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”.
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