Editorial: FFP and Pedersen

Yesterday, I broke news about issues within Birmingham that have caused the club to be subject to a transfer embargo by the EFL, along with the decision of the league not to register Kristian Pedersen as a player. There was a lot of attention to that post and a lot of questions, and with that in mind I have put together this article to explain as best as I can what is happening.

Finances and BCFC

What does it mean Pedersen is not registered? He’s in Austria, training with the squad.

When a player moves between clubs, the new club have to register that player to be able to play him.

It’s the final step in the move and the most crucial, because without that registration the player cannot play for the club.

As you can imagine, I’m not privy to all the details with respect to Pedersen’s move, but my understanding is that he is in limbo in the same way as Adrien Silva was when he moved to Leicester last summer.

That means Pedersen will remain with the club, but until the registration problem is sorted he cannot play.

This has knock-on effects.

Again, I’m working on assumptions here but with Pedersen not fully registered there may be an insurance problem, which would see him not involved in any contact training such as practice matches.

Why is he not registered?

This is a key question, and it comes down to how the league enforce FFP.

If you think about it, the only power the league has over a player or a club is to not allow them to play in their competitions.

Therefore, if a player signing is against FFP rules, the only thing the league can do is to say no to allowing his registration.

My understanding is that Blues were first under a “soft embargo”.

This was basically a period of time, probably from the end of the season, which the league set aside to go through issues and make sure the club was compliant with FFP rules.

During this time I’d imagine there would have been no strict embargo, but the league would have kept an eye on things.

However, these issues were not resolved, and Blues remained in breach of FFP regulations.

Again, I’m working on assumptions here and what I’ve been told but my understanding is that the naming rights deal for St Andrew’s and Wast Hills has not been fully ratified, with the league querying the amount paid by TTA for the sponsorship under the “fair market value” rules.

Now it might be that once these are sorted things will go back to normal.

It might take extra money coming in via a potential sell on fee from a sale of Jack Butland or Demarai Gray, but the longer it takes the more money is going to be required.

Why will more money be required if it takes longer?

Accounts are like a snapshot in time – they tell us the financial state of play at a set time and date.

However, time doesn’t stand still, and businesses keep bringing in money and spending money.

This means whatever the FFP result was at the end of the season, the figure will be different now – and as Blues have been running at a loss, then the logical assumption is more money will be required to right the ship.

This means that Blues will have two options – either a) bring in more money or b) reduce outgoings.

The obvious way to do that is to get rid of a high earning player, but as we’ve seen with David Stockdale it’s not that easy.

With many other clubs also meant to be in similar positions, it might be that other clubs in the division are also uneasy about taking on huge wages.

Okay, but Alan Nixon tweeted that Blues are still offering cash for players?

That is more than likely true.

In the time that Blues have been under embargo, they have bid for both Lewis Grabban and Bartosz Bialkowski.

The EFL cannot stop Blues from bidding for players or negotiating for players – all they can do is to stop them being registered.

If Blues are under the impression that this can be fixed quickly, then it makes sense to keep an eye out on what’s available and to try and do a deal which can be ratified once the embargo is lifted.

Until the embargo is lifted however, Blues are severely restricted in who they can sign.

Again, I don’t know exact figures but my understanding is Blues would be limited to freebies on low wages.

How it fully works depends on the stipulations the EFL have put in place, but it’s not as simple as no one in, no one out.

Why has this happened?

This for me is the crux of the matter, and the most crucial question.

Again, I can only speculate based on what I’ve been told by various people, but it would appear that whoever is dealing with transfers at Blues has taken a cavalier approach to the rules and decided that they either can get around them or ignore them.

The word from club insiders is that club CEO Ren Xuandong has taken pretty much sole responsibility for getting transfers done, so this would be on him.

Ren acts with the full backing of the Birmingham Sports Holding board, who have told the day to day staff like Finance Director Roger Lloyd, Club Secretary Julia Shelton and Chief Coordinating Officer Jo Allsopp that they have to accept what Ren says.

My hope is that rather than questioning the staff beneath him, Ren accepts that there is a lot of football experience there and that maybe they’re trying to help him – and that maybe Blues can move forwards and put this all behind them.

Can we expect a statement from the club or the EFL?

The EFL definitely will not make a statement. They’ve told journalists that they do not comment on individual club embargoes as they can change quickly and thus comments can rapidly go out of date.

I don’t expect the club will say anything either right now. As they have issued no denial, it makes no sense to say anything, and to try and right things as quickly as possible.

So why publish your piece?

I can understand why people are mad at me for posting  a piece about this yesterday, and I can certainly understand why people choose not to believe what I have written.

It’s not a story I wanted to write, and it’s something I’d like to see resolved quickly.

However, just as under previous regimes I think it’s important to call out when people are acting either incompetently or against the best interests of the club.

My personal opinion is that Ren Xuandong meets those criteria.

As of 8am this morning CEST I have received no comment from the club – I would like to personally invite Ren to make a comment which I will publish unedited and without my own comment as a right to reply.

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