Birmingham City shareholders warned of ‘substantial losses’

BIRMINGHAM City’s owners have warned shareholders the football club is likely to make a substantial loss due to relegation from the Premier League.

Loss of investment and reduced television revenue – despite a parachute payment to soften the blow of relegation to clubs losing Premier League status – have dealt a major blow to the club’s finances.

In an announcement to the Hong Kong Stock Exchange, Birmingham International Holdings said: “The board of directors of the company wished to inform the shareholders of the company and the potential investors that it is expected the group will record a substantial loss for the year ended June 30, 2011.

“Based on the information currently available, such a loss is mainly due to the substantial impairment losses in respect of intangible assets, such as trademark and goodwill, mainly as a result of the relegation of Birmingham City Football Club from the Premier League to the League Championship for the year 2010/11.”

The club has struggled to attract investment since relegation and the situation has not been helped by the arrest in Hong Kong of chairman Carson Yeung on money laundering charges.

New investors are now trying to be found but in the meantime the St Andrews club has been told it has to carry on as best it can.

Players from last year’s squad have been sold off – and more may follow – while the club lost manager Alex McLeish to city rivals Aston Villa prior to the new season.

New manager Chris Hughton has performed miracles in the eyes of many fans on little or no cash, including a long winning run which has seen the club climb the Championship table.

It is also progressing well in the Europa League, a tournament it won entry to following victory against Arsenal in last season’s Carling Cup competition.

The latter could provide a significant revenue boost if the club can progress to the knock-out stages later in the season.