BSH: Loss Warning

Birmingham Sports Holdings today confirmed in an announcement to the Stock Exchange of Hong Kong a warning of a substantial increase in loss in the interim accounts which are due to be published at the end of February.

Hong Kong Stock Exchange

The announcement can be viewed here.

It confirmed that

The increase in loss was mainly due to the increase in operating costs which largely attributed to the higher spending on players’ registration and staff costs as a result of the change of the club manager and signing in of a number of new players during the season with an aim to strengthen the competitiveness of the football club.

What does this mean for Birmingham City?

Well, it’s not good news.

There are a couple of things to take into account – firstly that the BSH accounts aren’t quite the same as BCFC accounts and as such it doesn’t mean BCFC have made a horrendous loss too – but it’s likely that the numbers will be similar.

It’s also worth taking into account that the BSH accounts are not the same as a “FFP result”. The numbers that make up where Blues stand with regards to Financial Fair Play take some things out of the equation, so it’s difficult to understand totally how close to the line the club is.

That being said, these numbers do show why FFP will be a continuing problem for the club.

If one considers that BSH made a £5.8million loss in the corresponding six months from July 1 to Dec 31 2016, and that they made a £16.7million loss in the 12 months from July 1 2016 to June 30 2017, then a “substantial increase in loss” is going to be pretty bad.

There are no guidelines for what a “substantial increase in loss” means in percentage terms, but from reading guidelines online, it should be an amount that would cause a severe change in the share price for the company – which is pretty concerning.

Does this mean we’re broke and done for?

As I said, it’s not good news – but I don’t think it means that the club is going out of business.

The reason Blues didn’t spend money in January wasn’t because the money wasn’t there – it was because they’re in enough trouble with regards to FFP as it is.

With the FFP rules being tightened up and new penalties such as points deduction coming into the equation, BCFC now need to cut their cloth accordingly having gambled heavily in the summer.

This means that the “axis of incompetence” – ie Ren Xuandong, Darren Dein and the rest of the “inner circle” need to be more realistic in how they conduct business in future transfer windows.

In the summer they gambled heavily, and it looks clear that gamble has been lost so now they and the club need to be more cautious going forward.

I don’t think the gamble was one that saw us completely wipe ourselves out, and it could be a good thing that we’ve gone through this now rather than continued on regardless, sleepwalking into a nightmare – potentially like another club not so far away from us should they not be promoted.

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