BCFC: Political Pressure

In recent times, when Birmingham City’s owner has appeared on the front page of the Financial Times it’s been as the harbinger of bad news. However, times have changed since Shelby Companies Limited have taken charge at St Andrew’s and Tom Wagner’s picture on the front of the FT was all about Blues challenging the authorities for the right reasons.

St Andrew's packed

The story came after the official Birmingham City website published a letter from Wagner to Rishi Sunak regarding the Government’s ongoing commitments to the HS2 project. If you’ve not seen that letter, it’s visible at this link.

The letter has brought about a fair amount of reaction from Blues fans online.

Some of the more pessimistic people out there are concerned that Wagner and Knighthead might be getting cold feet about their investment in Blues due to the potential for infrastructure programmes like HS2 to be scaled back.

After all, this news coupled with the recent financial worries that Birmingham City Council are going through could be seen to make any investment in the club or the city less secure than it was previously.

Other fans have seen this as further evidence of just how all-in Wagner is into the deal. I can’t remember any Blues owner coming to the defence of the city in this way at least since the days of David Sullivan and the Gold brothers; and I can’t help but feel Wagner might be slightly more altruistic in his views than the likes of Sullivan and co.

I genuinely think there is a lot to think about with this letter, and I thought I’d write this piece to explore that.

No Need to Worry

I think the most immediate thing to address is the worries of those who are a bit more pessimistic about the club and its owners, and what this news might mean for the continued investment by Shelby Companies Limited.

For me, the most important thing to remember is that this ownership is a world away from the last decade we have gone through.

Everything we’ve seen so far from the Wagner regime points to an outfit who are professional in word and deed; who are taking the long-term view with regards to Blues and who are a little bit more politically savvy than those who have come before them.

Take the collapse of Buckingham Group and the effect that could have had on the repairs to the ground.

Rather than dick about trying to find the cheapest option to continue the work, a quick decision was made.

The club did what was needed and paid what was required to keep the current subcontractors on board and appoint new construction managers who had already been involved with the job.

I have no doubt that this probably cost a fair few bob in the short term, but the long term savings are going to be massive.

Keeping the same subbies on board means that there is no argument over what work was done by whom and meant work could restart straight away. Appointing Mace as construction managers has maintained continuity at the top level as best as possible.

With this in mind, it’s only fair to assume that this attention to detail and refusal to take the cheap option has been the watchword for SCL since the very beginning of their involvement with the club.

I have no doubt that when doing the due diligence to buy the club, SCL will not only have looked into the positive impact HS2 could have on Blues but also the potential problems that HS2 faces.

It’s no secret that the whole HS2 project is massively over-budget. In the current political climate it’s easy for a cynic like me to believe any party would cut the project back as far as possible in a desperate attempt to offer short-term gains to voters.

Likewise, it was fairly common knowledge that Birmingham City Council faced a huge equal pay bill and that as such, its finances were precarious.

I cannot believe in either instance that SCL haven’t made contingency plans for their investment in the event of the bad stuff happening.

It’s for this reason mainly that I’m not worried at all that Wagner has chosen to apply public pressure.

If anything, it’s proof to me that he’s willing to play the political game.

Megaphone Diplomacy

Regular readers of the blog will have heard me speak before of the idea of “megaphone diplomacy”.

Normally used in international politics, the idea of megaphone diplomacy is to make strong statements in the public domain to force someone to do what you want.

However, the idea has crossed into the normal lexicon; for example it’s not unusual in the football world to see a club say something stiff to try and force a transfer.

In this instance, I think Wagner was trying to make a public point that would cause Sunak and his Government to potentially rethink their potential plans regarding HS2.

Now I might be reading too much into it, but I feel this letter from Wagner is more than just about this project.

Wagner notes in his letter that failure of the UK Government to go through with the commitments they have already made regarding HS2 could cause a loss of investor trust in the Government, consequently causing a negative impact on the country as a whole.

A lot of people paid attention to the line about Tom Brady and 17 billion positive social media impressions. As impressive as that is, I think it’s a red herring.

It struck me that this letter isn’t just the thoughts of Tom Wagner the BCFC Chairman. It’s the thoughts of Tom Wagner the managing member of Knighthead Capital Management, who manage more than $9Bn in various funds.

I think this is deliberate from Wagner, because as much I think as a party needs voters to win an election, there is also a consistent need for any governing party to maintain investment in the country as a whole.

Private sector investment helps to create jobs, which of course then helps increase the number of people paying tax and therefore funding the country.

However, more importantly investment funds and financial institutions like Knighthead are the ones who buy instruments such as treasury bonds which the Government then uses to fund itself.

If investors lose confidence in the government, then the whole money market gets shaky which has disastrous affects for everyone.

This was evident last year when an announcement of various unfunded tax cuts caused such disastrous ripples in the market it brought down a Prime Minister in a matter of weeks and added a whole new dimension to the ongoing cost of living crisis.

Now I’m in no way saying that Wagner is going to torpedo the current UK Government with one simple letter about a football club.

However, I do think it’s another straw to add to the camel’s back that is already groaning from recent complaints from industry and it might be enough to help force a change of mind.

This isn’t just about politics at a national level though.

Playing the Local Game

When I saw the videos of Tom Wagner at Deepdale getting the drinks in for the away fans, I wondered why else he would be in the UK for.

I mean, as thrilling as a Tuesday night game in Preston might be, I can’t imagine it would be the sole reason for Wagner to be in the UK.

That question was partly answered by a tweet from West Midlands Mayor Andy Street, who shared his positive meeting with Wagner and Garry Cook last week regarding both the club and the city of Birmingham.

Andy Street has been in the news a lot recently following the bankruptcy that Birmingham City Council faces as he is one of the people who can do most to help the situation.

While Street might be across the divide from me both as a Conservative and as a fan of the mob from across the Expressway, I can say from personal experience I have met few people who are as switched on as Andy Street was when I met him.

Street might also be across the political divide from the party running Birmingham City Council, but he will know that his remit as West Midlands Mayor is to do what he can to improve the area as a whole regardless of other crap going on.

We know that when Tom Wagner was over in the UK previously he met with the council so it was inevitable he was going to meet Andy Street at some time too.

I don’t think the timing is coincidental. I don’t know this, but I suspect Wagner will have met Street to do what is needed to further their plans for the infrastructure of the club.

I’m of the opinion that one of the reasons Wagner did the deal for Blues was that there was a chance to move to the Wheels site in the offing, which while a large capital outlay to build would potentially bring in huge revenues as a stadium for concerts, NFL games and other big events as well as just football.

Wagner will know that Street is up for re-election next year and as such, Street will want to do things that will help him to get the votes to maintain his position.

This gives Wagner a strong position to negotiate from – which is good for the club.

The big thing I think to take from all this is that for once in our lives, Blues are in a position of strength.

While it’s inevitable that the club and its investors need projects like HS2 to go forwards, the promise of investment in the area is a big carrot to wave in front of politicians to encourage them to continue with their plans.

Having the clout to get onto the front page of the Financial Times is also a stick they can use against the Government; give us what we want or we’re going to help destroy your reputation in the investment community.

I wonder what Rishi Sunak thought as he read the paper over his cornflakes in No 10.