Sheffield Wednesday accounts explained Part Two: Chansiri’s millions and finance expert’s stadium ‘red flag’

Dr Dan Plumley, Senior Lecturer in Sport Business Management at Sheffield Hallam University, spoke to The Star to deliver his summation of the club’s accounts submitted for the 2021/22 season, which were submitted hours ahead of deadline earlier this week.

They follow scrapes with Profit & Sustainability rules in recent years that lead to the controversial sale of Hillsborough Stadium to a separate company owned by Owls chairman Dejphon Chansiri.

But scaled-back expenditure and increased turnover in the first of their two seasons in League One indicate a more positive outlook going forward.

This is the second in-depth explainer into the club’s 2022 accounts. The first instalment can be read HERE.

So, how much money has Chansiri put into the club in the 2021/22 season?

Chansiri’s personal backing remains vital to the financial continuation of the club. The standard ‘Going Concern’ paragraph is in there that details just that.

If he stays on board and is able to continue his funding - and there is no suggestion that will change any time soon - then Wednesday will operate similarly to plenty of EFL clubs; at a loss (a sharp dip to £7.3m in 2022) and heavily reliant on their money men.

But how much did he personally plough into the club in 2022?

“It’s tricky to see that directly,” Dr Plumley said. “What I’d base it on is the difference in the long-term liabilities, or what the owe to Chansiri this year against last year. There’s a loan from the Controlling Party on page 31. That loan has increased by about £5m, from £51m in 2021 to £56m in 2022. Interestingly, it looks to be the overall balance owing to Chansiri amounts to £56.3m.

“That’s a £5m increase in the loan from the Controlling Party. As always, there’s a note with terms and conditions attached and it is saying that there is no set repayment date with no interest terms and that it is calculated at transaction price.

“That means he is not charging the club interest, he’s not saying when or if he wants it back and he’s not tracking any inflation movements in that figure as well. There are notes of positivity from an owner’s point of view because you can take from that that he’s still investing in the club and he’s not put a date on when he wants the money back.

“From the club’s perspective, the fact is that they do owe him that money. It just puts into further perspective that reliance on him as the owner.”

How’s the deal around the sale of the stadium running?

In 2019, some accounting manouevring that attempted to put the club in-line with P&S regulations saw Hillsborough Stadium sold to a third party company - Sheffield 3 - that is owned by Chansiri. It’s the deal that essentially earned them a six-point deduction in the season they were relegated from the second tier.

Payments have come in £15m instalments in recent accounts and that has continued.

Wednesday not owning their own stadium represents something of a ‘red flag’ to Dr Plumley.

“It’s tracking at the minute as we had expected it to when the deal was done. That instalment-related way in which he managed the stadium sale is now being reflected in the accounts. There are notes on Page 32 that looks owing by Sheffield 3 and that amounts to £15m and they’ve paid £15m in these accounts. You’ve also got a rent agreement in their of £2.5m per year.

“It’s as we expected and it’s operating the way it was meant to. Personally, I still think it’s a little bit of a red flag in the bigger picture - football clubs should own their own stadiums. But in terms of the finances, it’s all as we expected it to be.”

So in theory, if Chansiri was ever to sell the club, the stadium ownership would represent an issue?

“That’s the reasoning behind why I pop it down as a red flag,” said Dr Plumley - it’s important to stress that Chansiri has always maintained he would sell the club and stadium together if he was ever to sell-up.

“It will come into the conversation. If you’re an outgoing owner, in this case Chansiri, and you are looking to sell then the stadium is in a different company owned by him. There’s also the cash that he borrowed on that deal and so there’s a third party in the mix as well.

“All that is fine as long as Chansiri is the owner. Obviously with any sale of the club and a new owner coming in, assuming whoever that may be would want full control in a complete takeover, you’d have to agree a deal for the club with Chansiri. But you also have to agree a price to take the stadium. Normally any stadium valuation would be rolled into the full takeover cost.

“Any new owner coming in, in footballing terms, would want to buy the stadium and put it back into the club’s hands. That would come at a price in addition to the club takeover.

“There’s nothing to suggest that he’s going to sell the club tomorrow, but the narrative of Wednesday one day being up for sale is always in the background. Anybody coming into the club would have to deal with the purchase of the stadium as well.”

It sounds like there’ll be a final £15m payment from that deal to be factored into the 2023 accounts, then?

It does, but not necessarily. The payment could in theory be split depending on how they want to do things.

Over to Dr Plumley.

“There was a balance of £30m in 2021 and there’s a payment there of £15m in 2022, so that would suggest there is £15m left to pay.,” he said. “Assuming that’s done in one hit, that payment you’t think would come next year.

“But these things are always negotiable, especially when you’ve got the owner effectively being the person that is owing the money. If you take another £15m off that next year, you’d hit zero on that particular part of the payment and it would be done. We could see that next year. But debtors are always being negotiated, it’s money that is owed to the club so you can always try to re-negotiate it.

“At the moment it is tracking in line with what we expected. You’ve also got to consider the lease that is paid on the stadium and the longer-term payments that will be due for that over the course of the long, long term because of the way the deal was done.

“That all comes back to the idea that in time, you’d ideally want to put the stadium back in the club’s hands.”