BCFC: Don’t Panic About Future Funding

With any chance of a takeover happening still incredibly uncertain right now, there has been some fear among Blues fans that this will be the season Blues go under financially. The more dramatic fans on social media have seized on the idea that the owners will not fund the club if it is not sold with all the attendant crises that would cause.

St Andrew's taken 26 December 2018

The levels of hyperbole on social media have been exceptional recently, and while I am comforted by the fact that it is in all likelihood a minority of fans sounding off I think it is important to rationalise the fears out there and shoot down the worst of the fear mongering I have seen.

While it’s true Blues are not in an optimal situation right now, it’s also not quite as bad as some are making out.

Do Blues have to prove that they can be funded throughout next season if a takeover doesn’t go through?

While the answer to this question is yes, the good news is that Blues have already done so.

According to EFL rule 16.16, the deadline for Birmingham City showing sufficient funding for the upcoming season has long past.

16.16 By 31 March in each Season, each Club shall submit to The League in respect of itself (or if the Club considers it appropriate or The League so requests in respect of the Group of which it is a member) future financial information (‘Future Financial Information) comprising:

16.16.1 In respect of any Championship Club, projected profit and loss accounts, cash flow, balance sheets and relevant explanatory notes commencing from its accounting reference date or, if it has submitted interim accounts pursuant to Regulation 16.11, from the date to which those interim accounts were prepared and expiring on the next accounting reference date after the end of the following Season. The projected profit and loss accounts, cash flow and balance sheets shall be prepared at a maximum of quarterly intervals;

As one would imagine there is a penalty for not fulfilling these requirements. In this case, if Blues hadn’t submitted the required information, they would have been placed under a transfer embargo.

As at the time of writing the only club in the Championship under any kind of embargo is Reading, we can only infer that Blues have supplied the necessary information.

As this was provided long before a takeover became anything like a possibility, that information Blues would have provided to the EFL would have shown future funding with Birmingham Sports Holdings and Oriental Rainbow Investments as owners of the club.

In short, the EFL are happy that Blues have enough money to get through next season.

It’s not just the EFL that Blues have to satisfy either.

As part of the accounting documentation that Blues have to file at Companies House, the directors of Birmingham City have to confirm that the club will receive sufficient funding to ensure it remains as a going concern.

The auditors confirmed in the last set of accounts that funding of around £40m is required to January 2023 for the club to remain a going concern.

The directors report on page 17 goes on to confirm that those funds are available from the parent companies of the club and there is nothing to worry about.

The money is there, is the will?

It’s not hard to understand why Blues fans might be sceptical of paperwork filed with the EFL or with Companies House.

After all, paperwork has been filed with the EFL about the club ownership which doesn’t have the name of Wang Yaohui (aka the elusive Mr King) as a shareholder.

However, we now know that Wang is beneficial owner of at least one company with a shareholding in BSH.

If the truth about Wang Yaohui’s control can be withheld from the authorities for so long, then there is an argument that we as fans have to treat anything else submitted by the club as potentially false too.

However, logic dictates that BSH cannot allow Birmingham City to fall into administration or similar.

Although BSH only owns 75% of Birmingham City since Vong Pech’s Oriental Rainbow Investments bought a stake back in 2020, the fact remains that the club is the primary source of revenue for BSH.

This means that BSH are currently dependent on the club continuing to function to allow BSH to remain listed on the main board of the Hong Kong Stock Exchange. We know that the listed status has an intangible value of £40m or so; making it worth more than the club right now.

That means that BSH cannot allow anything to happen to the company’s listed status if it can help it; and that means BSH must keep the club solvent and out of administration.

The outcome of that is BSH must continue to fund the club somehow even if money is tight, because failure to do so is catastrophic to them.

There is a rub however.

While BSH do need to put money in to keep the club functioning, the amount of money they need to put in might only be the bare minimum, far below the funding fans would like to see.

If money is tight for BSH right now, they will only put into the club what they have to. That means kicking the can filled with all the problems the club has down the road for someone else to fix.

It’s for this reason the club finds itself in the limbo-like state it is in right now.

BSH can’t or won’t put any more money in than it has to keep it going; and as it stands will only entertain deals like the incredibly seller-friendly one on the table right now which will protect the listing and properly mug off anyone stupid enough to take them up on it.

That means this season is going to be shit, doesn’t it?

As it stands, the prognosis for Blues does not look good and it could be a very tough Championship season ahead for the club.

However, before people break out the Valium and the razor blades, that doesn’t mean it has to be shit.

From a personal perspective, I look at the season Derby County had last year.

Despite having 21 points deducted, having anyone who could be sold pushed out the door and having to rely on a razor thin squad all season, Derby made a good fist of it.

There’s a lot to be said for a backs-to-the-wall siege mentality, and I think Derby Head Coach Wayne Rooney came out with an incredible amount of credit for how close he was to keeping Derby in the Championship against all odds.

I think Blues need to adopt a similar mentality myself.

Rather than complaining about lack of backing and basically daring the club to sack him, I think Lee Bowyer should instead look to what he can achieve with what he has and what kudos he can attain.

Likewise, I think the team should come together to prove that they are still willing to play their hardest to beat the odds. Young players should seize the potential chances they are given to make their mark and become saleable assets themselves.

As fans, we need to do our bit to be more positive too.

This doesn’t mean we should just forget all the stuff that got us into this mess and not hold the people accountable that should be held accountable.

However, I think that some fans could do with putting aside their negativity and looking for what could be positive this season.

For me, I’m expecting absolutely nothing this year so anything Blues do achieve I’m going to celebrate as a positive.

It might be that the club can’t buy players this year because of a lack of transfer / wage funds being available, but I’m excited to see what young players will break into the first team from the Academy set up and the energy those players will bring.

Last year Jordan James came from nowhere to cement his place in the first team. I’m looking forward to seeing who will make the step up this year.

If we’re honest, the truth is nothing has really changed at the club in the last few months to make us so much more negative.

I think that raised expectations of a takeover back in May and a lack of football action has concentrated people’s minds on the negative aspects of what is going on, and I’m hopeful that as the football returns people won’t spend all day looking for reasons to be upset.

While it is good people understand the fundamental problems Blues have, I think it’s also important to realise that it could be much worse at Birmingham City.

I wouldn’t trade places with a Derby fan right now and I suspect there might be other clubs who will find things hard financially this year.

As the old song goes, “Que sera, sera”. The only thing we can offer right now is patience and support, so let’s do that and see what the future brings us.