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Preliminary Statement of Final Results
for the Year Ended 31 August 2008

Chairman's Statement
Following just one season in the Premier League we were relegated to the Championship at the end of the 2007/2008 season. This was particularly disappointing in light of the considerable investment made in the playing squad during the previous two transfer windows. However, the Board and management of the Club have taken up the challenge and I hope that the progress made to date will see us back in the top tier of English football at the end of the current season.

I would like to thank our employees for their hard work during the year and as ever our shareholders for their continued support.


Managing Director's Review
It was extremely disappointing for the football club to lose its Premier League status after just one year in the top flight of English football particularly after the significant investment made in the first team squad in the previous close season and in the January 2008 transfer window. The team eventually finished in 19th place in the Premier League, having spent much of the second half of the season fighting to avoid relegation. In the domestic cup competitions defeat in the 3rd round of the Carling Cup away to Blackburn was followed by defeat to Huddersfield in the FA Cup. In November 2007 Steve Bruce, who had served as manager for six years, left to join Wigan Athletic and was replaced by Alex McLeish and his management team. I would like to take this opportunity, on behalf of Shareholders, to thank Steve and his staff for all they did for Birmingham City whilst at the Club. In the opinion of the Board we have the right man in place to bring further success to the Club.

Turnover for the year to 31 August 2008 was £49.8m, up 99% on the 2007 figure (£25m) with the profit before taxation at £4.3m (2007: loss £6.6m). The significant increase in turnover and profitability reflects the Club's promotion to the Premier League for the season 2007/08 allied to profits earned on the disposal of players.

The increase in overheads of £6.5m was a result of two main factors, an increase in staff costs, up 27% on the previous year, and a provision for the refurbishment of the main stand. This increase in staff costs reflects higher player remuneration.

Player amortisation rose from £8.2m in 2007 to £14m in the year to 31 August 2008, reflecting the write-off of additional costs incurred in signing players in the 2007/08 pre-season and the January 2008 transfer window.  In total during the period under review 14 senior players were sold or left the Club including Mikael Forssell, Fabrice Muamba and Olivier Kapo. Significant profits were made on the sale of Muamba to Bolton, Kapo to Wigan and Matthew Sadler to Watford while additional gains were made on performance targets achieved by players sold in previous years.

Senior players joining the Club during this time include James McFadden, David Murphy, Lee Carsley and Marcus Bent. In addition, Kemy Agustien and Quincy Owusu-Abeyie had loan spells with the Club, costing in excess of £1.5m.

The current season has started positively with the Club recording its best ever start to a League Campaign. The Club is currently in 3rd position in the Championship table. Games, particularly those at home, have been very hard fought with many teams considering a visit to St Andrews as their biggest game of the season.  The Club has already been selected for 8 appearances on Sky this season, the highest number of any Championship team, showing the strength and size of our brand.

Relegation to the Championship along with the unprecedented economic situation presents a significant challenge to the Club in the current year with revenues being significantly reduced. The Board is mindful that the Club must remain as competitive as possible particularly whilst in receipt   of parachute payments while being aware of the inherent risks involved in chasing promotion to the Premier League at all costs. The objective of the Board is to manage costs, particularly payroll costs of the playing squad. The Board has taken measures to prepare for the reduction in revenue levels. Sensible financial governance and management of the business will stand the Club in good stead during these turbulent times, but the Club's financial performance in the current year will obviously be impacted by our loss of Premiership status.

The Club is undertaking scheduled major work on the Main Stand during 2008/2009 costing in the region of £1.3m; this will involve a complete restructuring of the Stand and refurbishment of the Wiseman, Captains Club and Trevor Francis areas.  In continuing with its strategy of improving facilities within the stadium, the Board has sanctioned the installation of under soil heating to the pitch at the end of the current season.

We expect to be pushing hard to regain our position in the Premier League and can assure Shareholders that the Board and all members of staff are totally committed to the long term future of the Club.

Managing Director

To view the Preliminary Results in full, please click here to download them in Word format.


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