Birmingham's finances put Europa place at risk
Fri 15th Apr 2011 | Money & Finance
Birmingham City’s uncertain financial situation looks as if it could cost the club its Europa League place next season.
Birmingham must convince the Premier League and the Football Association that their finances are not a major cause for concern.
According to reports, the Premier League is set to hold discussions with the Birmingham board this month before deciding in conjunction with the FA whether they should be granted a UEFA license and allowed to play in the Europa League, for which they qualified after winning the Carling Cup.
Rumours persist at the state of Birmingham’s finances following reports that the club’s parent company, Birmingham International Holdings announced that Carson Yeung was preparing to mortgage his private properties in a cash-raising exercise. The statement to the Hong Kong stock exchange added that without fresh funds the business may suffer "significant curtailment of its operation".
Yeung, who became the club’s largest shareholder buying 16% stake in 2010, purchased a further 8.6% stake earlier this week and is understood to have provided written assurances to the Premier League last year in relation to the club's finances.
Financial disclosure rules brought in after the collapse of Portsmouth last year, requires clubs to submit "independently audited accounts to the Premier League by 1 March each year with requirements to note any material qualifications or issues raised by auditors". Clubs are also required to submit "future financial information" to the Premier League by 31 March each year that "will act as an improved early warning system should any club take undue financial risks which may have consequences for future financial stability".
It’s understood that the accounts for Birmingham City Football Club and their parent company, Birmingham International Holdings, included qualifications in their audit reports about both companies' ability to continue as a "going concern".
A spokesman for the Premier League told the Guardian: "Under our financial criteria all the clubs have to submit future financial information. There are a number of triggers that would result in us taking a closer look at a club's financial circumstances, such as an 'emphasis of matter' [eg a doubt on the club's ability to continue as a going concern] on the accounts. This could result in measures being placed upon a club to ensure its sustainability going forward."
Peter Pannu, Birmingham's acting chairman, maintains that the club remains on a sound financial footing. "The finances of the club in terms of profit and loss are fine and with the continued support of Carson Yeung we do not envisage any foreseeable problems," he said. "It is routine procedure for the Premier League and UEFA to look at the club's books, especially as we are now eligible for European competition."
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