Birmingham City losses more than tripled in financial year

And reports filed at Companies house reveal the club requires almost £50million from their parent company to cover them from summer 2017 until December next year, writes Business Editor Simon Penfold.

After the 2016-17 season started well under Gary Rowett, he was axed in December last year to be replaced by Gianfranco Zola. Zola quit in April as the club desperately fought to avoid relegation to League One.

New manager Harry Redknapp saved the club from the drop and signed a one-year contract, but was sacked and replaced by Steve Cotterill after a poor start to the current season.

However, their form has not improved and they are currently bottom in the league following Saturday’s defeat to QPR.

The turmoil at the top at Blues and the recruitment of 14 players during the summer transfer window saw the club rack up a pre-tax loss of £16.3m in the 12 months to June 30 this year.

That compares to the £5m loss the previous year.

Accounts newly filed with Companies House put the widening losses down to an increase in player wages, a decrease in the selling value of the players and termination payments to football management staff.

Staff costs for the year rose to £22.2m from £15.3m the year before.

However, during the year the club increased its revenue from £14.7m to £17.2m as average attendances at games rose by more than a thousand to 18,650.

The club warned that its losses “indicate the existence of a material uncertainty which may cast significant doubt about the club’s ability to continue as a going concern” and it will be dependent on securing future funding from its Hong Kong-based parent company, Birmingham Sports Holdings (BSHL).

So far BSHL has pumped £33.4m into the club, which says it will need another £49.5m to cover it from this summer until December next year.

Despite the losses, says the report: “The directors of BSHL have indicated that they expect that the group will have sufficient working capital to be able to advance funds for BCFC to meet its financial obligations as and when they fall due for the next 12 months following the resumption of trading.”

BSHL was able to start trading again on the Hong Kong Stock Exchange in October 2016 after Trillion Trophy Asia completed its long drawn-out takeover of the club. Trillion Trophy is also providing a revolving finance deal for BSHL worth up to £24m.

The accounts also show that the club made a net loss after tax of £14.6m and, at the end of June, its current liabilities exceeded its total assets by £11.9m and its total liabilities exceeded its assets by £17.8m.

In the accounts, signed by Xuandong Ren, one of a batch of new directors appointed in November, Birmingham City said: “The directors have considered the forecasts of BCFC carefully and also considered, with the directors of BSHL, the company’s ability to obtain the funding that is required as shown by the forecasts.

“The directors do however remain in the view that the company can obtain the required funding from BSHL and, as a result, the directors consider that it is appropriate to prepare the financial statements on a going concern basis.”