They call him 'The Guv'nor': the Swiss Ramble who blogs from Zurich on football finances. This time he deploys his forensic skills and ability to read a set of accounts to consider the case of Birmingham City (2018/19 figures), enough to give anyone the blues. Their fans have been put through the wringer and they now face the prospect of another points deduction.
The Swiss Ramble notes, 'As a result of their fancy financial footwork [a stadium sale], the Blues £8m loss was nowhere near the worst reported in the Championship. Very few clubs manage to make money in this extremely competitive division, though largest losses often from promoted clubs – including hefty promotion bonuses.'
The club sold their stadium for £23m, which produced a £17m gain (deduct £7m book value, add £1m release of capital grant). If this transaction were excluded, they would have reported a large £26m loss. Interestingly, it was a much lower sale price than Rams £81m and Owls £60m.
It looks like newly registered company Birmingham City Stadium Ltd now owns the St.Andrews, though this is only an accounting transaction with no cash received. The ground will be leased back to the football club for 25 years at an annual rent of £1.25m.
Birmingham City have consistently lost money, only reporting a profit once in the last seven seasons – and that was just £1m in 2014/15. In the last three years, the club has accumulated £62m of losses – or £79m if the stadium sale is excluded.
The only season that Blues reported a big profit recently was £16m in 2012, very largely due to £22m of player sales. They have only made £23m from player trading in the seven years since then, but it will be a much higher figure in 2020 following Che Adams’ £15m move to Southampton. The Swiss Ramble notes, 'In fairness, clubs traditionally don’t make big money from player trading in the Championship, though 2018/19 has seen Bristol City and Stoke City generate £38m and £18m respectively.'
It's not all gloom. Following last season’s £4.2m (22%) increase, club revenue has now grown for three consecutive years. The 2019 £23.3m revenue is now higher than the £21.0m reported in 2015 – the last year when they received a parachute payment. Mainly driven by commercial income more than doubling.
Commercial income rose 57% (£3.7m) to £10.2m, largely due to owners Trillion Trophy paying 'significant' naming rights for the St Andrews stadium and Wast Hills training facility. Up to seventh highest in the Championship, though still less than half Leeds United £22m.
Moreover, 'Of course, it’s difficult to compete with clubs receiving Premier League parachute payments. In 2018/19, Stoke City, Swansea City and WBA received £43m, while Hull City, Middlesbrough and Sunderland got £34m, QPR £17m and Aston Villa £15m.'
A shout out for the fans: 'Despite their many issues, Blues have now seen their attendance rise 5 years in a row from the 15,457 low point in 2013/14, which reflects very well on their supporters. In fact, the 22,483 attendance last season was the highest since they were last in the Premier League in 2011.'
The wage bill fell £5.8m (15%) from £38.6m to £32.8m, though the prior season was inflated by severance payments for departing managers. Despite the reduction, this is still more than twice as much as £15.3m wages just three years ago in 2015/16. Playing staff down from 107 to 92. Following the decrease, the £33m wage bill is now only mid-table in the Championship, a long way below the likes of Aston Villa £73m, Stoke City £56m and Fulham £54m (all with parachute payments) and Norwich City £51m (including promotion bonus).
Gross debt increased by £24m from £73m to £97m, all owed to the club’s parent company BSHL (not repayable in next 12 months). Debt has grown by a worrying £81m in the last three years.