Blues consistently lose money

The authoritative Swiss Ramble has given his verdict on the 2019/20 accounts of Birmingham City.

The club's loss increased from £8.4m to £18.2m, as prior year included £17m profit on the sale of the stadium, partly offset by profit on player sales rising £7m to £12m. Revenue fell £0.5m (2%) from £23.3m to £22.8m, while expenses were flat overall.

The loss of £18m is firmly in the bottom half of the Championship, though many other clubs have posted higher losses, even before the pandemic. In 2019/20 these include Leeds United £62m, Reading £42m, Middlesbrough £36m and WBA £23m.

The Blues have consistently lost money, only reporting a profit once in the last eight years – and that was just £1m in 2015. Since then, the club has accumulated £85m of losses – or £102m if the stadium sale is exclude

Excluding property sales, only 2 Championship clubs are profitable in 2019/20 to date (Hull and Swansea, with £3m apiece). Very few clubs manage to make money in this ultra-competitive division, though largest losses are often from promoted clubs – including hefty promotion bonuses

The profit on player sales increased from £4.4m to £11.5m, largely from the transfer of Che Adams to Southampton. That was pretty good, but still a fair bit lower than Bristol City £26m, Brentford £25m and Hull City £23m.

The only year that the club reported a sizeable profit recently was £16m in 2012, due to £22m of player sales. 2020’s £12m is the first double-digit profit from this activity since then. but this season will be boosted by Jude Bellingham’s big money move to Borussia Dortmund.

Despite a small fall in 2020, the club have done well to grow revenue by £8.1m (55%) in the last four years. In fact, their £22.8m revenue is higher than the last year when they had a parachute payment in 2015. Highest growth came in commercial, which is the largest revenue stream (40%).    This partly due to owners Trillion Trophy naming rights for St Andrews stadium and training facility (deals expire in 2021).

The £23m revenue is mid-table in the Championship, significantly below those clubs in receipt of parachute payments following relegation from the Premier League, but also behind clubs like Bristol City £27m and Nottingham Forest £26m.

If parachute payments were excluded, the £23m would have the 9th highest revenue in the Championship. They would still be a fair way below the leading clubs, though the gap to the highest placed Leeds United would be reduced to “only” £31m.

The wage bill rose slightly (1%) from £32.8m to £33.1m, as playing staff increased from 92 to 99, while there were wage deferrals during football lockdown. This is more than twice as much as £15m four years ago in 2016. In the same period revenue has only grown £8m (55%).   The £33m wage bill is around mid-table in the Championship.

The wages to turnover ratio increased from 140% to 145%. This is far from ideal, but pretty much par for the course in the Championship, where 19 clubs are above 100%, much worse than UEFA’s recommended 70% upper limit. More than twice as much as 67% they reported in 2015.

Gross debt increased by £19m from £97m to £116m, almost entirely owed to the club’s parent company Birmingham Sports Holdings Limited. This means that the club’s debt has grown by a worrying £100m in the last 4 years.   Unsurprisingly, the £116m debt is one of the largest in the Championship, only behind Blackburn Rovers £142m and Stoke City £141m. The debt is not an issue – so long as the owners continue to provide support. It is unsecured and interest-free, though repayable on demand.