If you would like to read the accounts for yourself, you can find the Birmingham City Football Club plc accounts here and the Birmingham City plc accounts here. These accounts are for the year ending June 30, 2020.
As always, please bear in mind I’m not an accountant and that while I have sought the advice of people better qualified, I’m still only a lay person. For the purpose of this article I have only looked at the Birmingham City Football Club plc accounts.
Despite the impact of COVID-19 on the world since the start of last year, the good news is that the figures for last season were not impacted as significantly as one would think.
While turnover was marginally down and wage costs were static, the sale of Che Adams helped ensure that the loss before taxation was £18.335M. This was more than double the loss from the previous season, but the actual operating loss for last season was marginally better than 2018/19, coming in at £28.949M
Staff costs stayed largely the same at £32.418M, which gives a staff costs to turnover ratio of 143.92%. This is broadly similar to last season and is similar to many clubs in the Championship (as per this tweet from @SwissRamble).
Debt and Cashflow
While the figure of £110M owing to Birmingham Sports Holdings might seem scary, the truth is it’s not something we didn’t already know.
When BSH sold 21.64% of Birmingham City plc to Oriental Rainbow Investments, that £110M debt was explicitly stated in the stock exchange announcement as 21.64% of it was to be assigned to be repaid to ORI as part of the deal.
Likewise, there is confirmation in the strategic report section of the accounts that BSH will be able to provide cashflow required by the club, due to a HK$300M loan facility from ORI. This is directly taken from the interim BSH accounts issued at the end of February.
There is also confirmation that £38.0M is required in funding from BSHL for the period from July 1, 2020 until March 1, 2022.
This cashflow requirement is complicated by the aforementioned sale of 21.64% of Birmingham City plc to ORI. As Birmingham City plc fully own Birmingham City Football Club plc, there is a requirement for ORI to fund the club proportionately.
Robert Yam, Company Secretary for BSH confirmed to me in an email in December that:
If further capital is required by BCP, the Company [Birmingham Sports Holdings] and the Purchaser [Oriental Rainbow Investments] shall (subject to the applicable laws, rules and regulations (including but not limited to the Listing Rules)) inject such capital or provide such funds in the form of shareholders’ loan or by way of subscription of new shares of BCP in the Agreed Proportion.
What that means is that if £38.0M is required by Birmingham City, then ORI will be required to put in 21.64% of it (around £8.2M).
While staff costs remained largely flat and Directors’ remuneration dropped slightly, there was one section of the accounts which I picked out as being interesting.
The accounts confirmed that “Key management compensation” has risen considerably in the last 12 months from £323,185 to £965,217.
This raises questions to which it is impossible to find the answers from reading the accounts alone and as such it’s really important for people to not jump to conclusions.
The accounts do not specify which employees are counted as “Key management” personnel, nor the number of employees given this designation in each year. Without this information, it’s impossible to know if the rise in this remuneration is due to an increase in “Key management” staff, a rise in individual compensation or a combination of the two.
I reached out to the club to comment further on this, and they advised me that
…the increase is simply down to the fact that the Club has reclassified who is deemed to be ‘Senior Management’.
A higher number of salaries now belong to this category and is the reason for the increased figure when compared to 2019.
As previously stated, these accounts didn’t really tell us anything that we didn’t already know due to what has been published in accounts and stock exchange announcements by Birmingham Sports Holdings.
However, I think we can hope their publication should help ensure that the club does not suffer any further sanction from the EFL.
There should also be some hope that although COVID-19 has ravaged football in the last year, that contingencies have been put in place by both the club and Birmingham Sports Holdings to get the club through these difficult times.