Birmingham City face Premier League review over accounts
Fri 8th Apr 2011 | Money & Finance
Birmingham City faces a Premier League review after accounts submitted by the club and its parent company included auditors’ qualifications that cast doubt on its future.
Birmingham, who won the League Cup last month has been trying to raise funds after its parent company, Hong Kong-based Birmingham International Holdings Ltd. (2309) (BIH), said in March that its liabilities exceeded assets by about HK$348 million ($45 million).
The company raised HK$87 million in a share sale last month as part of its funding target.
In its latest accounts for the year ended June 30, 2010, Birmingham said it required funding from BIH to continue operating within its agreed banking facilities. It said then that it aimed to raise a total of £24.7 million.
“These conditions indicate the existence of a material uncertainty which may cast doubt about the company’s ability to continue as a going concern,” Birmingham’s auditor BDO LLP stated in a note to the accounts.
Premier League rules, drawn up after Portsmouth last year became the first team in the competition to seek bankruptcy protection, require clubs to provide detailed accounts by March 31 every year. The league has the power to enforce financial controls through measures such as blocking player trades and contract negotiations with existing players if it has concerns over teams’ balance sheets.
Referring to questions about the team’s finances to a statement issued on March 23rd by acting chairman Peter Pannu, said “major shareholder Carson Yeung recently loaned ‘an additional’ £4 million to the team.”
The loan was intended “to quell recent media reports raising financial uncertainty against the club which came as a result of journalistic-induced scaremongering,” Pannu said.
According to Bloomberg, Yeung met with the Premier League last year and provided written assurances that the club could be sustained over a full season after the team’s auditors previously cast doubt about its ability to function as a “going concern.”
Birmingham also needs to convince European soccer’s governing body about its finances. It qualified for the Europa League after beating Arsenal in the League Cup final in February. UEFA’s club licensing policy requires teams with qualifications in their accounts to explain how they will continue to operate.
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