Often Partisan


I was going to write a blog about the finances of Birmingham City tonight, but as I don’t have a degree in accountancy, I didn’t think I could do it justice.

The (unaudited) accounts can be found here: (pdf link)

However, there were a few things that have been picked upon that I thought I’d reflect on, and maybe give people chance to think about it some more.

One thing that has been immediately picked up on is:

“At the end of the reporting period, the group’s current liabilities exceed it’s assets by HK$337,552,000. This 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 it’s assets and discharge it’s liabilities in the normal course of business.”

These are sentences to strike fear into the heart of any fan of the club; in that it says we’re in debt to the tune of about £40million and that we’re screwed. The paragraph does go on to state that there is no reason that we won’t get a continued overdraft, and that Carson Yeung isn’t going to ask for the £10million or so back he is owed. It also states that Carson Yeung is going to continue to underwrite the club to keep it going.

To me, it means that this is a bit of a nothing statement. They’re stating the truth – as they have to – that without serious financial input we’re doomed. It then goes on to state that Carson Yeung is going to make the serious financial input. I’ve no reason to doubt this personally; although a lot of people have doubted Carson’s personal wealth I think that we don’t enough about Mr Yeung to make a truly informed decision one way or another. With the combination of the Great Firewall of China, coupled with the impenetrable Chinese language to western eyes make it very hard for googling types like me to find much out about him.

One thing that is pleasing is that the company are moving their financial year to coincide with the football season, meaning that the accounts will be a little clearer in that it will be possible to see exactly how the accounts relate to each season – previously it was difficult to exactly tie up revenue and profit to where we stood in the league, as the financial year overlapped the season by about three months. When the differential in income is so large – we bring in about double the money in the Premiership that we do in the Championship – it can make working out how we’ve made/lost money very difficult indeed.

Looking through the bank overdrafts and loans, it appears that the club are doing their best to reduce the overdraft – from £10million in April 2010 to £7million in August 2010 for example. According to the books, we’re currently using around £8million of overdraft as of 31st March, but with a large chunk of Sky money due around the end of the season I would hope that has been cleared down somewhat. Again, this is nothing more than guesswork on my part, based on knowledge of when some payments come in, but it would say to me that things are okay, and that with the overdraft facility dropping we’re slowly decreasing our short term debts.

There is also talk of post-balance sheet events where the group has got agreements with China Potevio who have set up a credit agreement for up to around £10million of equipment (they sell telecommunication and IT equipment); couple this with the rights for broadcasts of Premier League football on Chinese trains (which has been transferred from a personal company of Carson Yeung’s to the Group itself) and it seems evident where CY is looking at bringing in new revenue streams.

There is more information about the trains deal here: (pdf link) and here: http://bit.ly/d5gmCD

I’ve probably missed quite a bit, but to me it looks like things are okay. We’d be a bit screwed without Carson Yeung, but we’re not the only football club to be at the mercy of it’s owner.

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