On 17 March 2013, Birmingham International Holdings Limited – the holding company of Birmingham City Football Club – released their long overdue accounts for trading up to the 30 June 2012. On behalf of its members, Blues Trust sought professional advice in order to conduct a full analysis of the published results.
The BIH accounts follow the publication of Birmingham City Football Club and Birmingham City PLC’s reports in January; both of which raised a number of concerns surrounding the financial governance of Birmingham City FC.
Firstly, it is important to highlight the auditors concerns regarding what they describe as ‘fundamental uncertainty relating to the Going Concern Basis’. Put simply, this means the auditors have serious doubts as to whether the business will be in a position to operate in the short term. They question the uncertainty surrounding future funding being available and the impact this may have on Birmingham City Football Club.
This statement is hardly news given the state of the BCFC accounts, however the Trust would have welcomed more detail and clarification as to how the directors will continue to fund the club and note with some concern the comment, ‘the directors of the company will consider different sources of financing being available’. In a statement regarding the BCFC accounts published on 8 January 2013, Blues Trust raised concerns as to what shape this financing would take and note that still this issue does not appear to have been adequately addressed.
The auditors also qualified their opinion on two further areas; firstly the now infamous royalty arrangement and also around the remuneration of directors. Following queries in Birmingham City FC’s accounts regarding remuneration payments made to Acting Chairman and BIH CEO Peter Pannu, it appears there are further queries surrounding payments made to former BCFC Chairman and BIHL CEO Vico Hui, indicating yet more poor corporate governance.
It should be recognised however that it is only in relation to these issues that the auditors have raised concerns. In their statement, the auditors make it clear that in all other respects statements have been properly prepared.
Furthermore, it is disappointing that the release of Birmingham International Holding’s accounts have once again led to confusion, with Birmingham City having to clarify the situation surrounding the sale of two playing assets (now identified as Jack Butland and Jake Jervis) in a statement published via the Club’s official website. Accounts are supposed make it clear to the reader how an organisation has performed and the activities it has carried out during the reporting period. Contents of the accounts should not need to be clarified, especially within twenty-four hours of their release.
In summary, there is no new information of any real significance. The Trust is already aware of the questions surrounding the overall governance of Birmingham City Football Club and concerns regarding some of the transactions that have been entered into. It has also been well documented that the Club will require additional – as yet unidentified – funding to ensure it continues to operate as a going concern.
Looking at the positives, one of the main stumbling blocks to any potential sale of the Club was around the publishing of these accounts; once the interim accounts for the 6 month trading to December 2012 are released all outstanding accounts will be up to date – hopefully opening the way for potential buyers to move in.
Blues Trust will continue to strive to promote increased openness and transparency at Board level while attempting to gain further insight into some of the concerns raised herein; coupled with some of the outstanding issues previously brought to light. The Trust will endeavour to update its members and the wider Birmingham City fan base in due course.