Often Partisan

Delayed Accounts – the OP Perspective

So, it’s been announced that the accounts for the period ending June 30 for Birmingham International Holdings Ltd, parent company of Blues have once again been delayed – this time until July 31 at the latest. All I’ve seen online today is people speculating about what it means and what will happen. Here’s my take on things.

I have to be honest and say that this is a piece that I didn’t want to write. Whilst I feared that the results would be delayed again, I thought that the delay would be merely until the end of May and that wouldn’t be a disaster as Blues could concentrate on the playoffs before dealing with the financials. When I heard this morning that they’d been put off for three months, my immediate thought was “uh-oh”. Not just for what might happen to Blues but for the reaction that would precede it – the last thing that Blues need as a club right now are protests against the owner.

So what will happen? I’ve heard all kinds of scare stories about Blues being docked points, being booted out of the playoffs or even being denied promotion should we achieve it. Take it from me – none of those can happen because of a further delay to the accounts. We will still play in the playoffs, we will not be deducted points and there is nothing in the rulebook to deny Blues promotion should they achieve it.

The rules on this are quite clear. They’re also exactly the same for both Premier League and Football League, which makes things easier. The relevant rules for us are thus:

Each Club shall submit a copy of its Annual Accounts (as defined in Regulation 16.3 below) to the Executive, but in any event:

by no later than 1st March following the end of the financial year to which those Annual Accounts relate (in the case of a Championship Club)

(FL rule 16.2)

By 31st March in each Season, each Championship Club shall submit to the Executive in respect of itself (or if the Championship Club considers it appropriate or the Executive so
requests in respect of the Group of which it is a member) future financial information (‘Future Financial Information’) comprising projected profit and loss accounts, cash flow, balance sheets and relevant explanatory notes commencing from its accounting reference date or, if it has submitted interim accounts pursuant to Regulation 16.11, from the date to which those interim accounts were prepared and expiring on the next accounting reference date after the end of the following Season. The projected profit and loss accounts, cash flow and balance
sheets shall be prepared at a maximum of six-monthly intervals.

(FL rule 16.6)

Each Promoted Club shall by 30th June in the year of its promotion submit to the Secretary: copies of the documents and other information that it would have been required to submit to the Secretary…by 1st March of that year had it then been a member of the Premier League;
Future Financial Information commencing from 1st July in the year of its promotion and expiring on the Club’s next accounting reference date after the end of the following Season;

(Premier League rule c.88)

Blues have broken the first one and if are promoted and do not file their accounts by June 30 will have broken the third. The punishment for breaking the rules is exactly the same in either division:

to require the Championship Club to submit, agree and adhere to a budget which shall include, but not be limited to, Transfer Fees, Compensation Fees, Loan Fees.subsequent payments which become due under the terms of any transfer, players’ remuneration and fees payable to Agents;

to require the Championship Club to provide such further information as the Executive shall determine and for such period as it shall determine;

to refuse any application by that Championship Club to register any Player or any new contract of an existing Player of that Club if the Executive reasonably deems that this is necessary in order to secure that the Championship Club complies with its obligations listed in Regulations

(Football League rule 16.20, Premier League rule c.90)

What that means is what we know as a transfer embargo. Essentially, Blues cannot sign any player OR renew any contract of any player without the League saying okay.

The obligations referred to in the above rule are:

a) pay its liabilities to the creditors listed in Article 80.1 of the League’s articles of association and to any foreign Transferor Club (in so far as they are or will become creditors of the Championship Club) and to its employees as they fall due; or
(b) fulfil its obligations to play fixtures under the jurisdiction of the League; or
(c) be able to provide such rights, facilities and services as are required to enable the League to fulfil its commercial and broadcasting contracts.

(Football League rule 16.19.8, Premier League Rule c.89.7)

In other words, the League will allow you to sign players if in doing so it aids you paying off what you owe, fulfilling your fixtures and ensuring that the sponsors don’t miss out. Consider Portsmouth – in administration yet allowed to sign players when Blues weren’t. The reason for this is that Portsmouth were selling/loaning out players to cut costs and needed to bring in players to fulfil fixtures; each and every player signed had to be approved by the league – which was done because it ensured that they will complete the season.

Obviously, these are less than ideal conditions to plan your season on. However, those are the only sanctions that can be placed against a team filing their accounts late. Blues can only be docked points if they go into administration – which whilst might seem potentially possible isn’t yet being talked about. Blues cannot be docked points anyway this season even if they did go into Administration right now; according to rule 12.3.4 of the Football League rules, a points deduction would only be applied after the fourth Thursday in March if it would relegate the insolvent club; otherwise it is applied to the next season’s points total.

Likewise, the only way Blues could be denied promotion is:

Notwithstanding the provisions of Article 27, the Company may expel a Club from the League upon a special resolution to that effect being passed by a majority of not less than three fourths
of such members as (being entitled to do so) vote by their representatives or by proxy at a General Meeting of which notice specifying the intention to propose the resolution has
been duly given.

or in other words, if a general meeting is called and 15 or more of the 20 clubs decided they wanted us out.

The upshot of all this is while this news is not brilliant – “technical difficulties” or not, the delay has gone into ridiculous territory and it needs to be sorted as soon as possible – it’s also not the absolute end of the world. As soon as BIHL issue the accounts – and maybe reassures the relevant authorities that things are okay – then we’ll have the transfer embargo lifted and we’ll be back to normality. However, it’s down to BIHL to issue the accounts and I think they should realise that the longer that they delay, the more support for them is going to wane. To use the vernacular, it’s time for BIHL to crap or get off the pot.

(rules taken from the Football League Regulations and the Premier League Handbook)

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17 Responses to “Delayed Accounts – the OP Perspective”

  • kingy says:

    I hate to be negative at what seems theclimax to such a positive season but I really fear for us, if we fail in the play offs end up having to sell and release players again, maybe Zigic, Burke, King, Murphy, Mutch, Redmond, Fahey, Davies & Doyle could possibly leave the club. What incentive would that give Chris Hughton to stay on? Where would that leave us then? I think the next 10 years of the club hangs on the result of the play offs. Win and things could be rescued, Loose and we could slip into years of obscurity like Coventry or Portsmouth.

  • Berkshire Blue says:

    Another excellent article.

    A couple of points.

    1. I don’t think we should necessarily assume the accounts won’t be published until July 31st itself. The BIHL statement clearly says no later than and ,as on the previous delays, whenever BIHL post a delay the period always extends by 3 months (Oct to Jan, Jan to Apr, Apr to Jul) – I.e. whenever a delay is announced it seems standard procedure to always extend the deadline by 3 months. What is different this time ,as I’m sure Peter Pannu must realise, is that the delay is going to start affecting the club itself both through the transfer embargo and ,in all likelihood, in season ticket sales as some supporters get disillusioned by the teams prospects. Therefore, hopefully, we won’t be still waiting for the accounts in July.

    2. I’ve seen several comments elsewhere that the non publication of the accounts portends that administration is just around the corner. Like your blog I don’t see this myself. The club seems to have been able to pay its way this season , albeit through selling players and cutting operating expenditure and I’ve seen no hint of late payment of wages or to creditors. The club have decided not to sell season tickets until the season is over and we know which division we are in – if the club was really desperate for short term cash wouldn’t they have done like several others and started season ticket sales before the season ended.

    So ,whilst the latest delay is undoubtedly bad news and needs to be sorted ASAP before it really starts to bite I don’t see the sky falling in just yet.

  • Dan Brazier says:

    Personally whilst I find Pannu’s comments interesting (especially where he states its an admin error that are holding up the releasing of the accounts) I think the best thing us fans can do is keep things clear and simple. So for me its a case of A) as long as the players are being paid on time month by month and B) There are no viable warnings of administration or points being docked then I think we should continue backing the players on the pitch

  • JohnR says:

    Why is nobody asking why the publication of the accounts has been delayed four times. We deserve to know what these technical difficulties are. Obviously there is something seriously wrong. We should be more concerned about that than what the consequences are of not filing the accounts.

  • P.J.Nicholls says:

    Having been a Director of a number of companies can I ask where the Rule “Running a company which is a going concern” comes in.????
    I these accounts are in such a bad state legally it surely begs the question as to delay the accounts four times questions the ability of the acting Directors to run the company.

    • almajir says:

      It’s my belief that is what the hold up is – ie that the auditors will not sign off the accounts as they cannot affirm the company is a going concern.

  • Bluenosejohn says:

    The only hopeful thing is that HSBC and the Inland Revenue are so far holding off. When either of them start taking direct action then we know we are in deep deep trouble. The bank have a direct say on the disposal of assets and the IR will be straight in on non payers having been messed around by the likes of Rangers and Portsmouth in recent times.

  • Atahualpa is a worried BlueNose says:

    Very informative piece Almajir.

    You make a very valid point that negates a fair amount of the silly speculation going on regarding what might happen to the club in the near future – in this blog. I fear that they are not getting off the pot because they can’t decide if it is constipation or diarrhoea they seem to be suffering from.

    I do not believe that the club has a problem with running on a day to day basis, and this is borne out by the fact that all bills and debits are being paid accordingly. The issue stems from whether it is in a position to meet its future liabilities and whether there is a substantial backer who can act as a guarantor to cover any projected shortfall.

    The board can bluster as much poop as they wish to and claim it is nothing more than a ‘technicality’ but surely they must realise that they are fast dissolving the goodwill of the support which remains for them.

    Obviously CY has been unable to get any of his associates to make a commitment (perhaps due to the uncertainty of his forthcoming court case?), and is unable to do so himself. He may have thought that he would do what he had done previously and raised the money through mortgaging his properties and juggling his business portfolio around. Nothing doing with his assets being frozen. Without CY, BIHL is simply a floundering concept which was thought by investors to be a vehicle for future acquisitions. Its all gone tits up for them and none of the other directors will put his/her hand in their pocket.

    My worst fear is that those in power may act desperately, and if we do go up, simply use the money to cover costs accrued by BIHL as oppose to investing it into the club. It would seem no funds will be arriving from the Far East for some time yet me thinks. I wish that the business acumen of the owners shines through and they realise that in order for their investment to grow solidly, they need to put any funds received back into the team and club. They surely saw something special about BCFC when they decided to buy the club. Too much effort and finances have been used by CY and his crew for them to simply walk away with a significant loss. Chances are they will fight it out until the bitter end.

    Do not think that our situation is comparable to Pompey’s and Rangers’ as our debts are nowhere as big, and I believe our biggest creditor is Mr Ka Sing himself for in the region of about £17m.

    Peeing of CH must be our biggest point of contention. As much as he is a gentleman with honourable intentions, surely even his patience will be tested if he is not allowed to develop the team and club as he sees fit. Let us hope that promotion to the EPL gives us, the club, the board and finally BIHL, some breathing space and we can all plan ahead albeit on a reduced scale to what we may have envisaged.

    Now lets all get down to St Andrews and will the team on with our support.

  • chris says:

    another rumour is that the accounts have been passed by their Honk Kong auditors but it has been failed by the UK auditors.

  • bluenose08 says:

    To me supporting the team and the manager is the most important thing.I cant understand why bihl have
    not been fined for failing to produce their accounts on time. As for the delay in season ticket prices they are waiting to find out if we get promoted so they can charge more!
    For me the most important person at the club is ch as he has proved he cant be replaced !
    But whatever happens this season will always be remembered for some fine attacking football on a shoestring. ch for manager of the season. k.r.o.

  • Dirty Bertie says:

    CY’s put in £17 mil, Yang Yue Zhou £18 mil, BIHL overpaid by £40+ mil. Not really surprising they’re having difficulty squaring the accounts and no wonder they won’t let go of the bone.

    • almajir says:

      YY put in £12mil – to BIHL. Dunno if Blues saw any of that.

      Incidentally, YY (or rather his company) spent £1.25mil this week on fish food. No lie.

  • Dirty Bertie says:

    BTW Almajir, should we read anything into the fact that all the young ladies pictured at the top of the page appear to be of oriental descent?


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