Club losses treble as spending on players and staff exceeds its total income
BIRMINGHAM City Football Club’s losses nearly trebled last year – and if its owners were to pull the plug, St Andrew’s would face a crisis, a stark report reveals.
The report by accountancy Mazars revealed just how “critical” Blues’ dependence on Trillion Trophy Asia’s (TTA) money has become.
It followed analysis of the club’s most recent accounts up to the end of June 2017.
But a football finance blogger claimed Blues gross debt was “relatively small” compared to many other Championship clubs.
The bleak report pointed to a financial position in which losses nearly trebled and “future trading prospects look difficult”.
Following TTA’s involvement, Blues have gone from working on a relative shoestring of a budget during the Carson Yeung years, to being far more competitive in terms of transfer fees and wages. But the costs cannot be disguised. The report said: “Making a profit while operating as a football club without the riches provided by Premier League television money is very difficult.
“This is highlighted by the fact that in season 2015/16 only one of the 24 clubs operating in the Championship made a profit.
“The report provides a stark example of the financial difficulties facing Championship clubs.”
While there was a slight rise in income – up £2.9 million to £18.6 mil- lion – the majority of this increase related to an additional £2 million in payments to which all Championship clubs were entitled under the terms of a new television deal agreed by the Premier League.
But operating expenses rose far more dramatically, from £24.7 million to £35 million, including players costs, which ballooned from £6.9 million to £22.2 million. This cost alone is in excess of the club’s total income for the year.
The main assets were a squad valued at £11.1 million, the stadium valued at £11.4 million, debts due to the club of £6.4 million and cash in the bank of £3.3 million. These amounted to £32.2 million of the total assets of £34.6 million.
The main liabilities were £33.4 million owed to the parent company, £7.9 million of transfer and agents fees payable, £1.2 million of signing-on fees payable and £3.5 million of deferred income. These account for £45.9 million of the total liabilities of £52.4 million.
However, the report also notes the holding company have indicated it expects to have sufficient funds to continue its financial support of the football club for at least the next 12 months.