In the last few days, an excellent blog piece by The Swiss Ramble regarding Birmingham City’s finances has been circulating around the twittersphere and the messageboards. It is a bit long, but the writer has taken the time to try and look at things in depth, and summarise them in a language that most laymen can understand.

It paints a pretty bleak picture for us; in effect, we’re in hock to Carson Yeung to the tune of £14.8mil and the only way we’ll stay afloat is by getting further in debt to him. What worries me most is that our matchday income is one third of what it was in 2005 – media income has tripled since then, and we’re now dependent on money from Sky – 74% of our turnover comes from that revenue stream alone. With wages standing at 78% of turnover (and climbing, as those were old figures), it does look like we could be up the creek – and we might just have let go of the paddle.

A lot has been made of the club’s ownership structure. Trying to even find a breakdown of shareholders is a frustrating experience on google; most hits initially found related back to forum posts, and whilst some seem pretty well written, you cannot account for their veracity until you have proper information from a proper source. The latest information I can find regarding the major shareholders in the company is here.

We all know who Carson Yeung is. Chu Yuet Wah is better known as Pollyana Chu, and is the controlling shareholder of Kingston Securities. Liu Xingcheng doesn’t really show up at all in google searches; the best I’ve ever found is that he is potentially a lawyer in Beijing. The companies that are involved appear to be shell holding firms that act as investment vehicles for unnamed persons. Whilst many transactions involving Pollyana Chu also involve Eagle Mission, Active Dynamic and Galaxy Sky, I cannot find out who owns them – there have been accusations online that Ms Chu or her family are behind them, and if anyone can put together some conclusive proof of that, I’d be interested. I believe Great Luck is owned solely by Carson Yeung.

This means it’s not beyond the realms of possibility that the person who should be facing the fit and proper persons test that the Premier League now insists on maybe shouldn’t have been Carson Yeung, but Ms Chu. Bearing in mind Ali Al-Faraj passed the test whilst being in charge of Portsmouth (and apparently being a fictitious person), my faith in the FaPP test is minimal. I guess the question I have to ask myself is, do we worry about the club now, whilst the bills appear to be being paid and potentially leave it until things go pear shaped (as they did with Pompey), or do we ask difficult questions now?

One thing to factor in is that the Chinese (and indeed East Asian) business model isn’t the same as ours. Chinese business thrives on the philosophy of guanxi – whereby companies will bond together in huge networks, and will do business with each other for the prosperity with each other. Thus a Chinese firm might go to a bank it shares a connection with, and get a loan at a favourable rate. It then might go to a manufacturing concern it shares a link with, and sign a deal to make something that is mutually beneficial. Essentially, it’s the old “you scratch my back and I’ll scratch yours”, but on a corporate scale. Thus the actual wealth of Carson Yeung isn’t as important as his corporate connections – if he has pull with massive firms, then he will get deals that will benefit him (and Birmingham City). This cannot be shown on any balance sheet.

Another thing to factor in is that the Chinese classically are long term strategists. Many Chinese business deals are done with a long term plan in mind; thus a Chinese firm may be willing to absorb short term losses if it feels that there is a good term long term profit in it. Again, this is something that can only benefit Birmingham City – we’ve often been run on a short-termist approach, and I would welcome owners who built the club up from the bottom upwards with an aim of making us a big club in the long term.

What doesn’t help is when we see statements like Peter Pannu’s today. As a statement, it didn’t actually say anything at all, and as such left ambiguities that have debated around the forums – and hasn’t helped some of the feelings of paranoia that we are up the creek sans paddle. Whilst I know the Chinese like to keep things close to their chest, I think there needs to be some sort of action from the board to reassure people that the club is ok, that there is nothing to worry about and that we’re on an even keel.

I don’t expect Ms Chu to come out as the “real backer” behind the club. I don’t even think it matters who owns the club really, as long as the bills are paid and it’s kept going as it has been – whilst I’d love us to spend a fortune on transfers and wages I’d be happier if I knew we weren’t committing financial suicide. What worries me right now is that the club might be committing monetary hari-kari already, because we don’t know what is going on. Whoever said ignorance is bliss has a lot to answer for.

Tags: BCFC, Carson Yeung, Ownership, Pollyana Chu