The Takeover: One Approval Down, One To Go

On Monday afternoon it was confirmed by both Blues and by Birmingham Sports Holdings that EFL approval has been given to Shelby Companies Limited prior to their takeover of the club.


For those of you who have not seen either announcement, you can find the club statement here and the HKSE announcement here.

I don’t think I need to say too much to explain how this is good news for us as Blues fans. EFL approval is one of the three approvals which need to be fulfilled for the Shelby Companies Limited deal to go ahead; the other two being HKSE approval and shareholder approval.

Rather than waffle on about stuff in my usual manner, I thought it might be pertinent to ask on social media what questions people still had about the takeover.

The responses I got on Facebook suggested to me that I really need to reiterate some of the main points that fans need to know about this deal, as it’s clear that there are still some misunderstandings in some quarters.

If Shelby Companies Limited will only have 45.64% of Blues once the deal is complete, aren’t they still minority shareholders? How will they have control?

This question is answered neatly by the HKSE announcement made by Birmingham Sports Holdings on Tuesday.

To quote the announcement directly:

…whereby the EFL has confirmed its approval, subject to certain conditions including BCFC operating within a budget submitted to the EFL, of the acquisition of control (as defined in the EFL Regulations) of BCFC by the Buyer.

In essence, the EFL would not allow the deal to go through unless SCL have complete managerial and financial control of the club once it is complete.

While I normally welcome scepticism towards my reporting, this is not one of those things we can be sceptical about.

The announcement made by BSH has a legal bearing as does the conditions set up on the takeover by the EFL.

If they say that SCL MUST have control of the club when the deal is done, then SCL MUST have control, period.

What does the HKSE announcement mean when it mentions Blues operating within an EFL approved budget?

I’ve seen a few people wonder about this as it seems to imply that Blues are under some sort of EFL-imposed business plan.

The truth is much more prosaic.

Every March, as per EFL regulation 2.8.1 every Championship club has to forward to the EFL forward funding and cashflow forecasts for up to two seasons ahead, to show that they have enough money to complete those fixtures.

Failure to do so results in an embargo and causes all kinds of bother. With this in mind, it’s understandable that the EFL would require the same of SCL as the new season has not yet begun.

The EFL also insists on proof of two years funding for a club without recourse to transfer sales prior to any would-be new owner takes charge.

This is to try to prevent situations like the one developing at Wigan Athletic where it’s clear their owners who took control in 2021 are now struggling for cash and are failing to pay wages etc.

Can SCL now go into the club and make decisions as they have received EFL approval?

Technically, the answer to this question is yes.

Approval of the takeover by the EFL means that SCL’s people have all passed the Owners and Directors Test (OADT).

However, I think on a practical level it’s unlikely SCL will do much at the club before the EGM.

I’d imagine that SCL will want to make sure that they don’t do anything that could upset the HKSE before they give approval, and therefore the prudent thing to do would be to keep a low profile for now.

Will this EFL approval have any impact on signing players?

There should be no significant change in relation to how Blues are progressing with recruitment, as Blues will already have this under way.

As I have said before on this website, Craig Gardner and the recruitment team will have a budget already agreed by BSH for the season ahead and will be working on targets.

Constraints due to the Profit and Sustainability regulations mean that those budgets are likely to remain fairly similar once SCL take control.

While I get people are impatient that players aren’t being signed, the honest truth is that this is a time of year when many players are on holiday and not a lot is happening.

Although there may be the odd signing announced elsewhere, the transfer window doesn’t actually open for another week and technically players can’t start their new contracts until July 1 anyway.

I’m afraid those fans itching for transfer news are going to have to be a little bit more patient.

What about the future?

There were a few questions from fans regarding sponsorship, proposals for a new ground and the training ground but these questions are very difficult to answer without an intimate knowledge of SCL’s plans; something I cannot profess to have.

I could speculate on those things but right now I think it’s better to wait and see as SCL have made it clear that they will reveal more about this once the deal is done.

One thing we can expect is when the “Circular” is sent out to BSH shareholders ahead of an Extraordinary General Meeting, there will be much more detail available about what is going to happen.

It might seem a cop-out but I think we should wait for more information before talking more about the future.

The main reason I say this is because I’m very aware of my own limitations as to what I can imagine can be done, and I don’t want people to think that SCL have the same limitations in their thought processes.

We’re almost at the final hurdle now, with just the Circular to be produced before an EGM is announced.

The Circular requires HKSE approval, which I think is provably more difficult to achieve than EFL approval due to the extended amount of time required.

There’s been fans who have asked me if the HKSE can throw a spanner in the works and while the answer is that they can absolutely do that, I think we have to hope and believe that they won’t.

There now remains one piece of paperwork and one rubber stamp meeting to go until this takeover saga is finally over.

A little bit more patience is all that is required.