The Political Economy of Football V2

Birmingham City are very positive about their financial results for 2024/25 despite making an operating loss of £39 million which they somehow fail to mention:  https://www.bcfc.com/pages/en/media-article/birmingham-city-football-club-posts-strong-financial-statement-for-24-25 The club is undoubtedly making real long-term progress under its new ownership, although performance on the pitch has been a little underwhelming. The operating loss represents a significant increase of approximately 115%, as compared to the loss of approximately £16.1m for the corresponding period last year. This compares to Wrexham’s operating loss of £14.84m over the same period but is far less than Leeds United’s £49.1m when they were a Championship club last season. Cardiff City, who were also in the second tier in 2024/25, lost £35.1m over the same period. Much of Blues’ situation can be explained by wages of £38.9m, which are up 9 per cent on the previous year from £35.8m. What cannot be ignored,...

The steep bowl design lof Birmingham City’s new stadium features 12 chimney-form towers, designed to echo the brickworks that once sat on the site and point towards how the hard-working people of Birmingham changed the world during the Industrial Revolution. The chimneys — undoubtedly the biggest talking point — will provide structural support for the roof while accommodating lifts and staircases and helping with ventilation. One tower will even include a lift to what is claimed will be Birmingham’s highest bar, offering city-wide views. Once completed, they will be viewed from 40 miles away. Early reaction to the £1.2billion ($1.57bn) project from locals has been largely positive, but considerably more mixed across the country. Long-serving supporters of football clubs are sensitive to changes around history and tradition, with a stadium move the most delicate issue, yet the initial signs are that many Birmingham fans are on board. The design includes seating as close to pitch...

Everyone is piling into football clubs, even small and obscure ones.  However, they are high risk investments.   Lex in the Financial Times makes an interesting comparison with small cap investments in general. Small football clubs used to be seen as money pits for local business owners, but now everyone from hedge funds to tech billionaires wants a piece.   With top teams out of reach for all but the richest, Deloitte has described the English Football League — the 72 clubs in three divisions below the Premier League — as a “more accessible asset class”.  As the second-tier Championship kicks off this weekend, these potential diamonds in the rough will get to prove their worth. Investors, though, ought to think about them like another market full of deceptive “bargains” — small-cap stocks. The appeal is similar: big names might be safer, but find a future winner among the also-rans and the potential gains are enormous. Manchester United’s revenue grew 2 per...

Under the American franchise system, politicians are eager to attract sports stadiums to their cities.  They offer tax breaks, transport links and even help with construction costs.   American investors in UK football are familiar with the idea of persuading politicians that their stadium plans can bring public benefits.   Politicians are often susceptible to 'grand projects' and sport can be glamorous and associated with concepts such as inclusion, well-being and fitness. There is a large literature on the economic benefits or otherwise of stadium construction.   It is well summarised by Victor Matheson in a 2019 article: 'The case in favor of subsidizing large sports facilities is much harder to make than the one against. The peer-reviewed literature typically finds little or no evidence that the construction of new professional sports facilities results in significant increases in any type of measurable economic activity including personal income, ...

The huge outlay in the transfer market last summer ny Birmingham City was quite striking, as they really did splash the cash following relegation, as they tried to boost their chances of an immediate return to the Championship.  The accounts noted that Birmingham had £21m net spend in 2024/25, which was a pretty clear statement of intent from the owners. To further illustrate their lofty ambitions for the club, their £25m gross spend was more than all the other clubs in League One put together (according to Transfermarkt ). The catalyst for the club’s improved outlook is the change in ownership in July 2023, when Tom Wagner’s Knighthead Capital Management took over from the deeply unpopular Birmingham Sports Holdings Ltd (BSHL). This was greeted with delight (and some relief) by Blues fans, who had suffered many trials and tribulations ever since Carson Yeung took full control of the club in 2009. After being arrested on charges of money laundering, the Hong Kong businessman ...

The Championship has the most stretched finances of any UK football league and in effect functions as a Premier League Division 2, reinforced by the distorting effects of parachute payments.   What follows is an edited and slightly enhanced version of forensic analysis by the Swiss Ramble. The 24 clubs generated just under £1 bln of revenue (£956m to be precise) and £22m other operating income, but then paid out £1.7 bln in operating expenses, split between £892m wages, £260m player amortisation and £505m other expenses. This led to a sizeable £678m operating loss, exacerbated by £73m net interest payable, which was only partially offset by £420m profit from player sales and £17m exceptional items. As a result, the division as a whole lost £314m. Revenue shot up £207m (28%) from £749m to £956m, while profit from player sales more than doubled from £183m to £420m. However, this was offset by a steep increase in operating expenses, which were a third higher, rising £417m; ...

Birmingham City — the club owned by the American investment firm Knighthead that counts Tom Brady among its minority shareholders — sealed promotion from England’s third tier into the Championship, one rung below the Premier League, thanks to a 2-1 away win against Peterborough United. Anything other than automatic promotion would have pointed to deeper problems at Birmingham, given the £25million-plus ($32m) investment on signing players who many observers believe would have formed a competitive squad a division above in the Championship. The involvement of NFL great Brady also ensured that Birmingham received a level of publicity in the third tier that only Wrexham, owned by Hollywood duo Ryan Reynolds and Rob McElhenney, can match. The former NFL quarterback has no day-to-day involvement in the club and holds only a 3.3 per cent stake with no voting rights. He is the chairman of an advisory board, working with Birmingham’s directors and leader...

A three-way fight for promotion between a New York hedge fund, a Kazakh billionaire and two Hollywood actors has fuelled a record transfer splurge in English football’s third tier, as wealthy team owners look to get ahead of tighter financial rules taking effect this summer. The 24 clubs in League One have spent almost €56mn this season — more than the total for the past eight seasons combined — according to figures from data website Transfermarkt. Table-topping Birmingham City, owned since 2023 by US hedge fund Knighthead Capital, has spent more than €35mn, equivalent to about 63 per cent of the league’s total spend. Birmingham City smashed the League One transfer record last summer to sign striker Jay Stansfield from Fulham for €17.8mn. The club is also responsible for the next two most expensive signings in the division: Christoph Klarer at €4.15mn and Willum Thór Willumsson for €4mn. Huddersfield Town, owned by US businessman Kevin Nagle, spent more than €3mn on forward Joe Tay...

The US owner of Birmingham City football club has said the UK can unlock a wave of inbound investment “incredibly quickly” if the government makes tangible progress on its pledge to speed up planning approvals. Tom Wagner, co-founder of Knighthead Capital, told the Financial Times that Britain’s record of under-investment and slow growth could be turned around if Labour made good on its vow to remove obstacles to development.   “There are lots of projects that we are looking at in the UK that we’d love to pursue if the process can be made easier,” he said. “And we’re not the only ones. If things change by just a small amount, there’ll be a lot of capital inflow and a lot of excess growth.” Knighthead has acquired more than 60 acres of land around Birmingham City’s stadium since taking control of the League One team in 2023. The New York-based hedge fund plans to build a new 60,000-seat venue as part of a large £3bn regeneration project involving housing, retail and entertainme...

Wrexham and Birmingham drew 1-1 yesterday.  It wasn’t always a glamour tie (and some Blues fans don’t like being linked with Wrexham by some rival fans as a plastic club). The Hollywood derby, a phrase coined ahead of the first meeting at St Andrew’s in September, sees one club owned by two high-profile actors face another whose board boasts an all-time NFL great. This is part of a wider trend that saw 2025 kick off with no less than 23 of the 72 EFL clubs in North American hands, almost a third. As if to underline this increasing globalisation of a competition now into its 137th year, Thursday’s match was broadcast live on both sides of the Atlantic as part of CBS’ new four-year deal to show games in the Championship, League One and League Two. Cosm’s immersive entertainment centres in Los Angeles and Dallas will also be screening Wrexham vs Birmingham live. Quite the contrast from that last meeting in 1994, when only 6,002 were in attendance as the two tea...

Hong Kong prosecutors have told former Birmingham City Football Club owner Carson Yeung Ka-sing to sort out his finances in a month or face jail time after he missed a payment over his HK$338 million (US$43.4 million) debt resulting from his conviction in a money-laundering case 10 years ago. Yeung, 64, appeared in the High Court on Tuesday, six years after he was ordered to pay half of the HK$721 million linked to the high-profile money-laundering case. He was first convicted in 2014 and jailed for six years.

Taking the raw figures directly from Transfermarkt, we can see that reports of the demise of the Premier League, at least in terms of transfers, are a little over-stated, as the €2.4 bln outlay is the second highest in history for the summer window. That said, this was €0.4 bln (15%) less than last season’s €2.8 bln record. Although gross spend held up pretty well, the Premier League’s net spend this summer was its lowest since 2015/16 (though the January window is still to come). Chelsea had the highest gross transfer spend for the third year in a row, i.e. ever since the Clearlake Capital crew bought the club from Roman Abramovich, with a chunky £265m. The second highest spending club was Brighton, who used some of their gains from the last couple of years to fund a £235m outlay, while Manchester United again spent big with £219m. Perhaps unexpectedly, the two lowest gross spends this summer were Manchester City £25m and Liverpool £43m, while the next smallest were clubs faci...

Ed Sheeran is one of the most successful singer-songwriters of his generation. He also happens to be a diehard Ipswich Town fan. So when the Tractor Boys achieved back-to-back promotions to reach the English Premier League for the first time in more than 20 years last weekend, the Shape of You singer got in on the celebrations. Ipswich Town, like Sheeran, is a perhaps surprising success story. Despite being newly-promoted from the third division, the team finished second in the Championship, ahead of Leeds United and Southampton, both of whom were playing in the Premier League last year. Ipswich has spent just £8.6mn on new players in the past three seasons combined, Southampton forked out £204mn (albeit while still making a profit from player trading). The current Ipswich squad has a value of around £43mn, according to estimates from Transfermarkt, compared to more than £177mn at Leeds United. Based purely on money, Ipswich have massively overperformed. At the other end of t...

At Birmingham City hopes had been high when ownership of the club effectively passed to Thomas Wagner’s Knighthead Capital Management in July 2023. This change was greeted with delight (and some relief) by Blues fans after the trials and tribulations experienced 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. Last summer’s transaction was made with Knighthead’s UK affiliate, the wonderfully named Shelby Companies Ltd (SCL), with a reference to the family in the excellent Peaky Blinders, which is of course set in Birmingham. The club’s majority owners, including Birmingham Sports Holdings Ltd (BSHL) and Oriental Rainbow Investments Ltd (ORIL), approved the sale of 45.98% of Birmingham City Ltd and 100% of the St. Andrews stadium. Although this agreement does not give SCL a majority shareholding, with BSHL retaining 51.72%, th...

Birmingham City’s plans to build a new multi=purpose stadium have taken a step forward after owners Knighthead completed the purchase of land in the east of the city. Knighthead has bought a 48-acre site in Bordesley Park from cash strapped Birmingham City Council and confirmed plans to build a new “world-class” stadium and training ground. The “Sports Quarter” will be home to facilities for the men’s, women’s and academy sides and aims to be a “globally recognisable sporting and entertainment location”. The land is a former motor racing park and is located less than one mile away from St Andrew’s, which has been Birmingham’s home ground since 1906.    You can see it from the railway into Birmingham New Street which runs alongside. The site had previously been the subject for a proposed 55,000-seater stadium for the football club and Warwickshire County Cricket Club as part of the Birmingham Sports Village, but this fell through in 2006. Birmingham’s training ground ha...

Birmingham City have submitted their 2022/23 accounts, reports Kieran Maguire.  Revenue was £19.7m up 9%. Wages £28.9m up 10%. Wages £147 for every £100 revenue, a high figure but not unusual in the Championship.   Operating loss £26.5m up 3%.  Total losses over years £153m. Player purchases £3m.   Player sales £2.4m. These are the last accounts of the old ownership structure.  More here:  https://www.birminghammail.co.uk/sport/football/football-news/birmingham-city-release-annual-accounts-28929541

Managerial turnover is a baked in feature of modern football.   Owners and fans are impatient for success and a few bad results can mean the sack, never mind the cost.  Very often the replacement doesn't do much better with the same set of players. A new trend is the sacking of relatively successful managers.  'Chopper' Harris saved Gillingham from the driop last season and they were only just outside the play offs when he got the heave ho.  The new owners decided they wanted 'a new dircetion' whatever that means. Now Wayne Rooney is to replace John Eustace at Birmingham City, agreeing a deal with a salary that is three times the amount Eustace was earning. Eustace, 43, impressed during his time at the club against a backdrop of financial uncertainty and ownership change. Birmingham are sixth in the Sky Bet Championship after 11 matches this season. However, a statement said he had been dismissed because the board wanted to implement a winning mentality and “c...

Carson Yeung, the owner when Birmingham City were last in the Premier League, was jailed for money laundering, and points deductions, transfer embargoes, and a long list of broken promises have followed since under different ownership models. Sections of the club’s stadium, St Andrew’s, have also been closed for over two years due to asbestos. The hope is that repair work will be completed before the end of the calendar year and the ground’s full reopening, whenever the exact date of that is, will signal a changing of the times. To get a full picture of just how bad it has been, only last month upon completing the takeover, Tom Wagner — co-chief executive of Shelby Companies, the group which now owns the club — said there was a need to “change everything”. On top of all that, Birmingham hold the tag as the longest-serving club in the Championship: this season will be their 13th consecutive campaign one rung away from the riches and glamour of the Premier League.   At least th...

NFL legend Tom Brady has become a minority owner of English second division football club Birmingham City. Brady, 46, has entered into a partnership with U.S.-based Knighthead Capital Management LLC —which completed its takeover of Birmingham in July — meaning the seven-time Super Bowl winner takes part-ownership of the team and becomes chair of the advisory board. He will work with the board “on global marketing efforts and the identification of new commercial partnership opportunities”. Brady is not the first former NFL star to invest in English football. Former defensive end JJ Watt become a minority investor in Burnley, who have just been promoted to the Premier League from the Championship. Brady’s investment in Birmingham continues his relationship with Knighthead. Last year, Brady joined Knighthead’s ownership group of a Major League Pickleball team and in March, Brady’s eponymous clothing company became a partner of its World Endurance Championship racing team,...

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 w...