In the wake of their Carling Cup triumph, Birmingham City are facing financial challenges. Indeed, the Carling Cup victory has contributed to the problems as it means that substantial bonuses are now due for payment to players and the manager. However, should the club be relegated, the bonuses would be reduced.
In the wake of their Carling Cup triumph, Birmingham City are facing financial challenges. Indeed, the Carling Cup victory has contributed to the problems as it means that substantial bonuses are now due for payment to players and the manager. However, should the club be relegated, the bonuses would be reduced.
In a statement to the Hong Kong Stock Exchange, parent company Birmingham International Holdings (BIH) revealed that Blues and other Hong Kong-based group businesses had piled up total debts of over £29m. Yeung is now applying for a £12.5m loan pledged on his own property portfolio, although there have been suggestions that raising the money may not be straightforward.
The holding company is also trying to raise a further £25.5m by selling shares and taking a loan from unidentified institutions. They had intended to close the capital raising from shareholders last Friday but, in a possible sign that there was insufficient interest in the shares, this has been extended to 25th March.
The statement from BIH coincides with the Premier League deadline for clubs to file their future financial information. The club’s accounts to June 2010 signed off last October stated that £7.5m was required in the short term for the club to continue to operate within agreed banking facilities.
Premier League disclosure rules were brought in after the collapse of Portsmouth. They require clubs to provide written assurances that they can meet their liabilities for the year ahead and that loans will not be called in. Clubs that are unable to comply can face sanctions include a transfer ben or even the enforced sale of players.
The reaction of Blues fans is mixed. One view is that it is just a media attempt to rain on their parade after their Carling Cup success and that most Premier League clubs have debt problems. Others have expressed concern that the owners may not have enough funds to run even a medium-sized Premiership club.