Often Partisan

Carson Yeung 101

One thing I’ve noticed since I’ve started this blog is the amount of misinformation out there; not only in the media but perpetuated by Birmingham City fans. There seems to be a real mish-mash out there of theories about the club and how it was taken over, how it’s financed etc. I apologise in advance for talking in simplistic terms, but having thought about it for some time I thought I’d put together some information about the club so people understand where it is right now. So I present to you the first in a series of articles I’m entitling “Carson Yeung 101”

Like David Copperfield, I think it’s wise to start at the beginning and the takeover of BCFC by as was then, Grandtop. On 21 August, 2009, Grandtop received guarantees from the major shareholders of BCFC that they would sell their shares in BCFC (which amounted at the time to about 50% control of the company). This would take Grandtop’s share in the company to just under 80%.

What this did was trigger an automatic offer for every share in BCFC. Once a shareholder passes 30% total control in a company, they are obliged to offer the same price for every other share that is available as the price they paid for the shares that took them over the threshold. In this instance, because Grandtop paid 100p per share to Sullivan, the Gold Brothers, Brady etc, they had to offer that same 100p per share to every other shareholder in BCFC.

That same document lists how Grandtop were proposing to do this – by selling new shares in Grandtop to bring in £57million. This share issue was fully underwritten by Kingston Securities Ltd, which is owned by Dr Pollyana Chu. What that meant was that if any shares failed to be sold within the time limit, Kingston would have to purchase them – so whilst the shares were on offer, these shares are shown as being held by Kingston. This is shown by this filing here. One other important thing to note is that this is BIH borrowing the money, not Carson. As you can see from this next link, Carson only owned just over 16% in the company (having bought various piles of stock over late August and early September) around the time of the takeover. Therefore, Carson didn’t borrow the money – BIH did.

On the 20th October, the share issue was completed. You can see by the next filing I’ve linked from the HKSE that Kingston had disposed of it’s interest in the shares it held, and from that date they owned 0% of Grandtop. This means that the money borrowed to pay for the purchase of BCFC had now been paid by new people investing in Grandtop. Whilst there was a bridging loan in place to pay for the shares that they had bought two months previously, this was paid back with the proceeds from the sale of the shares.

To simplify it, I’ll use an analogy. Imagine you’re a kid, and you’ve seen something you’d like to buy in a shop – say a nice new football. Normally, you can only afford a flyaway but there is a mitre “caser” in the shop for a tenner, and you think it looks a good deal. Trouble is, you don’t have the tenner on you right now – but you really want to take it to the park with your mates. So you say to your mom and dad “can you give me a tenner for that football and I’ll do chores to work off the debt”. Your dad gives you the tenner, you buy the football and go the park with your mates. Then, when you get home you wash his car, do the washing up and hoover the front room. The next day you do some more chores until your folks say that you’ve done enough, and then you’re free to play with the football you’ve paid a tenner for – and you have nothing to pay back to anyone.

I’m not going to deny that Carson (and by extension) BIH paid too much for the club, because they did – I think they paid double what it was worth. But to say that they loaded debt on to the club when they bought it… well that’s a fallacy. If you would like to know who owns what in the club right now, or look at the accounts, just check out the FAQ page.

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36 Responses to “Carson Yeung 101”

  • Dudleybluenose says:

    good read – well explained

  • terry o'neill says:

    almajir for chairman!! I love this site – definitely my favourite blues ‘fan site’ Created with a bit of intelligence and tries to see the bigger picture. Instead of the usual opinions and emotions clouding the issue. Nothing wrong with passion (that’s the reason i’m on this site) it just gets a bit boring when all it generates is slanging matches and bitterness. Keep up the good work.

  • Bluenosesol says:

    PP has a responsibility to communicate with the fans. He told the media that any financial impacts affecting BIH would not affect BCFC as they are two seperate entities. This clearly is not the case. If the fans are confused then blame the people who’s job it is to keep them informed!

  • Blueboy 88 says:

    Do you know how much the shares are trading at today ?
    & what is the current market value of Birmingham City FC ?
    Should an outside investor want to takeover..

    • almajir says:

      Trading is currently suspended but the shares in BIH are at 0.154, which values BIH at around 55mil I believe.

  • ScudMuffin says:

    Any chance of an XKCD style diagram showing the whole thing? I’m thinking this is a bit tldr for some.

  • Bazzathebluenose says:

    A beautifully written, well researched and articulately explained article Aljamir. Just so I’ve got it absolutely clear though who is the’kid’ represented by? Who are the parents and what is the equivalent of the chores to pay off the debt? I hope I’m not being too literal here but somehow the borrowed money has to be paid back doesn’t it? Or is there actual work or consultancy activities in lieu? Sorry if I’m being thick but the payment of the debt by industry of the child in the analogy I can understand but I couldn’t quite work out how this translated to the BIH/BCFC/Carson Yeung situation. Thank you in advance for your further clarification.

    • almajir says:

      I equated doing the chores as paying the bill – like selling shares in the company, the kid sold “shares in himself” – ie his time to pay the debt. That’s exactly what happened.

  • chris says:

    worth about 48 million pounds the last time they traded.
    if and when they trade again, the price may well plummet because the market value of it’s assets have fallen dramatically as we have sold players for about 20 million.
    plus the income has also dramatically fallen, which will have a massive impact on how the market see’s BIH (not just blues) as a viable business.
    last time we were in the championship the club at it’s lowest point was worth about 22 million and i suspect this will be roughly BIH’s value once trading starts again.
    at that price it is ripe for a takeover.

  • Martin Liveley says:

    well put mate, where would we be without you eh. I Want a Caser Football now though.

  • Poppa999 says:

    Can you explain why the shares are suspended. BIH are not in trouble with the law are they? The new money being loaned, how does that figure in the great scheme of things and who is paying the interest on this loan? If the loan is wanted back by this property speculator, is he going to want our property?

    • almajir says:

      The shares are suspended on BIH’s request – which means no, they’re not in trouble with the law. The reason the shares are suspended is most likely to protect their value whilst Carson is on bail/trial.

      I’m assuming you mean the money loaned yesterday. I do not know how much will filter down to BCFC, but what it should mean is that BIH shouldn’t be short of cash for a little while, which is good news for BCFC. The interest on the loan will have to be paid by BIH; I’m not quite au fait with how it works but I believe it’s like an interest-only mortgage – ie the company pays the interest only between now and when the loan matures (in 2 years time), and then in 2 years they repay the full amount of the loan.

      The loan is unsecured, so it’s not held against any BCFC property – no worries there. My guess is that Mr Yang has taken the vice-chairship and three seats on the board to ensure the money is spent wisely, and in the case of it not being able to be paid back, to take control of the company. Again, it’s conjecture, but I do believe Mr Yang is going to the one who forces Carson aside.

  • Rathater says:

    Has anyone else heard the rumour that the reason Carson is coming over is to sell to a consortium headed by TF and Carrot?

    Would be good for everyone if this happened!

    KRO

  • Dean Giblin says:

    Almajir

    As a side point you have mentioned the ground (which I understand is owned by HSBC or at least the loan is with them??) and also Wast Hills is on a 99 year lease from Birmingham University. How much is the loan from HSBC on St Andrews. I may be being a bit naive here mate (and I think you know why I’m asking these questions!). If BIH defaulted on the loan would it fall in the hands of HSBC? If an “investor” wanted to come forward and say buy the loan from HSBC would they get 100% of St Andrews? Or is it just a loan to cover say 80% of the ground.
    In the same vein, if an “investor” wanted to come forward and buy Wast Hills what would be the process? Again I may be being naive but could someone approach Birmingham University buy the lease making it freehold and then buy the land?

    Thanks

    • almajir says:

      I don’t fully know the situation with the ground; as far as I know there is a mortgage on it with HSBC but I couldn’t say for sure. If someone bought the club it’d be like buying a house from someone else, you either put your own mortgage on it or pay the debt off on it.

      With the training ground, no idea. All I know is that it’s a long term (pretty sure 99 year) lease from Birmingham Uni

  • Bazzathebluenose says:

    Thanks Aljamir. Having read it again and looked at the various links I think I’ve got my head around it now. Well done again on a superb article.

  • Bluenose63 says:

    Shame that lovely new caser that was clearly overpriced, lasted only a short while before it deflated and ended up in the bin. Because with no money of my own and I can’t borrow any more money to repair it. All my friends have deserted me as they only wanted really to play with my football and now I am stuck in a room on my own for what seems like forever. Thinking to myself I should have bought the flyer at the cheaper price and I wouldn’t be in this mess

    • almajir says:

      Yeah, but you won that competition over the park with it, and you’ve been invited to play with some of the big boys from across the other side of town in their fancy parks…

      • Bluenose63 says:

        Whats the point… I can’t even afford the bus fare to get there now

        • almajir says:

          Really? Without wishing to take the analogy further, you must have heard something I haven’t if we’ve been kicked out of Europe.

          It’s not as bad as you think. Honest.

          • Bluenose63 says:

            Maybe I should have said I have been grounded and only let out of my room for a very short period of time. Before I have to return to it, and if I have been found to have misbehaved I definitely won’t be able to afford the bus fare

          • almajir says:

            Gotcha. Yeah, that’s fair enough

  • P.J.Nicholls says:

    I cannot get my head round where all this money is going.
    The parachute payment of 1st installment-18 million should have been paid in August.
    The payment from Aston Villa of 3 million in August.
    7 million for Johnson plus 5 million for Gardner paid in August.
    This in my calculation adds up to the “black hole” which we are told we were short.
    We the have the season ticket payments plus the proceeds from the matches played plus all takings from these games.
    We are told up to 18 million has been forwarded from share placements in Hongkong.
    We have the payments for Dann,Jerome,Foster & Ferguson.
    The extra payments to Cardiff for Johnson did not have to be paid as we were relegated plus there has been the huge savings in wages to Hleb,Philips,Bowyer,Gardner,Johnson etc.
    I will need some convincing as to where we stand financially as there seems to be some unspoken losses that are not clear.

    • almajir says:

      Parachute Payment ain’t 18mil, that’s a start (it was 16)
      I don’t believe we got £3mil for Mcleish, or £7mil for Johnson
      the 18mil in share payments was for cashflow purposes last season.

      There’s a start for you.

    • Alfboy says:

      I don’t think player sales make any kind of a dent into the “black hole” as players are listed as assets of the company, so the transfer value received for them is just cash on the positive side of the balance sheet rather than an asset.
      The only help from selling players is the fact that we get the wages off the bill.

  • Bluenosesol says:

    If we take a look at all of the player sales, McLeish compo, parachute payment, corporates, season ticket sales, share arrangements, we must be in the 50 mill ball park. How comes we couldnt afford 750k for Ben turner?! I still need convincing that what I can definitely smell aint a bloody big rat!!

  • Brendan Fitzgerald says:

    Great article.

    I’m of the opinion that administration is an inevitability. Carson Yueng isn’t the first, and certainly won’t be the last, person to get out of their depth and let their ego overrule their head. Goldberg lost £40m at Palace and now runs Bromley FC. I also think it’s immaterial whether or not he is convicted of money laundering. As Almajir points out Yueng paid double what the club was worth as a premiership club, as a Championship club he’s got a pig in a poke and all this would have blown up regardless of his personal troubles. He is obviously cutting his loses and trying to recoup as many shekels as possible. Also this character Mr Yang will be ready to pounce and get the club for a steal.
    I also think relegation was a Godsend. If we’d have stayed up we would still have had a fire sale and would have done a Pompey. Imagine having this squad playing in the big boys league? At least there’s a realistic chance of us staying in this league even with points deducted for going into administration. Also Hougton has absolutely no pressure on him. If we finish mid-table and he builds a young footballing side to boot then I’d be happy. We’re a reasonably well supported club and will eventually be bought and the whole roller coaster ride will start again. Perhaps we were due a reality check and not even the mighty Arsenal have a divine right to play in the Prem. We’ve been down before and survived and in truth this league is probably the toughest it’s ever been but doesn’t that make it the most exciting? All in all it’s not half as bad as the doom and gloom merchants paint it. If you were asked back in the Kumar days if you’d settle for where we are now having won a trophy at Wembley and playing in Europe getting 28k gates, (we played in front of crowds of 7k back in good old days) you’d tear my arm off at the shoulder.

    Keep up the good work Almajir, top blog and see you all in Brugge!

  • Dirty Bertie says:

    People must not forget that it was the SGB bunch that shafted CY/BIHL and, therefore the club and its fans. They were very prudent when their own money was involved but soon changed their tune when it wasn’t.

    BIHL has approx. 3.9 billion shares which @ 0.1540 HKDollars is worth about 598.7 million HKD, about £47.6 million @ today’s 0.0795 HKD to the £

    BIHL bought the club for £81.5 mil – a loss of around £34 mil, i.e. around 427 million HKD which is approx. the amount written off for Goodwill Impairment in BIHL’s accounts and forms the bulk of the Operating Loss in the last full accounts.

    SGB bought the club for approx £1 mil (in today’s money) and walked away with over £50 mil. Not a bad return for taking the risk of rescuing the club, not to mention their various payments and perks received as directors of a football club over 16 years. But their greed has put us back in the mire.

    CY & co may not be much better but, actions to date suggest that they will not let the club go to the wall and lose their money without a fight. As with SGB when they were prudent, we should “hold onto nurse for fear of worse” but get ourselves ready for when they start to over-reward themselves for their investment.

  • Gibbo says:

    a Burnley fan i know has just told me its reported we paid 500k for elliot,,so we aint that broke

  • Ben says:

    Also paid 500k for Ibanez
    I hope we sign a few good players in on loan.

    A goal scorer would be nice, as C.Wood needs to work on his 1st touch; Rooney is a work-horse and King is injuried. Zigic – will be quality but is lazy(hope he can pull it out for us – love how his agent said he was defo off – he is like our Tevez)

    Also think we need a better keeper than Myhill


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