Alarm raised as Lai’s West Brom debt is guaranteed by club itself
West Bromich Albion have effectively paved the way for a £5m loan taken out of the club by owner Lai Guochuan to be written off, prompting fury among fans.
West Bromwich Albion Football Club has submitted to Companies House its annual report and financial statements for the 12-month period ended 30 June 2022, which reflects the 2021/22 EFL Championship season.
— West Bromwich Albion (@WBA) March 30, 2023
A club statement said that WBA Holdings Limited, which owns an 87.8% stake in the club and is not known to hold any other assets, has agreed to guarantee the loan should Wisdom Smart remain unable to repay it. The loan was originally scheduled for repayment in September 2021.
Mr. Lai, the Baggies chairman, owns both WBA Holdings and Wisdom Smart.
The news comes as politicians and other fans’ groups joined Action4Albion, a fan collective, in signing an open letter addressing the club’s finances, challenging the club’s current financial model, which focuses on self-sustainability.
Yesterday the club announced profits of £5.4m for the Baggies in the period ending June 2022.
A spokesperson added: “An outstanding loan of £4,950,000, owed during the accounting period by Wisdom Smart Corporation Limited, has been impaired in the accounts at Group level by auditors, and West Bromwich Albion Holdings Limited has since committed to guarantee repayment of the loan and accrued interest.
“The ultimate controlling shareholder and Chairman Guochuan Lai has repeated his assurance to the club that the loan and accrued interest will be repaid.”
Action4Albion’s founder, Ali Jones, questioned the veracity of claims that the club was profitable.
He added: “The notion that there’s nothing to worry about is utter bollocks.”
Action4Albion claims that between current and previous ownerships, the club is owed £25m – much of which has been loaned out on extremely generous terms to unknown ‘related’ parties. They are furious that, despite the monies owed, in January it was necessary for the club to take out a £20m loan from American investment firm MSD Holdings at 10%APR. This money was used to cover the day-to-day running of the club.
Amid the letter’s general concern for the club’s financial health, it specifically called for transparency over the £4.95m Mr. Lai withdrew from the club in March 2021. He agreed to pay just £50,000 interest on this and missed the initial repayment deadline of September 2021. He then missed several more deadlines before setting January 2023 as a final marker.
That was also missed.
When asked about the debt, Ian Skidmore, West Brom’s head of communications, said that the club expected the loan to be repaid by Mr. Lai as it was his responsibility alone to do so, regardless of what was going on within his other businesses. He made no further comment.
In the letter fans also ask the chairman what his intentions were behind keeping the club and not selling it. Recent indications suggest that he may want to hold on to the club as an asset in case he wants to live outside China in the future. It is not easy to get large sums of money out of the country without state clearance. The implication is that many Chinese owners of European clubs are willing to hold on to their failing assets in order to keep money away from state intervention.
The letter reads: “You [Lai] are morally and legally responsible for protecting and sustaining this historic community football club. As we are sure you are aware, it is extremely difficult to compete as a self-sustaining club in the Championship without the benefit of parachute payments or owner investment.
“We have genuine fears for the future of the club we all love. We need you to communicate urgently with us and let us know your strategy for the future.”
The signatories do indicate some sympathy for the owner in light of the Covid-19 pandemic and the war in Ukraine but calls for a face-to-face meeting between fans and the chairman at the earliest opportunity.
It adds: “Any business which wishes to be successful in the UK needs to communicate with its customers and stakeholders.”
Mr. Jones told the Sports Gazette it was a powerful sign of intent that the letter was signed by 15 supporters’ bodies, three MPs and the Mayor of the West Midlands combined authority, Andy Street.
He said of the owner: “You’d expect a response normally but we’re not dealing with normal people.”
Jones founded Action4Ablion in October as fans became increasingly frustrated with the club’s ownership and senior management. Following his New Year’s Day interview in the Sports Gazette, he has appeared on TalkSport, ITV News, Sky Sports News and Kieran Maguire’s The Price of Football podcast to talk about protests he has organised.
Last week Jones was also invited to 10 Downing Street as a guest alongside his local MP Nicola Richards. Prime Minister Rishi Sunak held a reception at his home on Wednesday evening to celebrate community champions in Great Britain and Northern Ireland. Richards and Jones had been in touch since January after Richards heard of Action4Albion on social media. She was impressed with his tireless work campaigning for more transparency at the club and even brought the matter to debate in the House of Commons.
The club’s hierarchy has publicly remained silent on the club’s financial status but in recent months has agreed to a more open dialogue with fans via Mr. Skidmore. This involves regular meetings between fans and club representatives. Both sides have agreed to make meeting minutes public. All such conversations so far have been attended by the club’s CEO, Ron Gourlay, who Jones had previously called out for a lack of communication.
Some fans, however, have been critical of the organisation’s perceived success.
David Beddall, a West Brom season ticket holder acknowledged that Jones’ Downing Street visit was a nice gesture but insisted it didn’t amount to the kind of action needed.
He said: “We really haven’t achieved anything. All we have done is make the media and football world realise West Brom is in a deep financial nightmare. We need someone in government to help us.”
There will be protests against the board throughout Albion’s game on Saturday at home to Millwall.
