Last week, one of our founding bloggers sat down in an attempt to make head or tail of the ownership and financial situation at Birmingham City Football Club; a topic we last explored a little over a year ago. Having waded through almost a hundred pages of press reports and blog posts including, most notably, Two Hundred Percent’s attempts to get to the bottom of the situation, he gave up and instead decided to turn to Daniel Ivery, steward of the superb Often Partisan website. Just back from an investigative trip to Hong Kong, here’s Daniel with a summary of how things stand for the Blues while his blog should be your first port of call as the story continues to unfold.
“Life is a rollercoaster, just gotta ride it.”
Ronan Keating could well have been singing about Birmingham City when he penned that song. In just over two years the Blues have gone from Carling Cup winners to potential Championship relegation candidates. As George Best’s butler would have asked “Where did it all go wrong?”
The answer to that question lies six thousand miles away in the fragrant harbours of Hong Kong where Birmingham City’s erstwhile president Carson Yeung remains languishing on bail whilst facing five charges of money laundering. With the club’s parent company Birmingham International Holdings having to confirm to the Stock Exchange of Hong Kong that they are having to take on short term loans to pay the bills, it’s very easy to see why the Blues are struggling financially.
If anything, the answers pre-date the question. Carson’s first attempt to buy the club in 2007 ended when he couldn’t raise the money to complete the purchase of the football club and it took a rights issue of £57 million to raise the cash to complete the deal (at a vastly inflated price) in 2009. Although it didn’t leverage any debt onto the club it was demonstrative that Carson didn’t have the money to do the deal all by himself.
Carson made big promises about how much money he was going to spend on wages and transfers, and in absolute fairness to him he did deliver – Nikola Žigić in the summer of 2010 for £6 million and a huge contract that will cost the club £16 million over its duration; Ben Foster for a similar fee in the same window and Aliaksandr Hleb on a massive £65k per week loan deal from Barcelona. Birmingham City had never previously taken on those kinds of wages before – and it became apparent why not when even before relegation from the top flight it looked like they were struggling to afford it.
Within two months of Birmingham City beating Arsenal at Wembley (coincidentally on Carson’s fifty first birthday), it was announced to the stock exchange that Carson had been forced to mortgage his family home to ensure that the football club had sufficient cash flow to keep it going. Relegation hit the club like a hammer blow, and although the staff worked as quickly as possible to remove the biggest wages from the books there remained a huge millstone around the club’s neck in Žigić. As iconic the giant Serb is, his massive wages have ensured that the cost of the playing staff remains unfeasibly high even now when virtually every other prized asset has been moved on.
With Carson arrested in June 2011 and his assets frozen, it has meant that there has been no one capable of infusing either the club or the holding company with cash – the suspension of the holding company on the stock exchange ensures that it’s almost impossible for any other investor to put in cash to the holding company to prop that up and with Yeung holding on to the club in the vain hope of trying to regain some of what he had paid out to buy it, the club has slowly stultified into a situation where it is looking down the barrel of the administration gun.
The sale of the club has been very much an off-on affair with the emphasis on “off”. Gianni Paladini (of The Four Year Plan fame) announced in autumn of 2012 that he could buy the club within ten days but his hubristic announcement served to do nothing more than antagonise the acting chairman Peter Pannu into making a statement whereby he insinuated he wasn’t even talking to Paladini let alone selling the club to him. There have been various other rumours of shadowy groups looking to take on the St Andrews club but the lack of concrete bids and publicly available information has left the fans clutching at straws somewhat.
Some Blues fans have pointed the fingers at the footballing authorities for not having properly checked out Carson or BIH prior to them buying the club and there might be a point; Carson passed the owners and directors test along with Vico Hui on September 23, 2009 – twelve months after the Hong Kong police force started investigating his financial affairs. Had the Premier League made one call to the relevant police force to see if there was anything outstanding against Carson – as in a Criminal Records Bureau check – then maybe things might have been different. With the vast amounts of money that flow through football – even at Championship level – I believe that there is an argument that the authorities need to do at least some sort of cursory check into backgrounds of potential owners to prevent possible problems.
Last week, the holding company made an announcement to the stock exchange stating amongst other things that Carson Yeung was now preparing to step back from his position of chairman of the board of Birmingham International Holdings Ltd and that “parties had completed due diligence”. Whilst it was also confirmed that preliminary negotiations had taken place the worry is that this is too little, too late – the big question is how much longer Carson will hang on to his remaining prize asset before he decides to cut and run – or before that decision is taken away from him. For many Blues fans – including this one – that day cannot come soon enough.