Pandemic tames the Wolves

WOLVERHAMPTON Wanderers took a £ 40 million hit on revenues and turned a £ 22 million profit in 2018-19 to a £ 36.7 million loss in 2019-20. Unlike some clubs who reported a fall in matchday income, Wolves saw this revenue stream rise by 10% to £ 12.7 million.

The club’s revenues for the season totalled £ 132.6 million, some 23% lower than 2018-19. Wolves’ biggest drop came in broadcasting, a 28% decline to £ 95.8 million. Commercial income also fell by 13% to £ 24.1 million. Wolves calculated that if it were not for a deferred amount of broadcasting income, the club would have made a small profit of around £ 20 million. They will benefit significantly from the deferral in 2020-21.

Wolves enjoyed a lengthy UEFA Europa League run in 2019-20 that started in late July and ended over a year later at the quarter-final stage where they lost to Sevilla. They played 18 games in the competition against clubs from eight different countries. They failed to meet their objective of qualifying for Europe in 2020-21.

Wages went up to a record high of £ 94.7 million, representing a wage-to-income ratio of 71%. Since Fosun International took over the club, wages have more than trebled, but they remain among the lowest payers in the Premier. In 2016-17, Wolves’ wage bill was just £ 28.2 million, which was 119% of revenues. At the time, they were in the Championship where salaries invariably exceed income.

Wolves under Fosun have been transformed from a financial perspective. As recently as 2016-17, they generated just £ 23.7 million. Although income reduced in 2019-20, the £ 132.6 million was still the second highest total in the club’s history. Despite this growth, Wolves are still among the bottom half dozen in terms of revenues. In 2020, the club was named among the top 20 football brands in the prestigious Brand Finance annual review.

The club’s playing squad has a big Portuguese presence and all bar one player is a client of Jorge Mendes’ GestiFute player agency. In total, eight Wolves players have Mendes’ company as their agent. Fosun also has a 15% stake in GestiFute’s parent.

Wolves pay far less in agent fees than most of their peers. In 2019-20, they paid £ 8.6 million to intermediaries, some £ 20 million less than each of Liverpool, Manchester City, Manchester United and Chelsea. 

They have, however, been very active in the transfer market since Fosun arrived. They have bought more players than any other current Premier League club (129) and also sold more (also 129). Only Manchester City, Manchester United and Arsenal have incurred a higher negative transfer balance than Wolves’ £ 220 million between 2016-17 and 2019-20. Their income from player sales totalled £ 9.5 million which was lower than the previous campaign, but still up on 2017-18. They have continued using the market strategically in 2020-21, signing Fábio Silva (Porto) and Nélson Semedo (Barcelona) for a total of £ 65 million but recouping the whole amount by selling Diogo Jota (Liverpool), Matt Doherty (Tottenham) and Hélder Costa (Leeds United).

The club has anticipated working capital challenges going forward and has increased its financing with Macquarie Group to £ 75 million (from £ 50 million). This comprises a £ 60 million term loan and a £ 15 revolving credit facility. Given the current climate, it is no surprise that net debt increased to £ 125 million.

Wolves are a club with an interesting future and have retained their reputation for bright, attacking football. Their momentum over the past few years has been impressive, but the question is, will the pandemic curb their progress?


Portuguese flair could make Wolves the dark horses in old gold

WOLVES were fairly comfortable winners at Sheffield United in their first match of the Premier season, but you got the feeling it could have been even better than a 2-0 victory at Bramall Lane.

Sheffield United could find their sophomore season a tough one, although the neutrals will delight in any success that comes their way. For Wolves, the only thing stopping them from being popular among the average British football fan is the fact they are owned by a Chinese conglomerate and they are part of the Gordian knot that is the mysterious Jorge Mendes network – hence there are 10 players from Portugal in their first team squad.

Wolves are not in the very top billionaires’ club, but they are among the leaders of the second tier of wealthy club owners, and they play a brand of football that is exciting and easy on the eye. After two seasons of finishing seventh, they could be ready to make the leap to the next level of the Premier League. In their more traditional old gold shirts, as opposed to a rather over-yellowed version in 2019-20, Wolves showed pace and aggression. They were also way ahead of their hosts, Sheffield United, whom they killed-off in the first 10 minutes with two goals.

Wolves had a longer season than most in 2019-20 and reached the last eight of the Europa League, losing to Sevilla in their 17th game of the campaign. They failed to qualify for Europe by a narrow margin (goal difference of just three goals), but that didn’t extinguish the feel-good factor around Wolves. In fact, an absence of European football might improve their chances of a higher Premier League placing.

The pace and purpose of Wolves’ attacking impressed against Sheffield United, with Raúl Jiménez and Adama Traoré looking particularly sharp. Jiménez scored their first goal with a finish that underlined his agility and accuracy. He’s 29 and a client of Mendes (West Ham will need no reminding of that) and has scored 45 goals in 100 games for Wolves. The Mexican is, without doubt, one of the best strikers in the Premier League.

Traoré, who is 24 years of age, looks like a force of nature. His bulldozing style shouldn’t detract from the fact that he is richly skilful and is one of the best dribblers in the game. The 2020-21 season could be his time and if he can curb the temptation to hold on to the ball too long, he will be a valuable creator, as well as a taker, of goals.

Wolves lost Matt Doherty to Tottenham but received around £ 15 million for the Irish defender. The club has already been in the market with the £ 35 million acquisition of Portuguese teenager Fabio Silva from Porto and Lyon’s experienced left back Fernando Marçal, picked up for a bargain € 2 million. They also signed, on loan, Porto midfielder Vitinha. Silva is a rising star but Wolves may look at what happened to the last young player who had expectation poured upon him, João Félix, and how he has fared at Atlético Madrid. For a club with a relatively small core squad, new signings were badly needed at Molineux.

The Wolves project is still in its early stages but it is clear the club’s owners consider coach Nuno Espírito Santo is the man for the job. He’s just signed a new three-year contract and there are certain to be further reinforcements at the club in the coming weeks and months. Judging by their opening weekend win, this season could be their best chance to break into the top six for the first time for 40 years.







Wolves are back, but can they become a credible power again?

IT’S good to see a grand old name like Wolverhampton Wanderers back in the Premier League. One of the founding members of the Football League in 1888 (they finished third, behind Preston and Villa), they’ve long been a club with a great history – three league titles and four FA Cups – rather than an institution with a rosy future. But that all could change now the club has wealthy backers – or, at least, that’s the current script.

However, before Wolves get too carried away, there’s an agenda. The club is owned by Fosun International, a Chinese conglomerate with fingers in many pies. When the Shanghai-based company expressed an interest in a down-on-its-luck Midlands football club, many people questioned their motives. At the same time, Chinese investors have been eyeing the region with more than a passing interest – Aston Villa and West Bromwich were also being courted by businessmen from the far east.

Photo: PA

There’s a tendency in international business to look no further than London and, at a push, Manchester and Liverpool for opportunities. Indeed, global companies invariably only look at places like Birmingham as a possible low-cost outsourcing locations. So why would Fosun, an organisation that has interests in London, New York, Tokyo, Brazil, Russia and Sydney, among other places, be interested in a post-industrial town like Wolverhampton (population 260,000)?

The Chinese way of doing business depends on building networks – they call it “guanxi”. In Britain we might refer to it as “the old boy network”. Fosun have proved to be pretty adept at creating commercial webs of mutual cooperation. Fosun have many facets to their network – their business, by definition, is highly connected due to its diversity, ranging from financial services, including an interest in Bitcoin, to mining and engineering. The latter is important, for Fosun may well have their eyes on the controversial High Speed Railway 2 project which runs right through the Midlands. Other Chinese companies may also be circling for that exact reason.

Right now, Wolves fans won’t care too much about that, but what they should be a little concerned about is the complex network that surrounds Fosun and its links with the so-called Super Agent, Jorge Mendes.

Mendes, a “known associate” of Fosun, sold them a 20% stake in his Gestifuta company in late-2015. There’s something of a Gordian knot surrounding Mendes (and Fosun), but Wolves describe him merely as a “friend of the club” and despite suggestions he is the puppet master, not in charge of recruitment.

Mendes’ footprint, nevertheless, is all over the Wolves squad, including manager Nuno Espirito Santos, who replaced Paul Lambert in May 2017. Pippo Russo, a New York-based sociology professor, has written a book about Mendes and says that Wolves are now firmly entrenched in the “Mendes system”.

So what is this system? Basically, it is a network of clubs which look to Mendes for help in acquiring players, either permanently or on loan. This might involve players that are on Mendes’ books moving from a club where he has influence to another within the network. The cogs keep moving and with every transaction, Mendes and his company earn a fee. This has made him what some people consider to be the most prominent mover and shaker in modern football.

An extraordinary number of Wolves players are Mendes people – for example, Diogo Jota, the 21 year-old striker who came on loan from Atletico Madrid and from July will be permanent. He’s Wolves’ leading scorer this season. Then there’s Portuguese winger Hélder Costa, who arrived from Benfica for £ 13 million, a then-record fee for the club. In 2016-17 they also signed Ivan Cavaleiro from Monaco for £ 7 million. They are both clients of Mendes. Then in 2017-18, they acquired Rúben Neves – another Mendes connection – from Porto for £ 15.8 million, breaking the record set by Costa’s hiring. Brazilian forward Leó Bonantini, also linked to the super agent, is on loan from Saudi Arabian club Al-Hilal

There’s no denying Wolves have bought big and they have a team that was well ahead of its rivals, hence three of the squad – goalkeeper John Ruddy, defender Willy Boly and Neves – were named in the PFA team of the year for the Championship. The question is, have Wolves overspent to win promotion and will they be able to strengthen their team for 2018-19.

The financial figures show that they may have difficulty in pushing on in the short-term, unless something changes. The club has admitted that it is close to breaching Financial Fair Play rules and in 2016-17, they made a loss of £ 23.2 million, versus a £ 5.8 million profit in 2015-16. Fosun said that the club needed to increase expenditure on players to become more competitive and that’s exactly what has happened. Wolves have spent £ 67 million on new players since Fosun arrived on the scene. Wages increased to £ 24.9 million and the club’s net debt rose by 459% to £24 million. At the same time, crowds are averaging over 28,000 at Molineux, so public interest is rising once more.

As it stands, the “investment” has paid off and Wolves have had a barnstorming season. With one game to go, they were on 99 points, winning 30 of their 45 games, and there’s 10 points between them and second-placed Cardiff City.

How will they fare next season? Wolves intense  and very energetic style may go down well in the top flight but predictions range from a top six finish to a year of struggle. The club has moved upa gear, although many but now some of their rivals will be more resourced. The Midlands has not had a brilliant year in the Premier, Stoke are down and West Bromwich Albion are on the brink. In the past decade, the region has produced just three top six finishes in the top division. Wolves will never have a better chance to change that, but question marks will remain about who is really pulling the strings at old gold Molineux.