Finance guru issues '£127m' Wolves reveal as Chinese government steps in
Wolves may for now be insulated from their owners’ financial problems because of a £126.5million loans-to-equity deal.
That is the view of finance expert Doctor Dan Plumley, speaking exclusively to Football Insider about Fosun International’s worrying business situation.
The Chinese investment group bought then-Championship side Wolves for £45m in 2016.
Per the Financial Times last Wednesday (14 September), the company’s shares have lost 18 per cent of their value since the beginning of the month.
It is claimed that the Chinese government regulators have asked lenders to examine their exposure to Fosun.
Plumley argues that Wolves should be safe from the worst of the crisis for the time being, but there are questions about how the owners will fund future investment.
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“If you look at the most recent accounts, there was a restructuring of loans to equity from Fosun that totalled about £126.5m,” the Sheffield Hallam University expert told Football Insider’s Adam Williams.
“Effectively, the club don’t owe the owners anything in terms of shareholder loans. That might have been part of the play, to protect Wolves.
“But on the other hand, if they are struggling financially, what money can they afford to invest in the club moving forward?
“Primarily, you are looking at the transfer market and wage costs. Wolves are okay on a wages-to-turnover basis at the moment.
“There is no immediate concern there, but you have to factor in the investment that is needed to keep Wolves competitive in the Premier League.
“With the finances of the Premier League, staying in the league is vital so they can generate money through broadcasting and commercial and not be reliant on the owners.
“So, they look okay at the moment, but you are then questioning where the next wave of investment comes from.“