Aston Villa face liquidity crisis with no clear end in sight
By Josh Tonti
Dr. Tony Xia & Co. have settled the club’s short-term financial obligations for now. But how did this club get so close to being put into administration?
Breath. Aston Villa is a going concern…for now.
Reports from across England indicate Dr. Tony Xia has settled his unpaid tax bill with the HMRC, £4.2 million in total, with a secured £6 million loan. A semi-recent clamp down in China has seen a limit on capital outflows leaving the country. Especially in cases of foreign investment in sport, not in China. Our owner has money. A lot of it, presumably, even if we’ll never get an exact figure, but he can’t invest into his own investment.
Aston Villa is a club with zero viable financial future on the current trajectory.
Dr Tony Xia has agreed a deal which will enable the club to settle their £4.2m tax bill and pay wages for later this month. [john percy] #avfc
— villareport (@villareport) June 6, 2018
Money has already been borrowed against future parachute payments, properties owned by the club have been remortgaged, and cash owed on at least two structured transfers has been recouped early. [daily mail] #avfc
— villareport (@villareport) June 6, 2018
Loans will do for now. Loans will probably settle obligations next month too. Perhaps even the month after that. But where does it end? Wasted transfer sums, exorbitant player wages (never 100% accurately reported, but we can ballpark estimate), lessening parachute payments, and no capital injection from the owner through political regulation plague the Villa. Things are so bad Chief Executive Officer Keith Wyness went behind Xia’s back looking for potential backers domestic and abroad. It resulted in immediate dismissal, but Wyness had a fiduciary duty to look out after Aston Villa.
“Money has already been borrowed against future parachute payments.” Read that again. The club has already borrowed against its future receivables. If everything reported in the media regarding Villa is even 70% true, the club has no viable future under current ownership without serious, rampaging cost-cutting moves. Ones that likely put the club backwards for one or two decades. Securing a loan to pay a two-month old tax bill (with property as the collateral) is the equivalent of putting a bandage on a severed artery.
This is bad, folks. Aston Villa is expected to have an emergency board meeting on Wednesday. Talk of selling the club to another owner might be discussed following inquiries from the United States and U.K.