Birmingham City FC still get the blues despite profit
Birmingham City FC still face serious financial problems and further cutbacks despite making a profit of £15.7m in the 2011-12 financial year. Their latest auditors have expressed reservations about the financial prospects of the club.
The profit was achieved largely through the sale of players. Turnover was down from £61.5m in the Premier League to £39.1m but staff costs were cut from £45.1m to £25.1m which puts them well below the recommended 50 per cent of turnover. The club's highest paid director received £687,611.
With their overdraft facility withdrawn in 2011, the club are reliant on the £21.4m in loans they have received from Carson Yeung, the owner, and BIHL, the parent company. Yeung's assets have been frozen in Hong Kong where he will stand trial in April over five charges of money laundering, which he denies.
The auditor statement says 'at this stage of the proceedings the directors have not received any information to suggest that any funding provided to BCFC by Yeung, either directly or through entities making payments to BCFC on his behalf, was sourced from money-laundered funds' and that the board 'do not have any credible reason to fear that the Hong Kong authorities have any recourse to any loans made to BCFC by Yeung.'
The new auditor, Adrian Stevens, states in the accounts that the club 'requires additional funding to be made available to continue its operations ... through to December 31, 2013.' This is likely to be achieved by further sales for players. However, unlike the previous auditors, the new auditor is prepared to endorse the accounts on a 'going concern' basis.
Acting chairman of the football club Peter Pannu states in the accounts that BIHL have been approached by three prospective buyers and that discussions are at an advanced stage with one of the parties in Hong Kong. However, talks over the acquisition of the club by former QPR chairman Gianni Paladini have broken down, and there is understood to be little chance of a new buyer emerging before the end of the season.