Birmingham City has become the latest English Championship football club to have entered into a stadium sale agreement in an effort to enhance its financial standing.
The West Midlands club, which has already been the subject of financial fair play sanctions from the English Football League (EFL), is now found to have sold its St Andrew’s stadium to a company controlled by owner Paul Suen Cho Hung for £22.8m (€26.9m/$29.9m).
The BBC reports that City’s latest financial report includes details of a deal to sell “land and property” to Birmingham City Stadium Limited, an entity registered in May 2019 as a wholly-owned subsidiary of Birmingham Sports Holding Limited, the football club’s parent company.
St Andrew’s will be leased back to the club for £1.25m per year over a 25-year term, with a profit of £17.2m declared on the sale after the stadium was independently valued at £22.8m. The deal helped to bring City’s pre-tax loss down to £8.2m, with the club having reported an operating loss of £29.2m for the 12 months ending June 2019. The club’s pre-tax loss for the previous year was £37.4m.
The EFL hit City with a nine-point deduction for the 2018-19 season after the club recorded losses of £48.8m over a three-year period. The stadium sale development comes after City on Monday confirmed that it had been charged with a breach of EFL regulations in relation to a business plan imposed upon it in the 2018-19 season. City has denied the charge but could yet face another points deduction due to its financial status.
The subject of stadium sale agreements has become a hot topic in the Championship of late, with multiple clubs having engaged in such activities in an effort to shore up their financial position. Sheffield Wednesday last month issued a claim against the EFL for allegedly “acting unlawfully” when charging the club in relation to a deal it struck to sell its Hillsborough stadium.
In November, Wednesday said it would “vigorously defend” its position after the club was charged with misconduct. The EFL had been probing the Hillsborough deal amid concerns it was agreed using creative accounting moves in order to ensure Wednesday stayed within the League’s profit and sustainability (P&S) rules, potentially avoiding a points deduction.
The EFL said following a formal investigation into financial information provided by Wednesday in relation to its 2017-18 P&S submission, the club had been issued with a number of charges relating to alleged breaches of EFL Rules.
In September, it emerged that Middlesbrough was preparing to sue the EFL over Derby County’s purchase of its own home. Reading is another club to have come under scrutiny over similar deals, along with Aston Villa, after it emerged that its stadium, Villa Park, had been sold to a subsidiary company controlled by owners Nassef Sawiris and Wes Edens. Villa was promoted to the Premier League last season.
Image: Birmingham City