The authoritative Swiss Ramble reviews Birmingham City’s 2020/21 accounts, when their loss narrowed from £18m to £5m, thanks to Jude Bellingham’s transfer, which led to £27m profit on player sales. Revenue fell 40% to £14m, due to COVID. Gross debt was down £5m to £123m.
The Blues have consistently lost money, only reporting a
profit once in the last nine years – and that was just £1m in 2015. Since then,
the club has accumulated £90m of losses – or £107m if the profit from the stadium
sale in 2019 is excluded.
Excluding player
sales, underlying profitability is poor, as shown by their £30m operating loss
in 2021. This metric has been consistently negative, though in fairness every
club in the Championship posts substantial operating losses with ten of them
above £30m.
Revenue has fallen by £9.6m (41%) in the last two years from
the pre-pandemic level of £23.3m to £13.7m. This is about a third of the £39m
generated in 2012, the first season after relegation from the Premier League,
which included a £15m parachute payment.
Following the decrease, the £13.7m revenue is firmly in the
bottom half of the Championship, only around a quarter of those clubs in
receipt of the largest parachute payments, but also below clubs like NFFC £18m
and Bristol City £17m.
COVID drove reductions in match receipts, down to zero from
£4.7m, and commercial, which more than halved from £9.3m to £4.4m. In contrast,
broadcasting rose £0.5m (5%) to £9.3m, while other operating income increased
£0.3m to £1.8m, including £659k COVID grant.
Although a loss is rarely good news, the £4.8m deficit was
mid-table in the 2020/21 Championship with no fewer than 5 clubs posting losses
above £20m, led by Bristol City £38m and Reading £36m. Two highest profits at
clubs relegated from PL the previous season.
Importance of player
sales
The bottom line was boosted by profit on player sales
increasing from £11.5m to £26.5m, largely from the transfer of Jude Bellingham
to Borussia Dortmund. That was pretty good, but still less than half the three
relegated clubs.
The Blues have become increasingly reliant on player sales
with £38m profit in the last two years (mainly Bellingham in 2021 and Che Adams
to Southampton in 2020). However, this season’s gains will be significantly
lower, as most departures were on a free transfer.
Commercial income
more than halved from £9.3m to £4.4m, as COVID meant the club could not make
money from non-matchday stadium use. It
is unclear whether the figures included any Trillion Trophy naming rights. It was still the 10th highest in the
Championship, but far below Stoke £12m.
After rising 5 years in a row, average attendance (for games
played with fans) dropped 9% from 22,483 to 20,412 in 2019/20, but this was
still in the top ten in the Championship.
Wages
The wage bill fell 5% from £33m to £32m, as playing staff
cut from 99 to 89. This was down from a £39m peak in 2018, but more than twice
as much as £15m five years ago. Chairman Wenqing Zhao spoke of the “necessity
to be responsible with our spending”, so more high earners will leave. Following the decrease, the £32m wage bill
is 11th highest in the Championship, so they have badly under-performed.
The wages to
turnover ratio increased from 145% to 230%, badly impacted by COVID revenue
reductions. In fairness, the vast majority of clubs in the Championship have
unsustainable ratios well above 100% (with six over 200%), but the Blues are
third highest (worst).
Based on figures in the subsidiary, Birmingham City Football
Club PLC, total directors’ remuneration rose by 34% from £561k to £749k, the
4th highest in the Championship, so seemingly not performance-related. Amount
received by highest paid director was up 29% from £284k to £366k.
Debt
Gross debt fell £5m from restated £128m to £123m. Amount
owed to parent Birmingham Sports Holdings Limited down £43m from £116m to £73m,
but £20m transferred to related party Oriental Rainbow Investments Ltd. Also
£14m bank loan, £7m from EFL and £8m finance leases.
This means that club
debt has grown by a worrying £107m in just five years, so is now sixth highest
in the Championship. Most of the debt is not an issue, as long as the owners
continue to provide support, though it is interesting that some was replaced by
external debt in 2020/21.
The owner debt is
interest-free, though repayable on demand, but the club made a £2.3m interest
payment in 2020/21, relating to leases and bank debt. This was actually the
third highest interest payment in the Championship, only below Watford and
Huddersfield Town.
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