The statements by the EFL and the Club can be read by clicking the relevant links.
Do Blues have a clean slate for this year?
Yes and No.
The EFL has confirmed that any excesses in the past two seasons will be capped at £13million for the purpose of the P&S calculations this season.
This is good news for the club.
As the calculations are done on a three-year rolling basis, the years 2016/17 and 2017/18 are the first two years of calculation.
Without the capping in place Blues would have to record a profit in excess of £20million to meet the rules for this year – something that is absolutely unachievable.
With the confirmation that previous excesses are capped, Blues have to ensure their loss is no more than £13million for this year.
That might be harder than it seems, however.
The BSH interim accounts published at the end of February show that the club had made a £13million loss in the first six months.
It’s true that accounts are not the same as a P&S calculation; however one would suspect this means that Blues will be reliant on transfer income such as the sale of Che Adams to make sure they hit the target.
The fact that Blues have kept to an EFL business plan will also be a mitigating factor.
Does this mean Blues will get to spend freely this summer?
The fact of the matter is that even if Che is sold, Blues are going to be close to the line.
The continued reduction in wages with players like Tomasz Kuszczak and Cheikh Ndoye completely off the books will help, but Blues need to get into a more sustainable position.
It’s my understanding that Blues are scouting the lower leagues looking for young players who can step up in a similar way to the way Che Adams did after signing for League One.
This is a much more sustainable model and one that I hope Blues do try and make successful.
Are Blues in trouble forever then?
This is an impossible question to answer, simply because things in football change so fast.
Likewise, as we do not have anything like the complete picture of how the P&S calculation is worked out it’s difficult to know what will happen.
Although many clubs used loopholes to get around the rules in the past I think it’s telling that some clubs are now pushing to raise the limits.
This would indicate that these loopholes can only be used once and that if the rules hold, eventually everyone is going to have cut costs.
The only other thing I would note is that unlike many clubs, Blues’ parent is a listed company whose many operation is the football club.
This means that there is more than just the EFL paying attention to the accounts and potentially, more than just the EFL who are concerned by the consistent continual losses made by the club and the holding company.