Explained: How FC Pune City ran into the financial abyss

The Stallions have struggled to pay their players' wages and are now looking to relocate out of the city.

FC Pune City are in financial trouble and it’s not a secret anymore. The controlling company, the Rajesh Wadhawan Group are looking to relocate the club and are exploring a part stake sale to an investor.

Salaries of several players are yet to be paid, but the management has promised to clear all dues in installments before July 15. It has also asked players not to look for new clubs, ensuring that the new owners have a good team to start their plans with.

We take you deeper into the problems of the group, financially. Issues started at the beginning of the year when a media outlet reported that the Dewan Housing Finance Corporation had diverted loans of ₹31000 crore – a charge the company had termed ‘mischievous’ back then. The company had already sold of 70% of their stake in Aadhaar Housing Finance Ltd to Blackstone.

Reportedly, the loans were given to “dubious entities” that were linked back to the promoters, who were the ultimate beneficiaries. The Ministry of Corporate Affairs got in to probe the situation, adding to the already barbaric market pressure. The group had also made political donations beyond the mandated levels – the report had stated.

However, company chairman Kapil Wadhawan refuted the allegations. He had said that the group had never lent to a shell company, nor had any of its units made any political donations.

This though, did not stop its investors from selling their stocks. Prices came crumbling, with the current share price standing at a third of what it was at the beginning of the year. Earlier this year, the IL&FS Group, another subsidiary, added to the woes and earned market wrath over asset liability risks due to default on payment of dues.

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The issues do not stop there. Pune ha not been the most cost-friendly city for football fans and the stands gave a similar picture year after year. CEO Gaurav Modwel’s aggressive marketing did them some good, like creating a niche audience, but that was too less in number to really help the club’s situation financially.

Goal also reported that the franchise could be moved to Hyderabad, with the new owners not looking at the Shree Shiv Chhatrapati Sports Complex as the ideal hosting bastion. This could well mean that Pune City becomes the fourth club from the city after Pune FC, Bharat FC and DSK Shivajians to have shut shop after a small, but aggressive, period in operation.