On Thursday 17th January the accounts for Birmingham City FC’s parent company, Birmingham City PLC, were published for the year ending 30th June 2012.

The accounts followed the publication of Birmingham City FC’s accounts on Wednesday 9th January for the same period. Analysis of these accounts performed by Blues Trust raised a number of questions and queries surrounding the running of Birmingham City and future cash flow requirements in order to continue operating as a going concern until the end of the 2012/2013 season, whilst documenting that a single unnamed Director had been paid the sum of £687,611 in a single year.

The Club’s acting Chairman Peter Pannu has since gone on record stating having recently told the Birmingham Mail that he only took £250,000 as a gross salary, with the remaining £430,000 being ‘out of pocket expenses’. The publication of the parent company’s accounts breaks this figure down even further, showing that, in fact, the £687,611 figure actually relates to £661,000 of salary and £27,000 of benefits in kind.

This development alone poses an important question; which figure is correct? If Mr Pannu was only paid a salary of £250,000 why do these accounts show the figure to be more than two times that amount (£661,000)? If this £250,000 figure is correct, further questions must be asked surrounding the remaining £430,000 of expenses – as £8,000 per week is an incredibly high figure for purely expenses alone.

And therein lies the crux of the issue – confusion and conjecture. The publication of an organisation’s accounts is to allow the reader to make informed judgements on the running of said organisation. Yet since the publication of these accounts, it has become increasingly unclear as to what the Club got for its £687,000 outlay; irrespective of whether this was expenses or salary.

The Trust would also like to understand more about Carson Yeung’s personal loan lent to Birmingham City. It is no real surprise that My Yeung is in no rush for his loan to be repaid, given that it attracts interest at 5% and has accrued £1.57 million in interest to date. It must be noted however that this interest has not yet been paid over.

Moreover, while 5% is not excessive as a commercial arrangement, at a time when the base rate is at an all-time low (currently less than 1%) coupled with the parlous state of the Club’s finances and the fact the loan is provided by the largest shareholder, this figure does appear to be somewhat high. The Trust questioned in its previous statement as to the governance arrangements surrounding this loan as there is no formal documentation in place, so how did this figure of 5% get decided upon?

The Trust understands that Mr Yeung has taken personal responsibility for all 3rd party loans; however the Trust is not yet aware of the size of these loans, or what interest these loans attract. It remains a pressing concern, however, at the amount of interest the Club has to pay on these loans.

The Trust has today issued a second open letter to Mr Pannu seeking answers and further information on these issues. The full statement and a downloadable copy of the letter can be found here.

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