Why the ‘going concern’ is no real cause for concern for Sheffield Wednesday
There were some raised eyebrows at sections of Sheffield Wednesday’s 2018/19 accounts that seemed to paint a difficult picture for the future, but it would appear there’s no cause for concern just yet.
Phrases such as ‘additional funding will be required to enable the Company to continue in operational existence’ and ‘a material uncertainty exists which may cast doubt over the company's ability to continue as a going concern’ appeared to raise some alarm bells amongst fans, but the phraseology is not entirely different to that used in previous accounts.
Speaking to The Star, renowned football finance expert, Kieran Maguire, explained that the ‘going concern’ is not really anything to worry about – as long as Dejphon Chansiri remains invest in Sheffield Wednesday.
The Price of Football author explained, “A going concern comment means ‘Can you pay your day to day bills?’, and what this is saying is that, unless Mr. Chansiri continues to financially support the club, that’s going to be really difficult for Sheffield Wednesday.
“Mr. Chansiri has turned around and said, ‘I’m aware of this, I’m committed to covering the costs’ and it says that he’s committed to do that for 12 months from the date the accounts were signed on the 7th March 2021.
“Provided he’s as good as his word, Wednesday are going to pay the bills until 2022, and then what he’ll probably do is say exactly the same thing again.
“Is it a red flag? In an ideal world you don’t want to be continually bailed out by the owner. But if I take a look at most accounts in the Championship, they have very similar comments coming from the auditors because the clubs are simply losing money hand over fist.
“It’s not ideal, but I don’t see this as being something where the end is nigh - there’s no doomsday scenario provided that Mr. Chansiri is as good as his word - and there’s no reason to doubt that he wouldn’t be.”
With the sale of Hillsborough included in the accounts, Wednesday made an operating profit of over £19m, however recorded a gross loss of 17m.