Skip to main content

Light at the end of the tunnel for Blues

Earlier this month the announcement that Birmingham City fans had been eagerly awaiting for so long finally arrived, when it was confirmed that ownership of the club had effectively passed to Thomas Wagner’s Knighthead Capital Management.

Birmingham City have had a number of issues ever since Hong Kong businessman Carson Yeung took full control of the club in 2009. After he was arrested on charges of money laundering, Yeung resigned, but the club remained in the hands of Chinese owners.

The recent agreement was secured after couple of potential deals fell through last year. First, an attempt by serial tyre kicker Laurence Bassini in June came to nothing; then a proposed takeover by Maxco Capital collapsed in December.

Blues’ pre-tax loss  in 2021/22 widened from (restated) £5.6m to £25.0m, largely because profit from player sales dropped £23.3m from £26.5m to £3.2m, as the previous season included Jude Bellingham’s big money move to Borussia Dortmund.

Blues’ pre-tax loss widened from (restated) £5.6m to £25.0m, largely because profit from player sales dropped £23.3m from £26.5m to £3.2m, as the previous season included Jude Bellingham’s big money move to Borussia Dortmund.

Blues’ £27m operating loss was firmly in the bottom half of the Championship, though only around half of the deficit of the three promoted clubs, led by Fulham £69m.   Revenue of £18.1m is still £5.2m (22%) lower than the £23.3m generated before the pandemic struck. The largest fall was commercial, down £4.6m (45%) from £10.2m to £5.6m, though match day also dropped £1.0m (19%) from £5.2m to £4.2m.

Blues’ £4.2m match day revenue was one of the lowest in the Championship, only above Reading, Blackburn Rovers, Preston North End, Barnsley and Peterborough United. This was less than half of Nottingham Forest’s £8.7m.

After rising five years in a row, Blues average attendance has fallen more than 6,000 from 22,483 in 2018/19 to 16,152, partly because the lower tiers in the Tilton Road stand and Kop Stand were closed for the whole season, due to health and safety rules.

Due to the lack of investment by the previous owners, major repair works are required to improve facilities at the stadium. Indeed, Thomas Wagner said that “the first step in the transition is to ensure St. Andrew’s is fit for purpose”, so they have provided the funds needed to make significant improvements.

At some stage the new ownership might look at other sites. One idea that has been mooted is to build a new stadium on derelict land formerly used as a go-karting track at Birmingham Wheels, while looking to sell St. Andrews for development.

Blues’ £32m wage bill was actually 7th highest in the Championship in 2021/22, so they have badly under-performed relative to their budget. In fact, they had the third highest wage bill of clubs without parachute payments, only behind Nottingham Forest and Stoke City.  Blues’ wages to turnover ratio decreased from a COVID-impacted 236% to 177%, though this is still one of the club’s highest ever.

Blues’ gross financial debt increased £12m from £123m to £135m. Most of this was owed to the previous owners, adding up to £117m. The amount owed to parent Birmingham Sports Holdings Limited rose £18m from £73m to £91m, while the amount owed to related party Oriental Rainbow Investments Ltd rose £6m from £20m to £26m.   Blues’ £135m debt was the fourth highest in the Championship, only below Bournemouth £184m, Blackburn Rovers £163m and Middlesbrough £148m.

In the last 10 years Blues have required £142m loans (mainly from the owners) plus £19m from player sales to cover the club’s £155m operating losses, £4m interest and £4m capital expenditure.

There is now some light at the end of the tunnel for long-suffering Blues supporters, as it is difficult to imagine that the new ownership could be worse than the Chinese “investors”.

 

 

Comments

Popular posts from this blog

It's no deal say Spurs insiders over Taiwanese takeover

Senior figures at Tottenham Hotspur insisted on Friday that they had not been informed of any deal to sell Daniel Levy’s stake in the club. A business group, Eight Sports Capital — which is said to include a billionaire Taiwanese financier — claimed that it had an agreement in place to buy a 24.99 per cent stake in ENIC, the club’s majority owners, from Levy, who owns 29.88 per cent. The Times has been told Ng Wing Fai and Brooklyn Earick form part of the group, having both been linked previously to potential takeovers of the Premier League club. The Taiwanese businessman, Richard Tsai, is also said to be part of the consortium. He is reportedly worth £7 billion.  Last year Earick, the former DJ and tech entrepreneur, was part of an attempted £4.5 billion takeover, which was “unequivocally rejected” by Spurs.  An ENIC spokesperson said: “We can confirm that neither ENIC nor THFC are aware of any sale by Daniel Levy’s Family Trust of its minority stake in ENIC, THFC’...

Reports about Charlton sale exaggerated

Reports have appeared in The Guardian and elsewhere that Charlton has been put up for sale. Richard Cawley is an authoritative local journalist who runs a South London Sport substack site.  He reached out to the club yesterday evening to ask for comment on The Guardian’s article. Early indications from the club have been that nothing has changed since the story about them seeking investment, except that it is now a different company doing it. Charlton have since managed to consolidate their place in the Championship, avoiding an instant return to League One, with their women’s side promoted to the WSL, returning to the top flight for the first time since 2007, although staying there is likely to be costly. It would be counter-intuitive for owners Global Football Partners not to progress the club when looking for investment, that the focus remains on driving it forward, that their spend this summer is in line with long-term planning and will see an increase in wages spent on players...

Hull City's 'strange' loan

When football finance guru Kieran Maguire seems flashing lights in a club's loan deal, I become concerned.  He is the leading football finance expert in the UK. Hull City have borrowed £55m against their stadium and training ground yet they should get £30m from the Premier League before long.  What is going on? https://www.bbc.co.uk/sport/football/articles/cpwel48y51do