BCFC: Trust the Process?

For the first time in nearly two years, Birmingham City came from a losing position to win a game. A 90th minute equaliser from Lukas Jutkiewicz and an injury time winner from Auston Trusty ensured won 4-3 at Swansea, snapping a five-match losing streak. Off the pitch however, the shenanigans of the last few years don’t seem to be ending any time soon.

St Andrew's taken 26 December 2018

It’s only taken a week, but already there have been reports that the Often Partisan Limited takeover has found issues with their proposed plan to buy the club.

Neil Moxley reported on the Mirror website that issues surrounding the structure of the deal was causing issues for the would-be investors, while a piece by James Nursey for the Mirror newspaper talked about the possible involvement of Paul Richardson in the OPL consortium.

Predictably, this news hit social media like a sack of shit, with the shrillest posters already declaiming that the OPL bid is over.

As much as I appreciate that the whole takeover saga has become a yawnfest for some, I thought it might be worth trying to dissect what those pieces are about, if only to offer some constructive thought about the whole takeover process.

The Trust Issue

On Saturday, Neil Moxley reported that the OPL deal was stalling despite several meetings with the club’s owners. That article can be viewed online here.

I think the first thing to make clear here is that this article is in the present tense and despite what some might say on social media, it doesn’t mean that the OPL deal is dead.

It’s not even news really that there are issues for this bid.

As I talked about in my “Q&A” style article on the bid on January 28, it’s obvious that there are issues that need to be overcome for this deal to be completed.

One of those issues is what I would call as a “trust issue” during the period between the first part of the club is bought and the deal is finally completed.

To understand this, we need to understand the ownership of the club as it is now, and how it would change with this deal (per my understanding).

As of right now, there are two main shareholders in Blues.

Original Shareholding in the club

75% of the club is owned by Birmingham Sports Holdings (BSH)
21.64% of the club is owned by Oriental Rainbow Investments (ORI)

The rest is owned by minority shareholders, who are mainly people who didn’t sell their shares in Blues when Carson bought the club. For the purposes of this explanation, we’ll leave these out of it.

The first part of the deal would see OPL buy the 21.64% owned by ORI (as well as the whole stadium company). OPL would also receive total management control of the club.

At that point, the club ownership would be:

After Part 1 of the OPL deal

75% owned by BSH
21.64% owned by OPL

The second part of the deal (which I’d guess would take place in about six months or so), would see 25% of the bit owned by BSHL move to OPL’s control.

At that point, the club ownership would be:

After Part 2 of the deal

50% owned by BSH
46.64% owned by OPL.

The final part of the deal, which would be in about 2 years or so, would see the rest of the BSHL stake being sold to OPL.

At that point, the club ownership would be:

Deal done

0% owned by BSH
96.64% owned by OPL.

To make this work, OPL’s lawyers will need to draft up legal contracts that ensure that a) OPL has management control from the start, and b) that the second and third parts of the deal go ahead as planned.

Now, if you have a good enough lawyer, one would think a good contract would be enough to do this. However, the problem arises if one party decides to unilaterally breach the conditions of the contract and bollocks to the consequences.

The trust issue that OPL have is that their investors want protection for their money should this unilateral breach happen.

If BSH agree to those provisions, then all should be good; the problem arises if they don’t as the bid will reach an impasse and potentially fail.

I have to be honest, I do not know will happen. There are too many variables to consider and too much information that I just don’t know.

My fear is that this staged deal is always doomed to failure, because I have no trust in BSH to stick to the terms of the deal.

However, my hope is in my ignorance. I’m not a lawyer, I’m not an accountant and I’m sure if sufficiently good ones are involved there is a possibility of a solution that suits all parties.

The Return of Richardson

The other article published on Saturday was written by James Nursey; I’ve only seen a printed version of this article but if there is an online one I will link it. This tweet by Nursey is the best I can currently offer.

This article is much shorter and talks about Paul Richardson looking to get involved with OPL as part of their consortium.

If I’m honest, this is something I expected to see come out fairly soon after news of the OPL bid broke.

From what I’ve seen and heard I think it’s fairly obvious that despite the collapse of the Maxco offer for the club, Richardson very much wants to still be involved with a takeover bid.

I can’t comment on the veracity of the story but I could understand why Jeremy Dale and Keith Pelley would potentially accept the offer of help from Richardson.

For example, Richardson already will have a good idea of what due diligence OPL will need to do having conducted his own during the Maxco bid. If there are any particular areas to concentrate on, Richardson should be able to flag them up immediately.

From a monetary viewpoint, having Richardson involved may help resolve something that may potentially flare up into a major issue. While negotiating to purchase the club, Maxco put in around £7.5m to help fund the club and to pay for the initial works on the stadium.

The question now obviously is if Maxco are going to get that money back, and to what extent they’re going to go to attempt to recover it.

On the flip side, if Richardson is to get involved then one would have to hope he’s learned his lessons about being overtly public about his intentions.

Not only were the Instagram posts with new signings for the club a tad cringeworthy, but they also ensured that Maxco are now the focus of investigations by the EFL into how much control they were exerting over the club during their negotiations.

I’ve always maintained that we as fans have to remain circumspect about any takeover attempt, because of how complex they are.

The Moxley story only goes to confirm that the potential issues around the deal are very real and require much effort from legal and accountancy professionals to overcome.

That being said, I think there is a need for calm when news like this comes out. I’ve seen too many people mad because they think the deal is off when that isn’t necessarily the case.

Auston Trusty showed us on Saturday afternoon that sometimes despite things looking horrific, the club can come out victorious in the end.

All we can do is hope that the takeover will be the same. Trust the process, as they say.