As the Blues Announce a Loss – We Ask, is it Bad News?
(This is a re-publish due to a technical problem!)
Andy has given me permission to re-produce his latest article. I have made some comments after it.
Kev
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Birmingham City record pre-tax losses of £20.5million
By Andy Walker
BIRMINGHAM City’s successful promotion push last season came at a hefty cost, after it emerged that the club recorded a pre-tax loss of £20.5 million.
The astonishing figure has been revealed in the club’s audited financial statement for the year ending August 31 2009, therefore a debt amassed under the former owners.
The directors’ report blames the huge loss on ‘the decision taken by the previous members of the board to retain most of their playing staff from the previous Premier League season’.
That decision to arm Alex McLeish with a squad on top flight wages in the Championship saw Blues fork out staff costs of £27.1 million in 2009, compared to £26.6 million the previous year.
That was further hit by a fall of over £22 million (44.8 per cent) in turnover, including match receipts, broadcasting and commercial income.
The accounts will further infuriate Blues’ new owners, who already strongly feel that they were misled during last year’s takeover.
The Carson Yeung camp were fuming when they discovered that the previous owners had paid themselves advanced 2010 management fees worth £420,000, after which an offer from David Sullivan to pay back half was turned down, not to mention ex-MD Karren Brady’s controversial £1 million severance package.
While Yeung paid £1-a-share to buy Blues in October, the Chinese now believe that 30p-a-share would have been a fairer price.
A Blues source told the Birmingham Mail that the current board weren’t yet willing to comment publicly on the hefty pre-tax loss, largely as they feel that the figures speak for themselves.
The recent report also warns that, when it comes to McLeish’s future transfer kitty, the purse strings may have to be tightened in order to address last year’s loss.
It reads: “The acquisition of players and their related payroll costs are deemed the core activity risk and, whilst assisting the manager in improving the playing squad, the board is mindful of the pitfalls that are inherent in this area of the business.
“The aim is therefore to manage these costs whilst being as competitive as possible within the club’s financial constraints.”
However, former co-owner Sullivan defended the previous Blues board. Sullivan insists that they made no secret of a financial problem at St Andrew’s during the final months of their tenure and pointed out that automatic promotion back to the Premier League proved that they were right to stick with an expensively-assembled squad in the Championship.
“We are surprised the figures are quite as high as this,” admitted Sullivan. “We had a policy of retaining the squad to get back up which we thought was the correct policy and was vindicated because the club got promotion at the first opportunity automatically.
“Last summer we knew the club had a financial problem as we publicly stated we loaned it £5 million to pay the deposits on two new players because there was no money to do that.
“Some of the losses are the way accounting practices write players off over the period of their contracts although the money is paid over an early period.
“But I am sure the club will make £10-15 million in the Premier League this year.”
Originally found on Birmingham Mail dot Net.
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Firstly, it is very disappointing to have a loss announced. I’m sure there a number of fans who maybe are feeling concerned about the ability of the board – but as Andy has said, this last year and therefore the last board. But is it REALLY that bad?
When a club gets relegated, the reduction of television money – despite parachute payments – always goes down. I have read the reduction can be anything from 25-40%. Also there are other knock on effects. Lower attendances, less merchandise sold etc.
Obviously for a club like ours, the goal was to gain promotion immediately. As a result we were run as a Premier League side in the Championship, I suppose living the dream on a smaller scale.
It was inevitable that we were going to make a loss. Like it says in the article we could wipe that out this season, and we already know we will be in the league again next season, financially a real positive.
Reading the article, it appears that the new board didn’t have a clue that this loss was there. I’m a bit confused about this. Maybe I’m thick, but before Carson took over – we were a public company weren’t we? Which meant that if we were going to be taken over the accounts had to be revealed. Meaning that either the previous board hid key information or the new board didn’t read it properly. I doubt we’ll know for sure.
I’m concerned that this will re-start the spat between the present board and the former board. I hope not.
Over all I don’t think this is particularly bad news, as I have said we have every chance of breaking even this season.
I’m sure there will be some who will look at this and see it as a negative, but I’d encourage you to keep your chin up and give the board a couple of seasons to prove themselves.
Disrepute?
Picture the scene. Two managers stand nose to nose on the touchline having a disagreement about a decision the ref has given. Things get personal, the voices raised, the TV cameras zoom in to capture the facial expressions – eventually the referee comes across and sends them both to the stands.
Over the coming weeks they are charged for bringing the game into disrepute as the pictures of their argument is played on sports channels and certain internet video sites!
They will probably get fined, maybe even banned from the dugout for a number of matches. Why? Well it’s obvious, they have bought the game into disrepute.
So why is it, that two certain Directors of a London side, are allowed to accuse our new owners of things and get away with it? They are also publicising players deals of a club they have nothing to do with any more, surely that in itself is against some rule or law?
Some of the things that have been said by them have been completely out of order, and the FA should investigate them. Yes I believe a disrepute charge should be considered.
I am getting fed up of David Gold and David Sullivan whining and moaning about how our new board treated them. Well you sold the club to them! Both of you had voiced your desire to leave, OK David Gold retracted that statement and offered his help to the new board. However the new board clearly decided a complete break from the old board would be the best, and you couldn’t blame them for that.
I have a number of times said that I have appreciated what the previous board did at the club, but you are even beginning to lose those fans who could see the positive contributions you bought to the club.
Why don’t you just leave the Blues alone and concentrate on your new club? I feel sorry for the West Ham fans, because at the moment DS and DG seem to be talking more about our club than theirs.
I would like to add that I think our new board have handled themselves very well in all of this, and have tried to keep their heads down. Mr Pannu’s announcement of possible legal action against Mr Gold I believe is the action of a man who is exasperated with a situation that he thought would just settle down. In one way I hope it doesn’t come to it – because the all that will happen is the Lawyers will gain a fortune and the arguments will get worse.
SO, will either DG and DS be quiet about us and get on with their new job, or will the FA investigate a disrepute charge? No I don’t think they will either – either of those.
Does the “Respect Campaign” apply to the money men in the board rooms too? Apparently not.
I expect there will be more blogs on the subject.
VIEW FROM THE SOUTH – WEST HAM UNITED vs BIRMINGHAM CITY
Filed under: Blues News, Match reports, Matches, Reports By Bazza
On a bitterly cold night at Upton Park, David Gold got his wish for his new team to triumph over his old employees but the result can hardly be described as a “whack.” Much has been said by the two Davids in the days leading up to this one. We are of course all well versed in the playground antics of our former owners but now that they have moved on to a ‘bigger’ club their musings have been brought to higher national attention; after all, West Ham are a club that registers on the wider media Richter scale than the ‘little’ team from Small Heath in the nation’s second city.
They fielded an attacking line up with Mido and the returning Carlton Cole up front aided and abetted by Scott Parker and Diamanti. Blues made some changes with Phillips, Fahey and Gardner coming into the starting line up making a diversion from the side that had done so well for us over the last three months. Blues settled into the game after an initial opening flurry from the hosts and Cameron Jerome had a chance following a nice move but placed his shot wide from eight yards. This was to prove costly. Phillips had a searing 25 yarder tipped over by Green; Diamanti tested Hart with a fierce shot from wide and Scott Dann made a brilliant block from Cole’s fierce shot on 32 minutes which probably represented their best chance of the half. The contest was fairly even with Blues in control for the most part after the early exchanges and the board had been put up for a minute of time added on when Scott Parker’s pacy scurrying run at the heart of our defence was brought to an abrupt end by Dann’s outstretched leg. This resulted in a free kick 25 yards out and a yellow card for Dann. I had a premonition as Diamanti lined up the kick. I remember he came very close with a similar effort at St Andrews in our meeting with the Hammers there and we were fortunate to escape as the ball took paint off the crossbar. This time however, we were not so lucky and the Italian’s beautiful curling strike flashed past the despairing Hart into the top corner for a lead West Ham didn’t deserve on the balance of play but it was a goal to grace any match and would have beaten any keeper in the land. It was to be the last kick of the half.
The second half presented very few chances for either side and West Ham were resolute and more solid in defence than they had been in the first and were clearly in no mood to allow their opportune lead to be nullified by their in-form opponents. Blues played some nice stuff in midfield with Fergusson imperious again and Gardner making frequent pacy runs down the right making the letter our best player by far on the night. However, Blues could not find the killer ball or opening to trouble the Hammers defence. Michel came on for the tiring Bowyer and on 67 minutes McFadden came on for Fahey in a clear attempt to freshen the impetus in search of the equaliser. Just as the first half free kick had been the telling moment of the first period, this innocuous replacement was to be the turning point of the second. McFadden had barely stepped onto the pitch when Ridgewell found himself facing two West Ham attackers on the overlap one of whom was Faubert who found himself at the by-line. McFadden, not yet in tune with the game, realised the danger too late to help his colleague and the result was a clipped cross from Faubert to the stooping Carlton Cole who cleverly got across Johnson to head into the bottom corner; 2 – 0 and game over. This was a pity for I am sure that five minutes later and the goal doesn’t get scored because the cross doesn’t come in because the cover would have been there; a very nice finish nevertheless. West Ham held on comfortably after that and a couple of half chances which fell to Phillips were snuffed out by the uncompromising defenders. Upson clearly handled at one point but it was one of those nights when nothing ran for us and decisions like that were never going to go the way of the boys in blue.
Blues did not play badly but were undone by two key moments especially the free kick in the first half. I think it would have been a different outcome had the score been 0 – 0 at half time as it should have been. A couple of West Ham fans told me after the game that Birmingham should have been 2 – 0 to the good before Diamanti scored. It would appear that our chances were better than they looked to me from the poor viewing position I had for the princely sum of £35 last night. Unfortunately, we missed the opportunities we created and they took two of the three they carved out during the game; the other was the block by Dann of Cole’s shot. That was the difference between the sides in what was a decent game and on that basis West Ham deserved their three points. Well done Hammers, Bravissimo Zola even if your Chairman thinks you are paid too much!
On the way back to Upton Park station with Will and his brother Chris who had travelled down from the Midlands to join us, Will asked; “Hey Baz, ‘ow do yow know if yow’ve got frost bite in yower feet?” I said “when yow take yower socks off, if yower toes come with them yow’ve got frost bite!” It was freezing cold in the stands and icy underfoot; probably as chilly as the relations between the respective boardrooms? A man walked past us in the queue with his two little girls who were wearing our colours and was overhead to say “Ah well sweetheart you can’t win every game you know.” Indeed you can’t and that is one of life’s lessons and so is the fact that there is always the next game (unless you’re a Portsmouth fan possibly. 
) Derby in the Cup; let’s not have a repeat of this disappointment there please Blues. West Ham are a decent side with good players and no disrespect to Derby County but such quality is not clearly visible in their squad. The Blue Army expects!
KRO SOTV
Our Previous Board
What is it about our previous board? Do they not know when to be quiet? When they ran the Blues they were always annoying other fans and causing people to look at us and take the rip out of us. I don’t know what it was, but they could say something that is quite reasonable if said by someone else, but when they said it – it would sound very unreasonable.
Since they took over at West Ham, they appear to have spent as much time still talking about us.
When they comment about finances, they have spoken about some of the deals they did here – although not at West Ham I notice, then there was the “we were just in training!”
Well that is my line of work, and I suggest that you may need to do the course again!
I wasn’t a DS / DG knocker as such, I appreciated the fact that they did save the club and pretty much put us on healthy ground. HOWEVER, they didn’t take us to the next level, despite many promises, and there was a lot of hot air regarding players coming in or staying in. Positively, they were very loyal to managers, with only 4 being in charge during their time here.
HOWEVER, you have left – so PLEASE stop talking about your time here, and focus on West Ham, it sounds like you have plenty to get on with there.
No Gold Rush at West Ham
Here is Dale’s take on today’s announcement of DS and DG taking over at West Ham.
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The well publicised 50% takeover of West Ham United by David Gold and David Sullivan has seen the re-emergence of a partnership that will provide anything but ambition to the struggling London club.
I am aware that many loyal bluenoses will wish the new owners the best of luck with their new investment. They will remember them “saving” the club from the dire days of the Kumar’s and lifting the club out of administration in doing so. The £700,000 brought to buy the club from the liquidator BCCI in March 1993 saw the dawn of a new era at the club. They will cast their minds back to the average gates of 7,000 during the darkest days of the club and the facilities that were in desperate need of some attention. All of this under the era of the club pales in significance with the achievement of Premier League football and the 17 year long wait to be reunited with the old enemy in the country’s top division. The legacy that Sullivan and the Gold’s should of left was of vast improvements on and off the field, a club to be proud of and an emotional farewell to a club that was the focal point of their day-to-day business for the past 16 years.
However. The outspoken Mr. Sullivan put an end to any gracious departure that many were hoping for with his “FACT” sheet posted on the official site and with his dramatic claims following the angry demonstrations amidst the clubs relegation at the end of 2008.
“These people don’t know anything about business or about football. I have had enough. I don’t want to be here next season. All those out there who want to buy it, they can buy it. Please buy me out, David [Gold]. There are five or six clubs out there who would welcome me with open arms. It is time to move on.”
Since then he has continued to rant and rave about what a brilliant job he done in turning the club around. Yet I pose the question, when will the time come when the egocentric, bitter and self righteous EX co-owner realise that we, the fans, have stopped listening?
West Ham is in a financial state not too dissimilar to us all those years ago. Starring relegation in the face and in debt to the sound of £50m to banks and £40m to clubs, and any Hammers fan would welcome new owners and fresh investment. But here’s what will happen for all those “lucky” Hammers fans that will have the same little man sitting in the corporate seats at Upton Park that we had down St.Andrews.
I do believe he will steady the ship. The books over time will be cleaned and the finance of the club will improve. Along with David Gold, for whom I have a considerably more amount of admiration, they will lift the club out of their situation and will run a professional business, the way it should. That said, the bravado surrounding “a top 4 finish” will have those in the capital watering at the mouth. In reality, it will not happen. The way in which Sullivan will run the club will see stability and credibility but in terms of ambition and him parting with vast quantities of his own money will see false promises. It seems to be a double edged sword with Sullivan you have a tightly run professional businessman at the held but not a man to bring entertainment, value for money or ambition to your club.
I thank the Gold’s, Sullivan and Brady for what they did during most of their time at the club, but we have moved on with a new owner and look forward to the times ahead. Hopefully, with the takeover now complete at West Ham he will do the same and part verbal company with our club, Birmingham City.
Dale Moon
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