Blues accounts for last season were released a few days ago. The main highlights are discussed below.  As well as the headline profit and loss numbers there are some other interesting things happening.  All figures have been rounded to the nearest £100,000 to aid readability, and figures for the last 5 years and from other championship clubs are shown to give some context.

Blues are the thirteenth Championship club to report financials for 2021/22 and so Blues results will be compared to those other 12.  Blues set up in UK is that they have a parent company (Birmingham City PLC) which covers both the men’s and women’s teams as well as well as a company (Birmingham City Football Club PLC) which covers the men’s team.  Both these companies release their accounts at the same time.  The figures in the article are for the men’s football club unless otherwise stated.

Let’s start with revenue.

Revenue

• • Reduced capacity of St. Andrew’s looks to be impacting revenue

Revenue figures are shown above.  Probably the best past season to compare these against is the last full season before Covid hit.  The season that ended in May 2019. Match day revenue is down 16% compared to that season. Average league crowds at St. Andrews are actually 28% down compared to that season (16,152 compared to 22,483) although this is slightly compensated for by increased prices.  Nevertheless, it appears that the stand closures are having an effect on revenue with Blues having only the ninth largest matchday revenues out of those 13 Championship clubs who have published their 2022 accounts so far.

It is also noticeable that Commercial revenue is only half of what it was in 2019.  This would put Blues mid-table (joint 5th) out of those Championship clubs who have published their 2022 accounts so far, but the reduction is concerning.

Operating Costs

• Total wage bill is still over £30m

Blues total wage bill last season was £31.1m, marginally up on 2021 and the wages to turnover ratio was an unsustainable 177%.  Blues have the second highest wages and the second highest wages to turnover ratio for those Championship clubs who have published their 2022 accounts.

Player amortisation, which spreads transfer fees paid over the length of a players’ contracts, was down highlighting that Blues are becoming less of a spending club.

Overall though total operating costs were up slightly at £48.5m.

Operating Profit

• Significant loss on operations

Putting these together gave an operating loss of £26.9m. Marginally down on recent previous seasons, but still concerning.  Not surprisingly, with high wages and lower than average Championship revenues, Blues operating loss is one of the worst in the Championship so far with only Bristol City, Cardiff City and Stoke City showing slightly worse losses.

Player Transfers

• Blues continue to be net sellers

The overall transfer picture for 2021/22 is shown below.  Blues spent £1m getting players in and had sales of around £3m.  It should be noted that the purchases row is probably more accurately described as the cost of player registrations.  It would usually include transfer fees, loan fees, agent fees and lawyer fees etc.  Also, under current accounting rules neither purchases or sales would include any conditional payments not yet triggered.

It can also be seen that after investing strongly in players in 2018 Blues have become a selling club since then.

The profit on player sales is slightly below the total sales figure as the accounting value for the player on the club’s balance sheet has to be subtracted. For Blues this gives;

Profit and loss

• Another significant loss last season

Putting the revenue and costs together gives the following total profit and loss

Blues recorded on overall loss of £24.8m, the worst for four years.  In the previous three seasons significant operating losses were offset by transfer profits or the sale of the ground.  Again, this makes them one of the most loss-making clubs in the Championship out of the 13 who have declared their results so far, with only Bristol City and Cardiff showing slightly worse losses.

Debt

• The owners put in another £24m last season

In recent history the club has generally relied on cash injections from the owners to continue operating and this trend continued last season.  2021 was slightly different as the club relied on a loan from the football league and cash generated directly or indirectly by player sales.

You would therefore expect the club’s debt to go up.  But it didn’t, as the UK parent company Birmingham City PLC converted £52.6m of debt to equity.  Therefore the debt has gone down as shown below.

This conversion of some debt to equity is almost certainly for Profitability and Sustainability purposes as the allowed losses a club can make is greater if the owners have put in a certain amount of equity into the club in recent years.

The debt that the men’s football club owed each year over the last 5 years is shown below;

This debt is owed by the men’s football club to its UK parent company Birmingham City PLC who, in turn, owe the money to the ultimate owners of Blues, Birmingham City Sports Holdings Ltd (BHSL) and Oriental Rainbow Investments (ORI). However, the owners have not converted any of the debt owed to them by Birmingham City PLC to equity so although Birmingham City football club ‘only’ owes £58.6m to Birmingham City PLC, Birmingham City PLC still owes £116.8m to the ultimate owners.  This is broken down as £90.9m to BHSL and £25.9m to ORI according to the latest accounts, which suggests that the owners will struggle to recoup their debt even if the football club were ever in a position to pay it.

The Future

• Keeping the club going

The accounts estimate that £23m will be needed to keep the club going from July 22 to December 23 which, presumably, includes money for stand repairs, although this is not stated.  On the plus side this is significantly less than the £40m estimated to keep the club running July 21 to December 2023 in the last accounts, which suggests that perhaps this season and next the club will finally get to grips with the wage bill.

Interestingly, a note in the accounts says that Maxco have provided £8m of support for the club between June 22 and December 23.  Presumably this is part of the £23m although this is not explicitly stated. As Daniel Ivery and others have pointed out, the wording in the note, “During this period, working capital of £7,970,000 was provided to the club by Maxco Capital Co Ltd as part of the Master Sale and Purchase Agreement relating to the sale of Oriental Rainbow Investments Ltd (ORIL) by its beneficial owners”  is slightly ambiguous as to whether that money is returnable from the club or from ORI.

Summary

The accounts make for pretty grim reading.  Revenue is still down on pre-Covid levels, likely at least in part due to the stand closures, and the wage bill is still high leading to high losses.  In turn this is likely to limit future wages and transfer activity due to profitability and sustainability limits.  The only minor glimmer of hope is that the cash injection required up to the end of this year is smaller than in the corresponding injection required 12 months ago, suggesting that the club is at last getting a handle on the wage bill.

Even if there is a new investor or a take-over on the horizon there will still be a substantial amount of work required to get Blues back on an even keel.

Blues Trust