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Financial crisis nearing an end at Bolton Wanderers

November 26, 2015 | Financial Saviour

As light finally begins to emerge at the end of what’s been a long and dismal tunnel for Bolton Wanderers FC over the last few seasons, we decided to take a look at just how the financial crisis unfolded and is now within touching distance of being resolved.

Just over a decade ago, Bolton were punching well above their weight in England’s top division under Sam Allardyce, and finished sixth in the 2004/05 Premier League table, level on points with fifth place Liverpool, and just three behind Everton in the final Champions League qualifying spot.

That would prove to be the closest that Bolton would come to reaching Europe’s elite club competition and will now seem like a distant memories to many supporters.

Sam Allardyce

Sam Allardyce was Bolton manager from 1999 to 2007. Image from www.theguardian.com.

In the seasons that followed, Bolton achieved two further top eight finishes, but then began slipping consistently into the bottom half of the table, before a disastrous campaign in 2010/11 saw them relegated to the Championship on the final day of the season after 11 years in the top flight.

This relegation hit all three clubs particularly hard. Not just because it meant readjusting to life in a new league with much less income, but the fact that they each just missed out on the new regulations on Premier League parachute payments which would come into force the season after.

What are parachute payments?

Ever since Sky has held the broadcast rights to England’s top flight, all Premier League clubs receive a substantial share of the income, which, being astronomically higher than that for the country’s lower leagues, provides a greater incentive for clubs to reach, and stay, in the Premier League.

Ivan Klasnic

Striker Ivan Klasnic (m) was Bolton’s top scorer in the season they were relegated from the Premier League with 8 goals. Image from www.thetelegraph.co.uk.

Parachute payments were therefore made available to clubs relegated to the Championship to help them cope with this now loss of TV money that would be primarily used to cover the wages of certain high-earning players acquired while in the Premier League.

When Bolton were relegated, they, along with Blackburn and Wolves, received a parachute payment of £16m over two years – an amount and time-span deemed appropriate for them to have adjusted to the income of the Championship and have preferably offloaded most of their higher earners.

So when did this change?

In the season after Bolton’s relegation, parachute payments went up to £48m over a four-year period, and are now in excess of £60m over that same length of time for clubs that drop down from the Premier League.

For a club like Bolton, massively in debt to owner Eddie Davies who had funded the team for so many years, a payment of this magnitude would have been extremely welcomed. But it wasn’t to be.

Owen Coyle

Ex-Bolton player Owen Coyle couldn’t save the club from relegation in 2011/12. Image from www.skysports.com.

Under Owen Coyle, Bolton initially struggled in the Championship, before a change of manager rejuvenated their season and they just missed out on the play-offs in the final game which would’ve given them a real opportunity to bounce back to the Premier League.

In the time since, however, it has been far from pleasant at the Macron Stadium. Coyle’s replacement Dougie Freedman could only guide Bolton to 14th in the 2013/14 season, and he was sacked ten games into the following campaign after just one win in those opening two months. Former Leicester City and Celtic midfielder Neil Lennon came in to steady the ship, but the team still finished 18th in the final table.

Neil Lennon

Current manager Neil Lennon must again save the club from relegation to League One. Image from www.skysports.com.

It was then that the real problems off the field became even more apparent. A severe lack of funds placed huge restrictions on transfer activity, with a welcome £1.5m recouped over the summer of 2015 not being made available to Lennon to strengthen his squad.

After one win from 17 league games so far this season, Bolton lie at the bottom of the Championship table, and have recently appointed insolvency practitioner Trevor Birch as an advisor to the board of directors to help seek a resolution in the midst of a financial crisis in which long-serving chairman Phil Gartside is currently suffering from a severe illness.

What does the future now hold?

With debts of £185m to pay off, Birch’s task to lead negotiations between Eddie Davies and any parties interested in acquiring the club and its assets is one of considerable difficulty as the owner looks to sell his controlling stake in the club.

Eddie Davies

Eddie Davies has been a majority shareholder at Bolton since 2003. Image from www.bbc.co.uk.

There has, however, been a recent twist of good fortune for Bolton and all supporters, with Birch confirming that Davies will write off the loans when he agrees to sell the club in an act of generosity that will leave the new owners completely debt-free as they start the rebuild of a club who were enjoying so much success such a short while ago.

The door is currently still open to new bidders, with interest being shown by ex-player Dean Holdsworth and professional boxer and Bolton native Amir Khan, although it is understood, according to Birch, that no proposals to buy the club as of yet have indicated pursuing a change of ownership.

We are sure to see more developments over the next few days as Bolton look ahead to a Monday night fixture at home to Brentford in what could be the start of an exciting new era.

For any help or advice with financial restructuring and corporate turnaround, get in touch with Financial Saviour today. We are fully licensed insolvency practitioners with a practical tailored approach to each unique situation.

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