BCFC: Selling St Andrew’s

Derby County escaped sanction under the EFL Profit and Sustainability Rules by selling their stadium to another company owned by their owner Mel Morris. The sale and subsequent long term lease back ensured that the Rams made a profit last season and did not fall foul of the rules in the same way Blues did. Should Blues do the same thing with St Andrew’s?

St Andrew's taken 26 December 2018

The sale of Pride Park by Derby County has caused a lot of discussion in football, with Middlesbrough Chairman Steve Gibson calling for an investigation into the conduct of Derby County in the wake of the news.

However, as controversial as that sale appears to have been, it’s my understanding that various clubs are looking into similar moves to ensure that they do not fall foul of the rules for this season.

Are Blues thinking of selling St Andrew’s?

At the recent Supporters Forum held at the ground, Blues Trust asked the question if St Andrew’s was to be sold in the next twelve months.

The response from the club offered no official answer:

The Club is always looking at ways of increasing revenue streams as part of our ongoing strategy but financial and commercial sensitivities dictate that this has to remain private.

St Andrew’s was previously listed as an Asset of Community Value under the Localism Act 2011 in August 2014 and it’s my understanding that the Blues Trust are currently in the process of re-applying for this status.

As an Asset of Community Value, various restrictions apply, to wit:

No transfer or lease of the registered title … is to be registered without a certificate signed by a conveyancer that the transfer or lease did not contravene section 95(1) of the Localism Act 2011.

What that means in English is that with the ACV status in place, Birmingham City PLC cannot sell the ground without first notifying the Trust.

How would it affect Blues’ financial situation?

Before I go any further, please remember I’m not an accountant and that I’m working from a very base understanding of how a complex transaction like this could work.

According to a Land Registry search I made on Monday 6 May, the ground is owned by Birmingham City PLC and there are no liens currently registered against the property.

The last Birmingham City PLC accounts give a book value of £7.29million for the ground.

However, the sale of the ground has to be at market value which would be calculated by an independent valuer.

This is how Derby County made a profit; their ground was sold at a market value of £81million which was far above the value of the ground in the transaction, allowing them to book a profit on the transaction.

Therefore the higher the value of the ground, the more profit the club can bank on the transaction.

The ground would then be leased back to the club – which I’m guessing would also have to be done at a market value rate for the EFL to approve it.

Is this a good idea?

In the short term I understand why many clubs are looking at the sale and leaseback of their ground as it will ensure that they can comply with rules.

However, it’s a one-off transaction and as such I do not believe it makes long term sense to sell the ground to another entity.

One does to look far to see the issues that can occur when a club and a ground are separated with the controversy that has happened to Coventry City.

My fear is that down the pike an owner would sell the club but not the ground, causing friction and potentially making the club homeless.

The only solution that I can see that makes long term sense would be for the ground to be sold to the only people who will always be at the club – the fans.

Whether Blues fans would come together to raise the money involved to buy St Andrew’s is another question though.

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