Before reading further, please understand that I am not a qualified accountant and that this piece has been written based on my understanding of the figures listed. The accounts can be viewed for free at the Companies House website here.
The headline figures are as follows:
The loss made by the club has jumped considerably since the year ending 2016.
This is in the main due to the investment made in players in January. It’s worth noting that these figures are up until June 30, 2017 and therefore do not include any summer transfer spending.
Wages now stand at 128.69% of turnover, an increase from 104% which was the figure from last year.
Again, it’s worth noting two things – firstly, that without a significant rise in turnover this year that figure is going to be even worse this season; and secondly, if the unthinkable happens and Birmingham City are relegated then they will have to rapidly offload players as the maximum allowed in League One is 65% and this is strictly enforced.
Revenue has gone up by a fair amount – which is good news. The biggest rise was TV income, which increased by £1.8million; although commercial (circa £560K rise) and matchday receipts (circa £190K rise) also contributed. Matchday attendances also increased from an average of 17,571 to 18,650 despite the horrific second half of the season.
What does this mean?
The auditors obviously have concerns about how the club can operate as a going concern – although this isn’t unusual at this level of football and with the “benefactor” model of owning a football club.
The strategic report lays it out in black and white, however.
According to the accounts, the club has already been lent £33.4mil by BSHL – although this debt isn’t due within the next 12 months. Detailed cashflow forecasts have been made that show the club requires an injection of around £49.5million for the period until December 2018.
Is this good news or bad news?
The interpretation of how these accounts appear has to be down to the reader. The figures are there and while I can report them I can’t tell people what to think.
As far as I can see, it’s a matter of trust.
On the one hand, if the trust is there that the money will keep coming long enough for the club to stop making a loss and become self-sufficient, then there is absolutely nothing to worry about.
However, I must confess that I do not share that level of trust. This is because I’m a natural sceptic and I don’t believe in the benefactor model of football club ownership rather than anything specific against the current board.
Unfortunately, the way that football currently works it is very hard to not spend outside of a football club’s means to try to progress. As such the corollary of that is that I believe it’s imperative for a football club to bring in external revenue streams to try to offset that – and the increase in commercial revenue shows that the club is trying to do that. I think the time is coming where it’s ever more important to be able to bring in further revenue streams to enable the football operation to work with the level of ambition that fans demand.