Questions About Birmingham City’s Financing…

26 By Mark  |   The Ball  |   November 6, 2010  |     12

When Bates “reoccupied” Leeds United in 2007, he employed all sorts of accounting “techniques” to effectively clear most of the club’s debts, such as a quick in-and-out of administration (I’m assured that’s not the correct technical term). This seemed wrong to non-business-minded peoples but, we were assured by knowing sports journalists – Jeff Powell in the Mail newspaper, I’m looking at you – it was “normal” business practice. As was, we were assured in 2005, business people borrowing millions to buy a club and paying the money back from club profits. Leveraged buy-outs, they’re called. They happen all the time in what we were again assured was the real world.

More recently, football journalists have got excited by the phrase “the existence of a material uncertainty which may cast significant doubt about the Group’s/Company’s ability to continue as a going concern” in club’s parent company accounts. The suggestion was impending doom. But, we were yet again assured, this was just accountants and auditors covering themselves against worst-case scenarios. Nothing to worry about. Normal business practice. Happens all the time. Experience has taught many football fans that this, to quote the great financial wizard George Gershwin, “ain’t necessarily so.” Sometimes, to use another phrase, “if it looks like an elephant, stomps like an elephant and smells like an elephant…it’s an elephant.” And if there is “material uncertainty” about the financial future of the company/club in question, that is because there is a material uncertainty…etc…

Birmingham City were the latest materially uncertain football club when I started typing this piece. Since then, Bristol City have become materially not sure… almost as if football generally is in an unseemly financial mess. Birmingham’s parent company, Birmingham International Holdings (BIH), recently published its accounts to the end of June 2010 – later than promised, but we’ll come to that in a bit. And these figures have that material uncertainty in its usual spot – the note to the accounts entitled “emphasis of matter.” But despite the best efforts of financial experts among City’s fan base and because of the lack of effort of the local press, the entire accounts appear materially uncertain.

The club (“BCFC”) is a wholly-owned subsidiary of BIH, which itself was the small-time Hong Kong company Grandtop International Holdings until BCFC arrived. Grandtop was a clothing company, described as “apparel sourcing and trading” in these accounts, and also provided the catch-all “entertainment and media services.” Quite how main a subsidiary BCFC is can be gleaned from two key facts. During the 15-month accounting period, only eight of which included BCFC, “consolidated turnover” rose from 11 million Hong Kong dollars (HK$) to… HK$582m – an increase, the accounts note matter-of-factly, of 5,356%. And of that HK$582m turnover, BCFC made HK$580m. The results themselves indicate that BCFC’s net loss was £400,000 from April 2009 to June 2010, seven of which were under charisma combo David Gold and ex-pornographer David Sullivan.

But the results themselves did not instigate the concerns raised by some Blues fans. These came from the delay in announcing those results. Not particularly the length of the delay, as that was only one week, from October 19th to October 26th. And the announcement of parent company financial results within four months of the financial year end would have made a lethal weapon out of a feather among some fan bases (hello, Hull City). It was more that the delay was announced some way into the last minute, October 20th, “at the request of the Hong Kong Stock Exchange” (HKSE) (on which BIH is listed); and that the delay, according to the announcement, was “due in part to an outstanding issue relating to the working capital requirement of its principal subsidiary” which, by HK$580m, was BCFC.

The announcement also claimed BIH’s directors weren’t over-worried: “As Mr Yeung Ka Shing, Carson, a director and substantial shareholder…has pledged to provide reasonable financing to (BCFC) if required the Board is of the view that this issue is not expected to have any material effect on the operations of that subsidiary.” How “substantial” Yeung’s shareholding is, we’ll come to in a bit. And the “issue” remains unspecified, although it is stressed in the next paragraph that “there are no negotiations or agreements relating to intended acquisitions or realisations.” At least, none which are “discloseable under…listing rules.”  But the gist was that as long as Carson Yeung had pledged to cough up when needed, everything was OK.

However, this announcement came because of wild fluctuations in BIH’s share price, and came alongside the announcement of a “share placing” to provide “net proceeds for general working capital and financial support to the operation of (BCFC).” And perusal of various BIH announcements to Hong Kong’s stock exchange reveal a troubled time for the company, while also revealing Yeung’s investment in the football club to be as “substantial” as his shareholding. A share placing is defined as “a method of selling shares and other financial securities (which) are offered to sponsors or brokers private clients and/or a narrow group of investors.” In BIH’s case, it was specified that these shares would be placed with people who were NOT existing BIH shareholders. And the proposal helpfully demonstrated how current shareholders’ shareholdings would be diluted as a result – helpful because current shareholders’ shareholdings (or current shareholders themselves, for that matter) were not previously widely publicised.

It confirmed what many people suspected, however. That despite being the new ownership regime’s figurehead and, even now, routinely described as BCFC’s owner, Carson Yeung was merely one of many minor shareholders – two of which were named in the announcement. These were Zhou Xin, the CEO of “E-House China”, suggesting an e-communications background or, in keeping with his business history, property development and Lui Xingcheng, who increased his BIH shareholding from 13.14% to 14.22% on October 26th, buying his shares at HK$0.195, outside the share placing and fractionally more expensive. There was no indication in the stock market announcements as to who sold those shares. If all shares were placed, Yeung’s personal ownership would be down from 6% to 4% – “substantial” only in the weirdest of dictionaries. And he and his hopefully-entitled “Great Luck Management” company would together see their holdings diluted from 18.59% to 12.47% – one-EIGHTH of the company.

Other questions about Birmingham’s finances are not answered by the accounts and shares announcements. Indeed, they’ve posed a few more. The share placing, when publicised at all, has been presented as a “cash windfall” for Blues, with a possible £25m-£35m to be raised if all the shares are placed. £7m of the placing has been underwritten by the brokers of the deal, Kingston Securities Ltd. To add to the general uncertainty, the one local press article on the subject was headlined “£25m cash windfall for Birmingham City?” in the Birmingham Mail, but “£7m cash windfall…” in the Birmingham Post. It was the one article though, which quoted a stockbroker damning the whole thing with faint praise: “Provided that the get all the money in, (BCFC) is going to be relatively comfortable compared to some of its peers.”

Fans hoping for cash to improve the squad and fund the recently-suggested stadium improvements will therefore be disappointed. The accounts reveal that BIH’s current liabilities exceed it’s assets by a cool £28m, a gap which the share placing’s maximum net proceeds will, just about, plug. This fit of figures has been noted by other analysts. After that? A “material uncertainty,” even over whether the share placing will deliver the maximum financing. Some fans believe that Kingston Securities unwillingness to underwrite more than £7m is a sign of lack of confidence, as underwriting the whole amount would be a more lucrative exercise for any broker. This is despite the shares being an eye-catchingly cheap HK$0.19, lower than the lowest BIH share price of a turbulent summer and advertised in the announcement, somewhat desperately as “a 39.76% discount” on an average price over five consecutive, but turbulent, days. It is, of course, a minimal discount on the price Lui Xingcheng paid a week after the announcement.

The summer’s turbulence saw such wild fluctuations in share price that the HKSE wrote to BIH for an explanation. The company claimed it was “not aware of any reasons” for them, although the “large number of delays in producing required statutory documentation” (see below) has been cited by some observers. Also unexplained is why Yeung is so prepared to see his shareholding drop so low – and how he can still be the “sole decision-maker” others claim he is. He can afford more shares, having seemingly come into £290m over the summer. In the accounts BCFC was a “substantial acquisition.” But BIH’s May purchase of Diligent King Investments Limited “constituted a very substantial acquisition,” three times as substantial.

A high price, as one analyst noted, for a recently-incorporated company, with one asset, namely one “proposed agreement for a 20-year exclusive licence with China Broadcasting Telecommunications Ltd” – purpose unknown. A company with one careful owner… one Carson Yeung. The acquisition isn’t yet complete. In fact, BIH’s record at acquisition completion is a dismal one out of three, as witness by quarterly delays in “producing required statutory documentation” for both Diligent King and BIH’s other substantial recent acquisition, Peace International Creation. Peace’s “entire share capital“ acquisition was agreed a year ago. But last week BIH still required “additional time” and “the aforesaid acquisition is still in progress.”

So Yeung doesn’t have that cash just yet, although he clearly has plenty of some cash, given his preparedness to “provide reasonable financing… if required” to enable Birmingham City to continue as a going concern. One must hope, for the club’s sake, that he is better at providing that finance than BIH is at providing paperwork. Although I’m expecting reassurance from some quarter that such paperwork delays “happen every day in business.” Only one pattern seems to be emerging from Yeung’s motivations, that Birmingham City is the vehicle for promoting his other business interests. This is most obvious from the reference in the accounts to his “apparel” business, which is “facing a comprehensive challenge from apparel competitors” which meant the business “temporarily recorded no turnover in the period.” But only temporarily, as help is at hand from an agreement with “Xtep UK” on “the manufacturing and selling of ‘BCFC-Xtep’ branded sportswear” until 2015, a “crucial strategy… in redeveloping (re-starting) the apparel sourcing and trading business.” Lucky BCFC were on-hand, eh?

This might also explain Digital King’s future role…”live from St. Andrews” might soon be the Chinese equivalent of “now from Norwich, it’s the quiz of the week” (ask your parents), if the Premier League’s big clubs succeed in destroying the collective agreement on overseas broadcast rights (pure, PURE conjecture this, before anyone writes). But the idea that Yeung could be a mere face in a shareholders’ crowd has been passed off by commentators as “Eastern business practice.” And, with a depressing inevitability, BIH’s lack of transparency is because “the Chinese tend to be inscrutable by nature.”

“We forget,” said one Birmingham Mail reader, “that companies in Asia don’t behave like companies in the western world. Unless anyone is an expert in their ways, how can we be really sure what’s going on?” Indeed. Ask anyone whether Birmingham City are doing OK financially, and they’ll tell you they don’t know. Steven McManaman is a BIH executive director. You’re as well off asking him. This is the problem. And it isn’t a problem particular to Birmingham City FC at the moment – or Steve McManaman, to be fair. I am no financial genius or expert in “ways.” But nor am I stupid. And the financial affairs of a Premier League football club should certainly be clear to someone like me, if not every fan who takes an interest. If they are not, then they are not transparent enough. And if that is “normal business practice” which “happens all the time,” then normal business practice is wrong.

Follow Twohundredpercent on Twitter here.

  • November 6, 2010 at 9:42 pm

    utter crap ur full off the brown stuff u live in total and utter bollock shut up and get a fuckin proper job ya fuckin tosser birminghams finances are fine so shut the fuck up u knw fuck all wanker idot twat did i miss ne thing out god write about something thats true not this fuckin drivell

  • November 6, 2010 at 10:07 pm


    Well. Quite.

  • November 6, 2010 at 10:26 pm

    Mark Murphy

    And who could argue with that?

  • November 6, 2010 at 10:29 pm


    And that, m’lud, concludes the case for the defence.

  • November 6, 2010 at 10:31 pm


    The author really has far too much time on his hands. Get out, make some friends and get some fresh air, you’ll feel better for it.

  • November 6, 2010 at 11:28 pm


    blues fans need to wake up
    the fact is there are no clear accounts of whether BIH is taking money out of bcfc
    you can put your head in the sand but at your peril
    ask hull portsmouth etc , it only needs one of the creditors of BIH to demand their money and where will BIH get this from: bcfc no doubt

  • November 7, 2010 at 4:40 am


    Glad to see that my fellow supporters of BCFC can show such erudition in their carefully considered responses.
    Interesting, and frankly worrying stuff though Mark, just goes to re-inforce my opinion that football, and sport in general stinks financially.

  • November 7, 2010 at 5:09 am

    letsby avenue

    As an ordinary fan, as unwise and as uneducated as the writer, in the “financial world of football” – every point he eventually makes is old hat.

    There have been many public discussions on numerous forums about the finances and credibility of BIH and subsequently Blues.
    We’ve had doom and gloom predicted and almost semi-racist accusations of financial inproberty – for the 1st 12 months of Carson Yeung’s tenure.

    A set of papers are delayed a week ( because a share placement was being organised to offset any panic amongst the ‘observers’ such as the writer) – what do we get?
    Panic and innuendo from ‘observers’like the writer.

    A year ago, just over, we were promised that Carson Yeung had a hidden agenda. Obviously still hidden then.
    We were told that the Chinese Government and shady Hong Kong businessmen were using him as a front.
    We even had the reinforcement of David Sullivan telling the world that he was just a hairdresser.
    Carson Yeung may not be the multi-billionaire that Chelsea and Man City have as owners, but he has dekivered on every promise but one.
    That old clinker about a £40 million transfer window budget.

    That over excited, over-enthusiastic pledge was made on his initial press conference….and it seems to underpin every doom and gloom commentator’s motivation since. He couldn’t/didn’t deliver therefore he’s a sharlaton, broke,a wheeler-dealer or just inept.
    We’ve had all those comments.

    But now we have supposition passing as informed comment but coming from a writer who states up front he is not a financial expert – but chooses to rubbish other journalists who are equally or possibly better informed than himself. Why?

    He quotes two references from local Birmingham media.
    Both off the web and both probably written by the same journo for two separate papers within the same group.
    £7 million minumum was one hook.
    £25 million possibility was the other hook.
    Same source, same info, same truth – but directed at two different newsreader groups.
    Unfortunately, the writer seems to be ignorant of the ink trade as he is of finances in football.

    This article – ( when all the hyperbole and snide references to journalists and commentators is removed) – boils down to one fact, upon which a mountain of supposition is laid.

    The writer is also at fault for slagging the local journalists – the ones who would be the first to break a national story, the ones in daily contact with the key movers. They have no problem with Blues’ finances and manipulations out in Hong Kong. And with their proximity, they would know first and earlier than anyone else in the media if something was wrong.

    But because they have not reported international skullduggery – this writer insinuates that they are second rate or lazy or whatever.

    In fact it is this article which is biased and lazy. Selective and not very well researched.

  • November 7, 2010 at 7:58 am


    please, please, please never let the numpties put you off writing. Excellent article, if only other journalists could do such a good job, then maybe football clubs would clean up a bit.

  • November 7, 2010 at 8:10 am


    This tells us nothing we don’t already know. Yueng has got the money has got investors on board and is running the show, that has been made clear elsewhere. There is no Mr Big and has the author ‘Mark’ – a fan or a financial journalist – spoken to him or Pannu? This piece is the usual scaremongering cobbled together from the myriad of financial documents that tell us little in truth. Yeung has invested in the team, the ground and has a long term plan. He has not mortgaged the club to the hilt with loans like Liverpool were and Portsmouth. Blues are not about to go pop. The shareholders and investors are his companies associates and business pals and contacts. They prefer to be secretive so what? They are making inroads in China market and Yeung is not leaving the club short.

  • November 7, 2010 at 10:21 am

    Dr Bob

    So the main criticism against this article seems to be that it presents nothing new. No worries then – all must be well at BCFC.

    What a strange breed we footie fans are – why is it that an article that raises (or should that be ‘continues to raise’) serious questions about murky financial goings on at a football club makes some of that club’s supporters feel personally violated?

    It is murky – and it is BCFC supporters who shold be calling loudest for the murk to be lifted. And if everything is sweetness and light at St Andrews, then good luck to you. If not, it will not just be luck you will need.

  • November 7, 2010 at 11:24 am

    Often Partisan

    Thanks for doing sme digging as to what is going on at Birmingham, i have concerns about the club. Things definatly need to be made more transparant. As the poster above says the questions need to be asked.

  • November 7, 2010 at 12:10 pm


    Try asking Leeds fans, they are all experts in finance nowadays. After years of bullshit and lies by Chairmen, the premier and football league hierarchy, match officials, MP’s and the media trying to kill the club off.
    They will tell you “If they have a suit on they are corrupt”
    The fans are the only ones who care!

  • November 7, 2010 at 1:35 pm


    The criticism that there’s nothing new in the article doesn’t really mean a thing to those of us who don’t follow the minutiae of Birmingham City FC regularly. It’s all news to me and very interesting stuff. Keep it coming.

  • November 7, 2010 at 2:43 pm

    Worried Blue.

    eyupmate, you’re right “the fans are the only ones who care”. Or they would be if it was almost any other club than Birmingham City. I’ve followed them over thirty years and the vast majority of our fans don’t care as it requires thinking and effort but there’s not much of that on display with our average fan.

    The article is spot on and sums up nicely what some of us who have taken an interest already know and it’s very, very concerning!

    Please keep writing articles like this because, as you’ve identified, our local media is taking a head in sand approach and doesn’t have the journalistic talent to point out Hong Kong on a map.

  • November 7, 2010 at 9:02 pm


    why if abusive comments will be deleted and not published is the first one from not taken off. Surely the guy has an opinion and he is just reporting bits from the press he has read. so what. he has started a debate and doesn’t deserve to have foul mouthed comments directed at him. all true Blues fans want the best for the team I think that we are better off at the moment with the present owners, than the last lot. There is nothing we can do. hopefully the owners have backing from unknown investers and we will not know this until another Jan sales goes around and the end of this season. we will all know the state of play by then. So hang onto your hats and lets see what matererialises. I think that we will be disappointd personally, but hey what do I know.

  • November 7, 2010 at 10:07 pm


    We should probably modify it to “abusive comments will be deleted unless they’re as funny as this one”.

  • November 8, 2010 at 9:27 am


    It has got to the state when I wish all these clubs would just go bust.

    Then their fans might wake up to what is going on.

  • November 8, 2010 at 4:42 pm


    I.roth makes an excellent point, but Gavin was right in this instance. We took a vote and decided that comments as magnificently funny as that one should not be allowed to slip through the net.

    It also serves as a useful indication as to some of the fun-filled, good-natured and constructive comments which the site receives every day!

  • November 8, 2010 at 5:33 pm

    Mark Murphy

    Even I’d have voted in favour of keeping them up…although I wish my Dad would tell me before he writes stuff like that. I could have helped him with the spelling.

    Mind you, he denies sending it and reckons it was probably David Sullivan, who reckons Blues fans should be “proud” of Carson Yeung…just like Sullivan himself has always been.

  • November 8, 2010 at 6:19 pm

    Worried Bluenose

    I am appreciative to the writer of this article. This is the best explanation yet as to what might possibly be happening at my club.

    I sold my shares to Grandtop and twelve months on I have to say it was a decision I regretted. Shareholders were paid well over the market rate for the club £1 per share and I, like others, bit their hands off.

    Transparency? Some would be nice. The longer the true picture of the club’s ownership remains in doubt, the more likely it is that articles such as this one will be written.

    The local media were bought and paid for the moment they were wined and dined by Yeung, Pannu and Hui. The Birmingham Mail, an organ traditionally hostile to BCFC, show a sycophancy not seen since the days when Deadly Doug ruled AVFC with a rod of iron.

    Birmingham City Council, in the form of its political leadership is far more friendly towards this regime than its predecessor.

    BCFC are not one of the chosen clubs in as far as the affections of the national media is concerned, so I don’t expect Pompeyesque interest in the clouds obscuring its financial stewardship.

    I will be taking a closer interest going forward.

  • November 9, 2010 at 9:33 pm


    The thing I don’t get with these blinkered fans is why they are here. When I read a response like the first, I find it incredibly hard to believe they can be a regular reader of what is a pretty intellectual football site. Frankly I wonder how some of them read the ‘ON’ button on their PC.

    I mean, do they really read the stories about the finances of, say, Liverpool, Bournemouth, Rotherham, Cardiff and Luton nodding sagely in agreement, before Mr. Hyde takes over upon mention of their club?

    Personally, given your strike rate, should Swansea ever make an appearance as one of the ‘clubs in crisis’, I would come close to making a mess in my pants.

    Full marks on leaving Einstein’s remarks up, though – nearly caused a pant-mess of a different kind. In fact, it might even be worth having a wall of shame where the most egregious examples of idiocy, ineptitude and ill manners could reside.

  • November 12, 2010 at 5:05 pm


    Apart from the very interesting points raised above Birmingham do have some very real and undeniable concerns, which could put further stress upon the clubs viability. Firstly they have a comparatively ageing squad, which are on very good money and will soon need to be replaced and if you listen to a lot of Blue noses they will go down. What would be the ramifications on Carson’s business model with only Championship money to keep them afloat?

  • November 13, 2010 at 1:17 am


    Reading that ,all I kept hearing was “Hong Kong dollars and Indian cents ,
    English pounds and Eskimo pence”.

  • July 18, 2011 at 5:01 am

    Carson crisis leaves Blues adrift « giganticoo

    […] City’s parent company, was £28m in the red. This warning came only months after the club’s accounts had revealed a £10m+ deficit in their annual spending. And this was before they were […]

  • September 30, 2011 at 2:43 am

    Carson crisis leaves Blues adrift |

    […] City’s parent company, was £28m in the red. This warning came only months after the club’s accounts had revealed a £10m+ deficit in their annual spending. And this was before they were […]

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