The continuing misadventures of the owners of West Bromwich Albion
After two mid-table finishes, the Black Country club still don't look like returning to the Premier League.
If anything, perhaps the biggest surprise about West Bromwich Albion’s 2022/23 Championship season is that they finished it in the top half of the table. At the end of October 2022, a 2-0 home defeat at the hands of Sheffield United dropped them to the bottom of the Championship table. A year and a couple of months after relegation from the Premier League, another one was starting to come into view on the distant horizon.
But this wasn’t how things ended up. Steve Bruce had gone on the 10th October, and Carlos Corberan arrived 15 days later. And after the initial shock of that Sheffield United result, he started to turn things around; on the pitch, at least. West Bromwich Albion finished the season in 9th place in the table, and things would have been substantially better had they not lost three of their last four games of the season. Four more points, and they’d have been in contention for a place in the play-offs for a return to the Premier League.
The result of all of this is that The Hawthorns has been an increasingly disquieted place of late, as the murky details of the club’s financial dealings started to become something approaching clear. Despite the not-insignificant improvement on the pitch over the second half of the season, it has continued to feel as though this is a football club that is starting to rot from the inside out, with reasonable questions from parties with a valid interest in the club’s well-being largely going unanswered by the hierarchy.
Relegation from the Premier League came at just about the worst time possible for the club, at the end of a season played in front of empty stands as a result of the pandemic. But this doesn’t explain the club’s eccentric financial decisions since Guochuan Lai’s group took control of the club in September 2016. For example, immediately upon relegation in 2021 the club lent £5m to another of Lai’s companies called Wisdom Smart, which had fallen into temporary cash flow difficulties as a result of the pandemic.
Lai stated that this amount would be repaid by September, but this date came and went without repayment. He set two further dates, the last of which came at the end of December 2022, but this also came and went without payment having been made, and with the matter now being one of public knowledge as a result of the company accounts for that season having been published. In March 2023, when the accounts for the 2021/22 season were sent to shareholders, it was confirmed that this loan had been effectively written off.
Were West Bromwich Albion a cash-rich Premier League club, although this sort of shenanigans would still have been morally despicable, the loss of £5m would at least have been manageable. But in the EFL, it’s a different matter. Two successive mid-table finishes wasted the biggest advantage that Albion held over Championship clubs thanks to parachute payments. They have one year of those left to go, but the amount received falls year-on-year and most of their advantage has already melted away.
And this strange ‘generosity’ on the part of the club’s owner with the club’s money makes even less sense when we recall that Albion had to take out a £20m loan from Michael Dell’s MSD company secured against the club’s assets. If the club can afford to write a £5m loan to a company owed by the chairman at a time when they were still receiving substantial Premier League parachute payments, why on earth did they need to do this by the end of 2022?
A report by Ian Herbert in the Mail this week mentioned that, “Wisdom Smart had so much cash sloshing around last year that £25m was transferred to a reserve account ‘to be utilised by directors in any manner’.” So… why the need to even write off this debt? What on earth is going on, here? Were this a normal, legally enforceable loan, there would be six years for the creditor—in this case, the club—to pursue the debtor—in this case, the owner’s other company—for full repayment of the loan, but this can and will only happen where there is a will on the part of the owner of the club to do so. This has quite clearly detrimented the club to a not insignificant degree, and seems to be in just about every conceivable way a clear conflict of interests.
In January, CEO Ron Gourlay went out to bat for the club, putting their version of events in a wide-ranging interview with The Athletic. Gourlay, formerly of Chelsea, is an extremely experienced football administrator, and he must surely have known that his answer to the question of “What is the MSD loan for?” was only going to provoke questions than it could ever hope to answer. “The day-to-day running of the club” was a response that can only prompt further questions, the most pressing of which is why a football club that made £101.7m in Premier League television money for the 2020/21 season alone. Gourlay’s comments on the whereabouts of the Wisdom Smart money—“I made no secret on the point; my board has, too. This money has to come back. It’s not a matter of if, it’s when"—couldn’t have been much less accurate.
Gourlay’s resignation was announced at the end of May, though it was also reported that he had tendered his resignation at the start of February. For all his experience at Chelsea and Reading, Gourlay was unable to get the club anywhere close to being on an even keel. And it’s worth asking what effect his departure will have upon the club. It is understood that manager Carlos Corberan is very much in demand following the way in which he managed to steady the ship on the pitch at The Hawthorns despite the turmoil going on behind the scenes at the club. Corberan is understood to have been close to Gourlay and there are Championship clubs without managers at the moment. Leeds United are believed to be interviewing him this week. Sheffield Wednesday may also be attracted to him.
The possibility of West Bromwich Albion being without a manager in the near future, then, is very real, and what calibre of replacement might they be able to achieve if Corberan does decide to jump ship this summer? This question matters. Albion finished last season on a bit of a lull and the Championship is a division that is characterised by a collective desperation on the part of all concerned to get out of it in an upward direction. With all three of the newly-promoted clubs having stayed up last season and bigger clubs having come down, the chase for the promotion places may well be more competitive than ever.
It’s not all bad news. The last set of accounts reported a small profit for the club, but there were caveats, because there always seem to be caveats, with West Bromwich Albion at the moment; in this case, it was dependent on the sale of Mattheus Pereira to the Saudi Arabian club Al Hillal for £16m in June 2021. And there’s even been talk of someone buying a minority stake in the club, though that comes with a bit of a caveat, too.
Charlton Athletic supporters began 2020 in a positive frame of mind. The fractious ownership of Roland Duchatelet was coming to an end–details of the sale to ESI (East Street Investments) had been announced at the end of the previous November, the new year brought completion of the sale–and their club was under new ownership.
The speed with which the ESI ownership of Charlton Athletic fell apart was breathtaking. Over the course of just a couple of months the owners fell out and the main investor withdrew altogether, while the EFL placed the club under transfer embargo almost immediately because proof of forward funding for the club had not been provided. The board fell apart amid horrific squabbling. Former chairman Matt Southall had stood accused of spending the club’s money on a lavish lifestyle for himself, and with a growing sense of unease on the part of supporters—and, it later turned out, many backroom staff—that something was going very wrong.
Farnell, a solicitor, had been brought into the club by Nimer in the midst of the battle with Southall and another director, Jonathan Heller, but by the summer the team had been relegated back to League One and a takeover of ESI had been agreed, though this was (unsuccessfully) disputed by Southall and also later rejected by the EFL, with Farnell among those who were deemed to have failed the Owners & Directors Test. He was also banned for a short period, though this was overturned after just five weeks. With his disqualification lifted, he was expressing an interest in a minority stake in Burnley, though nothing came of that. Charlton, meanwhile, were sold to Thomas Sandegaard in August 2020. Both in the Burnley and West Bromwich Albion interest, his partner has been Mohamed Elkashashy, who was very much in the background while Charlton’s first summer takeover attempt was being rejected by the EFL. It’s…complicated.
None of this is to imply Elkashashy or Farnell are guilty of anything. Neither were ever even directors of the club. But the very fact that they were at Charlton when this was going down doesn’t seem likely to ease the concerns of a fan base which has been becoming increasingly tetchy over the last couple of years. Shareholders 4 Albion represent the club’s smaller shareholders, who hold the 12% of the club not owned by Guochuan Lai, while Action For Albion are a protest group, unhappy at the way in which the club is being run.
There is a way in which the club succeeds, fighting through the thickets of the Championship next season to emerge blinking into the sunlit uplands of the Premier League come the summer of 2024. With the club’s value suddenly increased by as little as one season back in the top flight, Lai is able to cash out by selling up to the Democratic People’s Republic of Korea’s Public Investment Fund or whoever and West Bromwich Albion soon find themselves back in the top half of the table and thriving. It’s only been six years since Albion were a mid-table Premier League club, and they could be again.
But as time continues to pass since the club was last relegated from the Premier League, the task of getting promoted back gets increasingly difficult. West Bromwich Albion will, through their third year of parachute payments, still have something of an advantage over most other clubs in the division, and even with that advantage being at its lowest at around £15m, that £15m is getting on for twice the average TV revenue for a Championship club. But there are others with bigger advantages over them too in this division, now, the three clubs relegated at the end of last season and two of those relegated the year before, and it should also be noted that the majority of other Championship clubs have owners who seem more competent and engaged than those who’ve been running West Brom this last few years.
And as ever there seems to have been complete inertia on the part of the EFL over all of this. To a point, there isn’t a great deal that they can do. It’s perfectly legal for company owners to make intra-company loans, after all. But to pay out millions of pounds, repeatedly claim that the debt will be repaid, and then find that it’s quietly been brushed to one side in the club’s annual accounts should be raising alarm bells across the division. It has long been a well-established fact that the finances of the Championship are a disaster area. Clubs simply cannot afford to be giving away this sort of money.
But then again, why should Guochuan Lai care? He’s from Guangdong rather than Smethwick, after all. But this isn’t really a matter of nationality, it’s a matter of mindset. For so long as football clubs are considered viable opportunities by the vulture capitalists of the world this sort of situation will continue, the temptations of the riches of the Premier League being of considerably more interest than actually acting as a custodian over a valued and cherished community institution. With the new season already just a few weeks away, unless something changes dramatically West Bromwich Albion will be heading into 2023/24 in a gloomy frame of mind, and not without good reason.