The announcement can be viewed in full here.
Please remember before reading any further that I am no accountant and that it’s wise to look at the figures for yourself to get your own interpretation of them.
I have to admit I’m not surprised by the huge loss. The level of money spent by Blues in January – not just on transfer fees but wages too – was always going to significantly increase the amount of money the company lost.
Revenue has not significantly increased – in fact while attendances were on the whole up last year the amount of money from match day revenue has actually dropped, as has commercial income.
Staff costs have risen though. Salaries and wages for the BSH Group now stand at HK$210million (approx. £20million), which is 122% of turnover. What concerns me is that these are the figures for last season; with the spending in the summer wages will have significantly risen further and one has to wonder how sustainable that is.
So what does this mean?
To my untrained eye the accounts are mere confirmation that Birmingham Sports Holdings (and therefore by extension the club) are reliant on money being put into the company by a benevolent owner.
In the short term this means there is nothing to worry about.
As long as whoever is putting money into the club, be it TTA owner Paul Suen Cho-hung or as I believe a new party who will take the club on from Suen, then the club is fine.
However, I don’t like this model of doing business because it means the club is reliant on these people. Should anything happen and that source of income change, then the club is screwed once more.
The fact that wages are 122% of revenue BEFORE the club spent heavily this summer makes me worried how sustainable things are.
Does BSH have any business outside of BCFC?
They are trying to diversify the company somewhat, having opened up talks to reverse into the business a company with a huge residential development in Cambodia.
However, this is taking longer than they thought it would to sort out with the company having to extend once again the deadline to provide information to shareholders.
News that there are demonstrations in Phnom Penh at the site of the development against the company due to workers not being paid doesn’t fill me with confidence either.
The important thing to remember is that these are the accounts for the whole holding company. The club accounts for last season should be with Companies House in the UK in December and should provide a clearer picture.