Dejphon Chansiri at £40m Sheffield Wednesday crossroads as one-week deadline looms

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As of today, Sheffield Wednesday owner Dejphon Chansiri has exactly one week to ensure that both players and staff are paid and, potentially, a major debt is satisfied too.

Wednesday earned their first win of the season at the weekend, beating Portsmouth 2-0 away from home. They remain second from bottom, however, and are odds-on favourites to be relegated.

That result came just a few days after the latest pie to the face in the perpetual circus act that is Dejphon Chansiri’s Sheffield Wednesday: a fresh recruitment embargo from the EFL.

Like every Championship club, the Owls need money from their owner to survive. Unlike every other Championship club, Chansiri is unable to provide it.

And on 30 September, the situation in South Yorkshire could get significantly worse.

• READ MORE: Sheffield Wednesday set seven-figure transfer fee for ‘major asset’ following £2m summer interest

Kieran Maguire’s view on Sheffield Wednesday’s 30 September debt deadline

As reported by The Star earlier this month, Sheffield Wednesday may be required to repay a significant chunk of a £7.3m loan to New Avenue Projects secured against Hillsborough Stadium on 30 September, or within an unspecified grace period.

That would be a departure from previous junctures when the loan has been due, which have seen the loan rolled over with interest.

It is a measure of Wednesday’s creditors’ views of how bleak the situation is in S6. And to compound matters, 30 September is also payday, and staff have reportedly been given no assurances of payment.

Speaking exclusively to EFL Analysis, Liverpool University football finance lecturer Kieran Maguire gave his read on the situation, the likelihood of administration, parallels with Derby County under Mel Morris and the true value of the club.

“They have two new appearances under the EFL embargo listing. That’s Chansiri failing to demonstrate that he has the resources to cover the club’s projected losses this season.

“If he can’t do that, then he can’t pay this £7.4m loan. The only alternative scenario is if he is saying he is going to pay the loan and he isn’t going to have enough left over to pay players and staff.

“Administration is looking increasingly high-risk…

“There are some reservations there because Chansiri himself could end up as kingmaker at Sheffield Wednesday because he sold the stadium to a technically separate entity.

“So we could therefore have a position similar to that which we saw at Derby County where the former owner put the club into administration, kept control of the stadium and was therefore able to play the part of Caesar and give the thumbs-up or thumbs-down to interested parties as far as a takeover is concerned. That is my concern.

“Chansiri’s decision making has been erratic and volatile. At times, it has been dictated by emotion rather than rationality. My concern is, will he do something out of spite in due course if the worst happens?

“The very fact we are talking about administration as a potential positive is a signal of where we’re at. It’s not positive. Local suppliers will go under, staff will be made redundant and so on. That’s not good.

“Is it better than the club completely imploding? Yes, it is. But if I’m the administrator, what do I actually have to sell? You have the intellectual property of the club, the position in the Championship, which is under threat. They have sold their best players and are favourites for relegation.

“Administration looks increasingly likely. If the players aren’t paid by 30th September, that is a breach of contract. They will stick around unless someone has performed well in the first few matches, can they really afford to rip up their contract and go elsewhere? They’ll be in touch with their unions about that.”

The possibility of pre-pack administration and Dejphon Chansiri’s £40m dilemma

It’s possible,” Maguire says when asked whether pre-pack administration, an insolvency practice where a takeover is agreed before entering administration with the deal itself going through immediately thereafter, could be on the cards.

“Remember, they would have to pay the lender [New Avenue Projects] £7.4m, pay off all your football debts, and pay your remaining creditors 25 per cent.

“I did a valuation of the club 6-9 months ago when they were mid-table in the Championship and had a solid if unspectacular squad. They punched above their weight last season, so I valued them at £40-50m.

“Given the dilapidation issues at Hillsborough, I was tending towards the lower end of that scale. There has been no money spent since and there is a fair chance they will be in League One next season, so that £40m now looks high. If they got £30m when they have a stadium that is falling down and a squad that is struggling in the Championship, you would be quite pleased with that.

“But then when you do the sums, Chansiri sold the stadium to himself for £60m. No one is going to pay him any money for the stadium on top. You pay New Avenue, you pay your football creditors, you pay players and staff, you pay the administrators, and you pay 25 per cent to your unsecured creditors – there is very little money left over for him.

“In theory, you only buy the assets of the club. But New Avenue have a charge over the assets of Sheffield Wednesday, so the administrator has to pay them first.

“With Chansiri’s loans, he would do the same as Mel Morris if he has any sense. If you go to the very first administrator’s report on Derby County, the estimated unsecured creditors were something like £200m, but they only received claims for £30m. So Morris effectively didn’t put in a claim for the money owed to him. 25 per cent of £30m is a lot more manageable than £200m.

“He is going to have to write it off, but the guy just doesn’t see sense.”