughout the game, will continue to struggle to meet the demands of an outdated and unsustainable model.

In respect of the challenges at Wigan Athletic, there is clearly a number of important unanswered questions that require urgent attention and the EFL welcomes the move made by the Administrators to launch an investigation as to what has led to the Club being placed into Administration just a matter of weeks after the Next Leader Fund (NLF) took ownership of the Club. The EFL will undertake a similar exercise and, should any breaches of football regulations or company law be discovered, action will be taken either by the League or the body with the relevant jurisdiction to do so.

The EFL understands this situation once again leads to questions being asked about EFL regulations in regard to changes of control, alongside the actions taken when an insolvency event occurs, and as a result has opted to clarify each matter below:

EFL Insolvency Policy

In all circumstances a sporting sanction applies in respect of an insolvency event (default 12-point penalty). The Regulation seeks to ensure that a Club cannot gain any advantage over other Clubs in the competition by not paying its creditors in full and on time, while also ensuring there is a deterrent in place for Clubs and their owners, from operating in a manner so as to cause insolvency. The EFL acknowledges it is a difficult time for any Club placed into Administration, particularly in the midst of COVID-19, but is mindful that its regulations are to be applied consistently and equally to all member Clubs irrespective of the circumstances.

In the current case of Wigan Athletic, and, in accordance with EFL regulations, due to the Club being placed into administration after the fourth Thursday in March, the sporting sanction will take affect once the final League positions are known. If in the event the Club is relegated by virtue of their final position following the conclusion of the Championship season, then the deduction will apply in League One in 2020/21. However, if the Club is not in the relegation places following the final game of season, the sanction will be then be applied to their season 2019/20 total and final league standings amended as appropriate.

A Club can appeal against a decision of the Board to impose a 12-point deduction under the EFL Regulation 12.3.10, and the appeal will be heard by an independent panel appointed by Sports Resolutions. That independent panel will determine whether the relevant Insolvency Event(s) arose

solely as a result of a Force Majeure event, caused by and resulted directly from circumstances, other than normal business risks, over which the Club could not reasonably be expected to have controlled.

Owners’ and Directors’ Test

Under EFL Regulations, it is a requirement that the self-certification Owners’ and Directors’ Test is completed by every prospective new owner and relevant person seeking to gain control of a Club. The test sets out an objective set of Disqualifying Conditions. This process was completed during the recent change of control at Wigan Athletic, and Mr Au Yeung Wai Kay was not subject to any disqualifying conditions.

As previously stated, the EFL is aware of the public frustrations felt in respect to the current Owners’ and Directors’ Test and acknowledges that there is a requirement for ongoing adaptation and improvement but, from a legal perspective, it can only operate within existing parameters.

In 2018 the EFL conducted an Owners’ Conduct Review, which in part looked at making a number of fundamental changes to the criteria and whilst some amendments were made at the time, it is clear that the appetite has been strengthened by the circumstances that led to the withdrawal of Bury FC from the League, and the lessons learned from the subsequent review into the conditions that led the Club to that position. The EFL has been engaged and remains in ongoing consultation with both the Premier League and The FA to achieve the appropriate improvements to the Owners’ and Directors’ Test for the future.

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