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Birmingham City record pre-tax losses of £20.5 million in promotion year
Blues hit by financial report...
5 Mar 2010 18:42:00
By Niall McGlone
Birmingham City have recorded a pre-tax loss of £20.5 million, the club’s auditors have revealed.
The financial statement concerns losses for the year ending August 31 2009, meaning that the debts amassed were under former owners David Sullivan and David Gold, who have since taken over West Ham United.
The report blames the 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."
The losses were accumulated during Birmingham’s promotion winning season in the Championship as the Blues ran up staff costs of £27.1 million in 2009, compared to £26.6 million the previous year.
That figure was then hit by a fall of more than £22 million (44.8 per cent) in turnover, which including broadcasting and commercial income as well as match receipts.
The accounts will no doubt anger new owner Carson Yeung, who was already outraged when it was discovered that the previous owners had paid themselves advanced 2010 management fees estimated to be worth £420,000 before selling the club.
David Sullivan later offered to pay back half of the fee but the offer was turned down. Yeung’s business team were also left fuming over ex-MD Karren Brady’s controversial £1 million severance package.
The Hong Kong businessman paid £1-a-share to buy the club in October, but the Chinese now believe that 30p-a-share would have been a fairer price.
The current board were unwilling to comment on the tax loss.
"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," read the financial report.
"The aim is therefore to manage these costs whilst being as competitive as possible within the club’s financial constraints."
Despite the record losses, former co-owner David Sullivan has defended the previous board claiming that there were no secrets over the financial problems at St Andrews.
"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."
The financial situation at the club is likely to have an effect on Alex McLeish’s transfer funds come the summer transfer window.
The financial statement concerns losses for the year ending August 31 2009, meaning that the debts amassed were under former owners David Sullivan and David Gold, who have since taken over West Ham United.
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The report blames the 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."
The losses were accumulated during Birmingham’s promotion winning season in the Championship as the Blues ran up staff costs of £27.1 million in 2009, compared to £26.6 million the previous year.
That figure was then hit by a fall of more than £22 million (44.8 per cent) in turnover, which including broadcasting and commercial income as well as match receipts.
The accounts will no doubt anger new owner Carson Yeung, who was already outraged when it was discovered that the previous owners had paid themselves advanced 2010 management fees estimated to be worth £420,000 before selling the club.
David Sullivan later offered to pay back half of the fee but the offer was turned down. Yeung’s business team were also left fuming over ex-MD Karren Brady’s controversial £1 million severance package.
The Hong Kong businessman paid £1-a-share to buy the club in October, but the Chinese now believe that 30p-a-share would have been a fairer price.
The current board were unwilling to comment on the tax loss.
"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," read the financial report.
"The aim is therefore to manage these costs whilst being as competitive as possible within the club’s financial constraints."
Despite the record losses, former co-owner David Sullivan has defended the previous board claiming that there were no secrets over the financial problems at St Andrews.
"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."
The financial situation at the club is likely to have an effect on Alex McLeish’s transfer funds come the summer transfer window.
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| Open an account with Sportingbet today and get up to £50 in free bets! |
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| Sign up with William Hill for a free bet up to £25 |
|
| Sign up with bet365 for a free bet up to £200 |
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