Are Wigan Athletic really £45m in debt?

The administrators provided Wigan Athletic's creditors with an update on Friday.

It didn't take long for details of the confidential report to be leaked on social media - and the bottom-line figure of the club's total debt, a cool £45,712,567 - alarmed many fans.

Their worry? That the club would never find a bidder who would pay that amount.

Well, the good news is they won't need to.

The total sum is technically accurate, with major creditors being previous owners Next Leader Fund (£25.3m), Wigan Athletic Holdings (£10.7m) and HMRC (£2.8m), as well as around £6m of footballing creditors' debt.

But it's misleading.

For a start, the £10.7m is - it seems - not really relevant.

Wigan Athletic is made up of five businesses, and the £10.7m is an inter-company loan - effectively, one of the five businesses owes it to one of the others. So even if it was paid, it would effectively be paying itself.

Expect to see that amount scrapped in any sale process.

"The administrators are appointed over all five companies and will choose to write the (£10.7m) debt off when it comes to (that point)," tweeted co-administrator Paul Stanley.

So £45m suddenly becomes £35m.

Of that, think of it in two parts - football creditors' debt, and non-football creditors' debt.

Let's address the football creditors' debt first. This £6m needs to be paid - and it needs to be paid in full.

It includes any money owed to players (wages, back-pay), agents... and unpaid transfer fees. Even if clubs had previously arranged to pay fees in installments, they must all be cleared when a club exits administration.

So while Kieffer Moore was sold for more than £2m to Cardiff last week, £1.5m was owed to his former club, Barnsley.

Of the £6m Wigan Athletic owe, more than a third is on unpaid transfer fees. They are believed to be for Antonee Robinson (£500,000, Everton), Jamal Lowe (£750,000, Portsmouth), Joe Williams (£350,000, Everton) and Josh Windass (£500,000, Rangers).

If those players can be sold for more than the amount owed their previous clubs, it would drastically reduce the club's football creditors' debt - clearing the unpaid transfer fees as well as reducing the wage bill.

Now, onto the other creditors' debts.

If they aren't paid at least 25p in the £, Latics would incur a 15 point penalty.

That includes the tax man.

HMRC was supposed to become preferential creditors on April 1 - but that change was put back to December 1, which is good news for Latics.

It means HMRC is still classified as a non-football creditor and so, of the £2.8m owed, only a quarter (£700,000) needs to be paid to avoid the 15 point penalty.

The rest of the amount is written off; it does not need to be paid by the club down the track.

And that applies to the rest of their creditors including, gulp, the £25m loan owed to the former owners.

Co-administrator Gerald Krasner has previously spoken of a "strategy" to remove it from the balance sheet. And football finance expert Kieran Maguire, author of The Price of Football, told Wigantoday he expects they will be "looking at all legal options" to avoid paying it.

"And that would increase the chances of hitting the 25 per cent threshold (for paying non-football creditors)," he said.

So back to the initial question - how much will need to be paid by any potential new owner?

It's difficult to say with so many variables.

Will the loan be challenged? Will more players be sold - and for how much? We can only guess.

But if we predict a few players move on - hopefully for fees which cover the amounts owed to former clubs - it's not unfeasible that the football creditors' debt could be halved, to around £3m. Which must be paid in full.

Throw on top another bill which will need to be paid - the administrators themselves. With legal fees, that will be a seven-figure sum.

Presuming Latics want to avoid the 15 point penalty, the amount they would have to pay non-football creditors bill would be a little over £7m (a quarter of the £28m total owed).

If the loan can somehow be challenged and removed from the debt, the non-football creditors' debt would be cut to about £4m - of which 25 per cent (£1m) would need to be paid

So worst case, a debt of £15m would need to be paid.

Best case, £6m.

Both vague, for sure, but both a lot less than the £45m some were having nightmares about.

Their debt could be lowered even more, depending on how many players leave, and for how much. And, of course, the club could bite the bullet, pay the non-football creditors less than 25 per cent and cop the 15 point deduction.

Even if bids are received before the administrators' self-imposed August 31 deadline, there is still a threat of relegation - in which the business would be closed and the assets (two training grounds, DW Stadium, Sharpey's Chippy site) sold.

Maguire explained: "They can only go down the liquidation route if the expected liquidation price exceeds the bid, they have obligations to the person who appointed them to sell for the best price. There will be a tipping point."