Birmingham City have emphatically denied that they are facing a Portsmouth-style meltdown. Blues are not the new Pompey. Club officials are responding robustly to press enquiries. They consider that the liabilities of the club, which have been estimated at £35m, have been exaggerated. Owner Carson Yeung is providing short-term financing as required and has no attention of calling in a £7.06m loan which would force the club into administration.
Birmingham City have emphatically denied that they are facing a Portsmouth-style meltdown. Blues are not the new Pompey. Club officials are responding robustly to press enquiries. They consider that the liabilities of the club, which have been estimated at £35m, have been exaggerated. Owner Carson Yeung is providing short-term financing as required and has no attention of calling in a £7.06m loan which would force the club into administration.
An interim financial report from the board for the year to March 2010 revealed that the liabilities of the parent company, Birmingham International Holdings, exceeded the assets by £31.9m (and the position could well have deteriorated since then, hence the £35m figure which is being mentioned).
The interim report says that ‘the situation indicates the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore the Group may not be able to realise its assets and discharge its liabilities in the normal course of business.’
In plain English this means that the company could go bust and would be unable to pay its bills. However, the report added that talks with banks over the company’s loans and the continued support of Yeung mean that the company is considered to be sound. In other words, it can keep going as long as the banks remain tolerant and Yeung keeps pumping in the cash.
It is understood that the Premier League has requested written assurances from Birmingham, but this is being seen as purely a procedural matter rather than a warning signal. The Premier League made use of new rules designed to prevent another Portsmouth situation.
Birmingham City is also one of a number of clubs involved in a dispute with the tax authorities over their players’ image-right bills. If Revenue and Customs wins its battle, it could cost the Blues more than £5m. They also face a battle over VAT they claimed back from agents and have set aside an additional £1.07m to cover themselves if they lose the case.