West Ham - New Gold Dream

West Ham’s 2014/15 season was like the proverbial game of two halves under Sam Allardyce, as a promising start took the club into the top four at Christmas, before a wretched slump produced just three victories in the next 21 games.

The Hammers still finished in a comfortable 12th place, which should presumably have satisfied joint chairman David Sullivan, as he described “retaining our Premier League status” as one of his highlights of the season. The club also qualified for Europe for the first time since 2007, albeit only by finishing top of the Fair Play table.

Nevertheless, they decided not to renew the manager’s contract, bringing in former player Slaven Bilic as Big Sam’s replacement in June. The Croatian has put together a very decent squad and already has wins against Arsenal, Liverpool, Manchester City and Chelsea under his belt. On the other hand, his team has also lost against Leicester City, Bournemouth and Watford.

Be that as it may, these are exciting times at West Ham, as the club is investing a lot of money in new players and will move to the £700 million Olympic Stadium in Stratford next season after 112 years at the Boleyn Ground.

"Slaven to the Rhythm"

The stadium move could revolutionise the club and is an amazingly good deal for the Hammers. The basic facts are that West Ham have a 99-year lease on the stadium starting from June 2016 and will pay just £15 million towards the conversion costs, which they can easily cover from the proceeds of selling Upton Park to property developer Gaillard Homes.

The stadium has a 54,000 capacity, around 19,000 more than the club’s current 35,000 seats, so will bring in substantially more money. The financial gains will be even more impressive, considering that West Ham will only pay annual rent of £2 to £2.5 million, while the running costs will be covered by the taxpayer.

Unsurprisingly, many have criticised this arrangement, though West Ham has argued that it has at least avoided the kind of “white elephants” seen in former Olympic host cities such as Barcelona, Athens and Beijing.

"A new royal family, a wild nobility"

Indeed, the club has mounted a vigorous defence: “Without us the stadium would lose money. West Ham make a substantial capital contribution towards the conversion works of a stadium on top of a multi-million pound annual usage fee, a share of food and catering sales, plus provide extra value to the naming rights agreement. Our presence underwrites the multi-use legacy of the stadium and our contribution alone will pay back more than the cost of building and converting the stadium over the course of our tenancy.”

On the other hand, it is worth noting that the deal is more favourable to the club than the one agreed with Manchester City in similar circumstances. They pay all the overheads on top of £4 million rent for the Etihad Stadium, which was funded by the taxpayer for the 2002 Commonwealth Games. Along the same lines, Chelsea and Tottenham would have to pay £10-15 million a year for using Wembley Stadium while their grounds are being developed.

Little wonder that Chris Bryant, the Shadow Secretary of State for Culture, Media and Sport described the deal as “astoundingly good” for West Ham, even though it will be a jolt for many fans to leave Upton Park with all its memories and fantastic atmosphere. The new stadium is in an excellent location, just minutes from Canary Wharf and the City and  close to the Westfield shopping centre with very good transport links and infrastructure.

As vice-chairman Karren Brady said, “Our new home will be one of the greatest arenas in world football and a platform to transform the future of our great club.”

There is little doubt that this move will provide a major boost to the club’s finances, though these have steadily improved in the last two seasons in any case with West Ham reporting record revenue and another profit in 2014/15, though profit was down £7 million from £10 million to £3 million.

Revenue rose 5% (£6 million) from £115 million to £121 million, largely on the back of £3.6 million more TV money, though the other revenues streams also grew, albeit not much: commercial up 9% (£1.9 million) to £22 million and match receipts up 2% (£0.4 million) to £20 million. Player sales also increased by £2 million to £3 million.

On the other hand, costs grew at a faster rate: wages increased by 14% (£9 million) from £64 million to £73 million; player amortisation was up 20% (£4 million) to £22 million; and other expenses rose 11% (£2 million).

Of course, these days most clubs in the Premier League should make money, given the spectacular increases in the TV deals, allied with the restrictions on wage growth imposed by Financial Fair Play (FFP). In fact, only five of the 20 clubs in the top flight made a loss in 2013/14, the last season when all clubs have published their accounts.

Three of the five clubs that have so far reported their 2014/15 figures have registered lower profits, though only Manchester United actually lost money, due to their failure to qualify for Europe. This may well be a similar story at other clubs, as this is the second year of the current three-year TV deal, thus restricting revenue growth, while player costs are still rising.

A football club’s profitability can be very much influenced by profits on player sales, as can be seen in 2014/15 with Southampton making £44 million, manly due to the sales of Adam Lallana and Dejan Lovren to Liverpool plus Calum Chambers to Arsenal. The previous season saw Tottenham Hotspur make an amazing £104 million (largely due to the mega sale of Gareth Bale to Real Madrid), Chelsea £65 million (David Luiz to Paris Saint-Germain) and Everton £28 million (Marouane Fellaini to Manchester United).

Even though West Ham’s profit from this activity increased in 2014/15, it was still only £3 million, which could either be considered as implying that they are not a selling club (a good thing) or an indictment of their player development (a bad thing).

An additional £25 million from player sales would make a big difference to the bottom line, but it’s not going to happen in 2015/16 when the only sale of note was Stewart Downing to Middlesbrough for £5.5 million, while many players left on free transfers: Jussi Jaaskelainen, Modibo Maiga, Guy Demel, Carlton Cole and Kevin Nolan.

Even so, West Ham have managed to make profits in the last two years, which is a major improvement, considering that before 2013/14 they lost money seven years in a row, amounting to aggregate losses of £144 million.

In fairness, the small £4 million loss in 2012/13 already represented a step in the right direction, as the club had been averaging £23 million annual losses before then. This is a sign of the greater financial stability that the majority owners, David Sullivan and David Gold, have brought to the club since taking over in 2010.

To underline how little impact player sales have had on West Ham’s figures, this activity has only contributed £37 million to West Ham’s profits in the last nine years, i.e. less than Southampton made in the 2014/15 season alone. You have to go back as far as 2008 (£16 million) and 2009 (£22 million) for any meaningful profits from transferring players. In fact, West Ham have only averaged £1.4 million from player sales over the last four seasons, while actually contriving to lose £8 million in 2011.

The good news is that West Ham’s figures are no longer being hit by exceptional charges, which have had a major adverse impact on their accounts, adding up to £58 million since 2007.

The most notable charge was the £32 million they had to pay for breaching Premier League rules when acquiring Carlos Tevez and Javier Mascherano. They have also shelled out £10 million compensation for loss of office and £6 million following the termination of Dean Ashton’s contract due to severe injury.

It is worth exploring how football clubs account for transfers, as it has a major impact on reported profits. The fundamental point is that when a club purchases a player the costs are spread over a few years, but any profit made from selling players is immediately booked to the accounts.

So, when a club buys a player, it does not show the full transfer fee in the accounts in that year, but writes-down the cost (evenly) over the length of the player’s contract. Therefore, if West Ham spent £25 million on a new player with a 5-year contract, the annual expense would be only £5 million (£25 million divided by 5 years) in player amortisation (on top of wages).

However, when that player is sold, the club reports straight away the profit on player sales, which is essentially sales proceeds less any remaining value in the accounts. In our example, if the player were to be sold 3 years later for £32 million, the cash profit would be £7 million (£32 million less £25 million), but the accounting profit would be higher at £22 million, as the club would have already booked £15 million of amortisation (3 years at £5 million).

This is all horribly tedious, but it does help explain how clubs can spend big in the transfer market with relatively little immediate impact on their reported profits. Even though the annual cost of purchasing players is therefore somewhat reduced in the profit and loss account, it is worth noting that the impact of West Ham’s increasing spend in the transfer market has pushed up player amortisation, which has more than doubled from £10 million in 2012 to £22 million in 2015.

Obviously this is nowhere near as much as the really big spenders like Manchester United (£100 million), Chelsea (£72 million) and Manchester City (£70 million), but it is still worth keeping an eye on in future years.

The other side of the coin here is that all these signings have helped strengthen the balance sheet with player values (reported as intangible assets) climbing to £55 million, compared to only £15 million just four years ago. So what, you might say, but it is obviously good for any club to have better quality “assets” on the pitch.

That said, West Ham still have net liabilities (assets less liabilities) of £47 million, though this has improved by £4 million in the last 12 months.

Given all the accounting complexities arising from player trading, clubs often looks at EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) for a better understanding of how profitable they are from their core business. In West Ham’s case, EBITDA has recovered from negative £8 million in 2012 to £28 million in 2015, though it did fall back from £33 million the previous season.

This is not too bad, but at the same time helps to outline the challenge for clubs like West Ham, as the EBITDA at the leading clubs is significantly higher, despite their larger wage bills: Manchester United £120 million, Manchester City £83 million, Arsenal £64 million, Liverpool £53 million and Chelsea £51 million.

Since 2009, West Ham’s revenue has grown by 59% (£45 million) from £76 million to £121 million. The majority of this growth is down to TV money, which rose £35 million (79%) from £44 million to £79 million, though commercial income did grow £8 million (53%) from £14 million to £22 million and match day was up £2 million (13%) from £18 million to £20 million.

The highest increase within commercial came from retail and merchandising, which has risen 95% from £3.7 million to £7.3 million, partly due to the decision to bring the online retail business in house in 2012.

The impact of promotion from the Championship is evident from the £75 million increase since 2012 with all revenue streams benefiting from being in the Premier League.

Despite this significant growth, West Ham’s revenue of £121 million is still a lot lower than the Premier League elite, e.g. the top four clubs all earn more than £300 million: Manchester United £395 million, Manchester City £352 million, Arsenal £329 million and Chelsea £320 million.

West Ham are very much mid-table in revenue terms in the Premier League (10th highest the previous season) around the same level as Everton, Aston Villa and Southampton. Although the Hammers 2014/15 revenue growth of 5% was not as high as the previous season, this is very largely linked to the cycle of the TV deal. As last season was  only the second year of the current three-year TV deal, it is unlikely that any club will see significant revenue gains in 2014/15.

However, West Ham’s revenue is now the 21st highest in the world according to the Deloitte Money League, ahead of famous clubs such as Marseille £109 million, AS Roma £107 million and Benfica £105 million.

This is basically due to TV money, which contributes nearly two-thirds (65%) of West Ham’s revenue. Commercial income and match receipts account for 18% and 17% respectively.

It is therefore no surprise that Brady has stated that retention of “our (Premier League) status in 2015/16 is an absolute necessity for the future wellbeing of our club.”

That might sound a little worrying, but it is a very similar story at other Premier League clubs. In fact, no fewer than 11 clubs had a higher reliance on TV money than West Ham in the 2013/14 season with Crystal Palace, Swansea City, Hull City and WBA all depending on TV for more than 80% of their revenue.

Considering the significance of Premier League television money to the Hammers, it is worth exploring how this is distributed in some detail. In 2014/15 their share rose 4% from £74 million to £76million. This is based on a fairly equitable distribution methodology with the top club (Chelsea) receiving £99 million, while the bottom club (QPR) got £65 million.

Most of the money is allocated equally to each club, which means 50% of the domestic rights (£22.0 million in 2014/15), 100% of the overseas rights (£27.8 million) and 100% of the commercial revenue (£4.4 million). However, merit payments (25% of domestic rights) are worth £1.2 million per place in the league table and facility fees (25% of domestic rights) depend on how many times each club is broadcast live.

In this way, West Ham were helped by climbing one place to 12th, but were held back by being broadcast live on one less occasion. However, they were still shown live 13 times, 4 more than Stoke City, which meant that they earned £2.2 million more (£11.0 million compared to £8.8 million), even though the club from the Potteries finished three places higher in the league.

My estimates suggest that West Ham’s 12th place would be worth an additional £35 million under the new contract, increasing the total received to an incredible £111 million. This is based on the contracted 70% increase in the domestic deal and an assumed 30% increase in the overseas deals (though this might be a bit conservative, given some of the deals announced to date). Of course, if West Ham could maintain their current 5th place, they would earn even more.

West Ham would also be targeting European qualification, which could bring in additional revenue, though their 2015/16 Europa League adventure will not generate much money, as they crashed out early to Romanian side Astra Giurgiu.

The Europa League is not a great money-spinner, unless you somehow manage to win the competition, but Everton did earn €7.5 million last season for reaching the last 16. The big money is obviously in the Champions League with English clubs averaging €39 million in 2014/15 and is getting higher, as the new TV deal from the 2015/16 season is worth an additional 40-50%, thanks to BT Sports paying more than Sky/ITV for live games.

This might feel like a somewhat unlikely ambition, but not if you listen to the two Davids. Gold said, “Realistically, in the next five years we would expect to be knocking on the door of Europe, The longer-term aim is to frighten the big boys of Chelsea, Manchester City, Manchester United, Arsenal and Liverpool. We want the big five to be looking over their shoulders.”

Stirring words, but they were echoed by Sullivan: “I’d love fourth now and we’d take our chances. I know it’s unlikely, but it really is possible.” His optimism is admirable, but he slightly ruined the effect when he started to talk of winning the Premier League and FA Cup double, “We’re very, very optimistic. I’m not talking it down. I want to talk it up. I believe it’s achievable. Look at what’s gone wrong with Chelsea – that looked an impossibility – so why shouldn’t the opposite happen to us?”

Match receipts rose 2.3% (£0.4 million) from £19.5 million to £19.9 million in 2014/15, even with one less home game (due to the run to the Carling Cup semi-final the previous season), as the average attendance rose 2.5% from 34,007 to 34,874.

West Ham supporters have lamented the club’s high ticket prices with the BBC Price of Football survey showing that 15 of the 20 Premier League clubs offered cheaper season tickets in 2014/15, despite prices being frozen that season. Even though the last season at Upton Park has seen a 5% price increase, season ticket sales for 2015/16 have exceeded 25,000, another club record.

The loyalty of the club’s fans is shown by attendances remaining at around the 34,000 level in the top flight, however well or badly the team has performed. The only slight blip came in the Championship in 2012, but the Hammers still averaged more than 30,000 in the second tier.

Nevertheless, West Ham’s match day revenue of £20 million is nowhere near Arsenal and Manchester United (both around £100 million), though a more valid comparison might be Tottenham, whose £44 million is more than twice as much.

This underlines the importance of the move to the Olympic Stadium, which should significantly increase West Ham’s revenue, not just because of the considerably larger capacity, but also the availability of more corporate hospitality and premium seats. Brady confirmed that only 200 of the 3,700 premium seats remained available.

The good news for fans is that many tickets in the new stadium will be sold at lower prices with thee cheapest season ticket being reduced to £289. While Brady was keen to link this to the benefits of the new broadcasting contract, others have pointed out that this is easier for West Ham than most, due to their extraordinarily generous stadium deal.

Commercial revenue rose 9% (£1.8 million) from £20.0 million to £21.8 million, comprising £14.6 million from commercial activities and £7.3 million from retail and merchandising.

Even though Brady proudly proclaimed that West Ham are “officially recognised as one of the world’s leading football brands by Brandfinance, placing us in the top 8 most valuable football brands in Premier League clubs and 16th overall in the world”, the fact remains that their commercial income pales into insignificance compared to heavyweights such as Manchester United, who generate £196 million from this activity.

That comparison might be a little unfair, but it is worth noting that Tottenham earned £42 million and Aston Villa and Newcastle United £26 million (in the 2013/14 season). Growth was a little disappointing, especially given that commercial and administrative staff rose from 136 to 164.

To be fair, the growth is sure to be better in the 2015/16 season, thanks to new sponsorship agreements. Less than a month after previous shirt sponsor Alpari went out of business, West Ham signed a three-year deal with online bookmaker Betway worth £20 million. This is worth £6.7 million a year, so more than double the £3 million that Alpari were paying.

Similarly, a new five-year kit supplier deal was signed with Umbro, which is reportedly worth twice as much as the previous deal with Adidas, which was valued at an estimated £2 million.

Given the higher profile afforded by the Olympic Stadium, the move should deliver plenty of commercial opportunities with the board noting that the club is already “receiving approaches from big brands that are desperate to be part of our exciting journey.” Furthermore, the new club megastore with 12,000 sq ft will be three times as large as the current club shop. In time, this should be reflected in much higher commercial income.

Wages rose 14% (£9 million) from £64 million to £73 million, despite players, management and training staff falling from 100 to 93, leading to the wages to turnover ratio worsening from 56% to 60%. Since the first season back in the Premier League in 2013, wages and revenue have both grown at a similar rate: wages by (29%) £17 million and revenue by (34%) £31 million.

The wage bill will be inflated by having four reasonably high-profile players on loan (Alex Song, Carl Jenkinson, Victor Moses and Manuel Lanzini), while it will also be impacted by extending the contracts of some players (Diafra Sakho, Aaron Cresswell and Winston Reid).

The amount paid to the highest paid director, believed to be Brady, was virtually unchanged at £646,000.

Although West Ham’s wages to turnover ratio increased, it is still the second best the club has recorded in the last seven years and much better than the 90% suffered in the Championship. It is also well within the standard achieved in the Premier League with 13 of the 20 clubs grouped in a fairly narrow range of 56-64% the previous season.

West Ham’s wage bill of £64 million was only the 13th highest in the 2013/14 season, exactly in line with their league placing. Even though this has increased to £73 million, to place this into context, it is only around a third of the elite clubs, who all pay around £200 million: Manchester United £203 million, Manchester City £194 million, Chelsea £193 million and Arsenal £192 million.

Nevertheless there is a clear bunching of clubs in the £60-70 million range, as the traditional bigger spenders like Newcastle United, West Ham and Aston Villa have only grown a little, while the nouveaux riches like WBA, Stoke City, Swansea City and Southampton have all had to significantly increase their wage bill in order to compete.

It is worth noting that West Ham’s wage bill has only risen by 8% since 2008, while others have grown much faster, e.g. Stoke City 411%, Southampton 362% and WBA 211%.

Sullivan did warn that the club would be restricted by FFP, following the big spending this summer: “As a result, we are now at the maximum wages we are allowed to pay under Premier League rules and, therefore, if we wanted to buy again in January we would no doubt have to sell someone before we would be allowed to make signings. It also means we expect the club to make a loss of between £10m and £17m this year, depending on where we finish in the Premier League and the number of games we have televised. This is indicative of just how seriously we took this window and the signings we wanted to make.”

This has been reflected in “major investment in the first team squad of £32.5 million (2014/15) and £42.0 million (2015/16)”. Last season saw the arrivals of Mauro Zarate, Enner Valencia, Aaron Cresswell, Cheikou Kouyate, Diafra Sakho, Diego Poyet and Morgan Amalfitano. Subsequent to the latest accounts, the club invested in Pedro Obiang, Dimitri Payet, Angelo Ogbonna, Michail Antonio, Nikica Jelavic, Stephen Hendrie and Darren Randolph.

Although reported transfer figures are notoriously unreliable, it is clear that there has been a major ramping up of expenditure in the four seasons following promotion. In that period, West Ham have a net spend of £93 million, averaging £23 million a year, compared to just £3 million in the preceding six years.

In fact, over that four-year period, West Ham were the 6th highest net spenders in the Premier League, only beaten by the usual suspects: Manchester United, Manchester City, Chelsea, Liverpool and Arsenal.

This is all driven by the club’s desire to maximise the chances of staying in the Premier League until the move to the Olympic Stadium. As Sullivan said, “I cannot remember a more exciting or successful window during our time at the club. We brought in 12 new players at a cost of over £40m, but that was only possible because David Gold and I made sure we dug deep to get the players we wanted. We thought it was important this season, with the move to the new stadium, that we bought players in every position to create the best squad and team that has been at the club since we arrived.”

Despite this spending spree, net debt actually fell £6.8 million from £73.5 million to £66.7 million with gross debt being cut by £2.5 million to £89.1 million and cash increasing by £4.3 million to £22.4 million. Around £49 million of the debt has put in by the owners, David Sullivan and David Gold, as unsecured shareholder loans – unchanged from the previous year. This represents over half of the club’s gross debt of £92 million, leaving £39 million of external debt and £0.6 million of debenture loans under the Hammers Bond Scheme.

External debt includes secured bank loans with interest charged at 3% to 3.75% over LIBOR, which have been refinanced until December 2016, though the club repaid £6.5 million on 31 August after the accounts were finalised. The club has also arranged additional short-term finance of £30 million with JGF Limited, secured on future income from the Premier League broadcasting contract, which is repayable in August 2016 and replaces the previous loan with the Vibrac Corporation. To date, £25 million of this facility has been drawn down.

"Diamond Smiles"

In addition to the financial debt, West Ham had £22 million of net transfer fees payable plus £9 million of contingent liabilities (dependent on the success of the football club or players making a certain number of club or international appearances). On top of that, there is a further net £37 million of transfer fees payable for players purchased after the accounts closed.

Furthermore, interest of 6-7% has been accrued on the owners’ loans, but is not paid or added to the loans until the loans are repaid, so there is another £9 million of potential debt “hidden” in accruals.

It is clear that West Ham are building up their debt in order to give themselves the best chance of success, both in terms of financial debt and transfer debt, though this is probably OK, so long as they avoid relegation.

In fairness to West Ham, there are seven clubs in the Premier League that owe more than them with five having debt above £100 million, namely Manchester United £411 million, Arsenal £234 million, Newcastle United £129 million, Liverpool £127 million and Aston Villa £104 million.

Moreover, the club has pledged to be free of external debt by the time it leaves the Boleyn Ground. The hope is that the proceeds from the sale of the Boleyn Ground to Galliard Homes will cover the Olympic Stadium £15 million conversion fee plus “some of our bank debt”.

According to the profit and loss account, West Ham’s net interest payable of around £6 million is one of the highest in the Premier League, albeit considerably lower than Manchester United £35 million and Arsenal £13 million. However, the cash payment is only £2 million, as the interest on the owners’ loans is not being paid.

West Ham’s improved finances are also reflected in the cash flow statement. Taking 2014/15 as an example, the club generated an impressive £43 million from operating activities, before spending £31 million on player registrations, investing £2 million in infrastructure and making £2 million of interest payments. They then made a net £2.5 million loan repayment, leaving a positive cash flow of £4 million.

This is indicative of the approach that Sullivan and Gold have taken since 2010, though they have not had to invest so much personally in the club in the last two years. In those six years, West Ham generated £69 million of cash from operating activities, which was supplemented by £75 million of financing from the owners (£49 million from loans and £26 million from an increase in share capital), giving £144 million of available funds.

Around two-thirds of this (£95 million) was spent on new players, £22 million on loan and interest payments and £8 million on capital expenditure. The remaining £20 million has served to increase the cash balance.

In line with the trend at other clubs, West Ham’s cash increased last year from £18 million to £22 million, though this is still a long way behind the leaders, e.g. Arsenal £228 million, Manchester United £156 million and Manchester City £75 million.

Sullivan and Gold now own 86.2% of the club and, though they have insisted that it is not for sale, West Ham is fast becoming an attractive investment opportunity. Indeed, last year they expressed a desire to sell some shares, valuing the club at £400 million.

Wealthy buyers will certainly be interested in purchasing a club of West Ham’s history in an iconic new stadium with massive potential to grow attendances, match day income and commercial revenue. There are a lot of parallels with Manchester City with the added advantage that the Hammers are not only located in London, but in an area that has already received an influx of foreign investment with Qatar purchasing the Olympic Village and China pouring money into the Docklands.

"Handy Andy"

If the club is sold following the move to Stratford, some of the profits would be returned to the taxpayer, but it is not clear what proportion. The only potential fly in the ointment would be if the club had to pay compensation if their move were deemed to contravene European state aid laws.

The other appeal to investors is FFP, especially as UEFA have recently relaxed the regulations for new owners, who will now be allowed to make larger losses, as long as they can produce a business plan that will show how they will reach break-even. This modified stance is a move from “austerity to sustainable growth” in an effort to encourage investment into European football.

"Don't Look Back in Anger"

West Ham are firmly in favour of FFP, according to Brady: “FFP is the legislation which, for the next season at least, will limit the ability of clubs to over-extend themselves on players’ costs and will likely enable all clubs, including ourselves, to increase profitability, and we continue to operate within the rules. We are hopeful that FFP will continue in some form in the next broadcast deal.”

As it stands, West Ham are arguably now one of the most exciting “projects” in European football. Whatever the rights and wrongs of the Olympic Stadium deal, it is difficult to disagree with Brady, when she says that it will be a “game changer for West Ham”. The challenge will be to advance into this brave new world, while retaining the characteristics of what Slave Bilic described as “a cult club”.

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Birmingham City Blues

The January transfer window has been a bit of a damp squib to date, with the exception of Manchester City’s big money purchase of prolific Bosnian striker Edin Dzeko, but rumours of possible signings abound. Perhaps surprisingly, one club that has featured prominently in the feverish press speculation is Birmingham City, who have been linked with a series of attacking players in an attempt to resolve their goal scoring problems, including Kenny Miller and Robbie Keane, and have signed David Bentley on loan.

The reason for Birmingham’s activity in the transfer market is clear, as they are currently languishing in 15th position in the Premier League (albeit with a game in hand), a single point ahead of the relegation places. Even though the Blues have proved their usual obdurate selves defensively, particularly at St. Andrews, they have only won four times with their points tally being damaged by an unusually high number of draws (ten).

Realistically, the fans’ hopes should not be overly high, as Birmingham have only won one major trophy, back in 1963 when they beat local rivals Aston Villa 3-1 on aggregate in the League Cup, though they have played in the top tier of English football for the majority of their history. Nevertheless, the team achieved a highly creditable ninth place finish last season, which was particularly praiseworthy, given that this came immediately after being promoted from the Championship.

Great stuff, but this was always likely to be a hard act to follow and, sure enough, Birmingham are suffering from a classic case of second season syndrome, whereby a promoted team that exceeds expectations invariably struggles the following year.

"Alex McLeish - Big Eck"

In fairness, the club’s prospects have been hurt by the long-term absence of James McFadden, exacerbated by the failure in the summer to secure manager Alex McLeish’s preferred striking targets, including Bobby Zamora, Fabrizio Miccoli and Moussa Dembele. As an alternative, he has had to make do with beanpole Serbian forward Nikola Zigic and Chilean winger Jean Beausejour, supported by loan signings Matt Derbyshire and Aleksandr Hleb, and none of these players has had a meaningful impact on the scoring charts.

So they need to do something if they want to ensure survival in the Premier League. When Carson Yeung’s investment vehicle Grandtop International Holdings Limited took over the club in October 2009, it made it very clear that this was the cornerstone of their strategy, “Our aim is to work hard to secure our position in the Premier League, not only this year, but for many years to come.” Nothing wrong with that, of course, as this is the strategy of the majority of clubs in the Premier League, because the financial implications of relegation are too hideous to consider. When Birmingham were relegated in 2006, they warned, “A prolonged absence from the Premier League will force the club to make wide-ranging economies.”

This explains the club’s apparent willingness to reinforce its squad, though there is a degree of confusion over just how much money is available for new players. Alex McLeish first claimed, “We are not in a position to spend at the moment. We are looking at the loan situation and if push comes to shove then we will see.” However, this reticence was later clarified by Peter Pannu, the club’s vice-chairman, “We will consider each request on a need to buy basis, and need to play basis and finally on a need to strengthen the team basis and not on a buy for the sake of buying basis.”

"David Bentley - dreaming of a new start"

It’s a real dilemma for Birmingham: in the immortal words of Richard Keys, do they stick or twist? If they don’t improve the squad, they run the risk of relegation and all that entails, but, on the other hand, if they do splash the cash, they will place an additional financial burden on the club’s threadbare financial resources. Last year McLeish explained his ethos, “There will be money to spend, but there has got to be prudence.” Of course, if the money spent were to result in the club maintaining its place in the Premier League, it would certainly recoup its investment, but this still represents a gamble.

This is especially so in the case of the Blues, as highlighted by the latest accounts for Birmingham City PLC, which were released last week and included the dreaded “Emphasis of Matter” warning, which stated, “These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern.” Although some have under-played the significance of this statement, suggesting that it’s merely a case of accountants covering their backsides, the reality is that auditors do not make such remarks lightly, as supporters of Liverpool and Hull City would appreciate. In simple terms, there is a risk that Birmingham City will be unable to pay its bills and could even go bust.

The same accounts make it crystal clear that the club “is reliant on continued funding from Carson Yeung.” Of course, Birmingham are by no means the only club that is dependent on the support of a wealthy benefactor, but the comments on future trading and liquidity emphasise the hand-to-mouth nature of the club’s existence, as “the forecasts show that the Group needs funding of around £7.5 million from its parent company in the short term in order … to continue to operate within its agreed bank facilities.” Even that hinges on finishing in an unspecified position in the Premier League with a further £3 million required if the club avoids going down. There is no mention of what happens in the worst-case scenario of relegation, but we can make a pretty good guess, as the club posted a £19 million loss the last time this happened.

"Hleb - known to Arsenal fans as Dribbly McNoscore"

Even more worrying is the fact that the parent company, Birmingham International Holdings Limited (BIH), does not appear to have this funding readily available, but needs to organise a placing of shares on the Hong Kong Stock Exchange “to provide general working capital and financial support.” Only £7.5 million is fully underwritten (i.e. guaranteed), leaving a further £17.5 million to be raised on a “best efforts” basis. That’s not particularly comforting, especially as the accounts state that the net proceeds “are expected to be transferred by the end of November 2010”, but there has been no further press release from BIH regarding the results of the placing. Instead, the company’s shares were suspended on 5 January, “pending the release of an announcement regarding proposed very substantial acquisition.”

To a certain extent, the warning in the football club accounts is old news for Blues fans, as the BIH accounts published last October contained exactly the same “going concern” statement, while also noting that the Group’s current liabilities exceeded its current assets by around £28 million (depending on exchange rate with Hong Kong Dollar), after incurring a loss of £35 million, though much of this was due to a paper loss from writing-off goodwill arising on the acquisition of the football club. Clearly, the funds from the proposed share placing will be used to shore up the balance sheet, but that means that only limited funds will be available for transfers or stadium development.

At the time, Peter Pannu eased the fans’ fears, “The accounts are those of the holding company and has nothing to do with BCFC, which in the last year had shown profits”, but this is palpable nonsense. Birmingham City Football Club PLC is the only trading subsidiary of Birmingham City PLC, which is in turn wholly owned by Birmingham International Holdings Limited (formerly Grandtop International Holdings Limited). If the chain of ownership is not enough to convince, try this for size: 99.6% of BIH’s turnover comes from the football club.

All of this has cast significant doubt over the viability of the club’s holding company, which is crucial, as the football club is reliant on its support. Birmingham City’s June 2010 balance sheet has net current liabilities of £27 million, while net debt is £14 million. Almost all of this has arisen in the last year, very largely comprising a £12 million loan (bearing 5% interest) from Carson Yeung, though he has promised not to seek repayment in less than 12 months. Since the books were closed, he has advanced a further £2.8 million, so the total owed now stands at £14.8 million. The club also has £2 million of bank loans and a £2 million overdraft, both of which are secured on the club’s land and buildings, offset by £1 million of cash.

So, the club is no longer debt-free, as it had been during the reign of previous owners David Sullivan and David Gold, thanks to their frugal approach. Of course, Birmingham’s debts are not huge compared to other clubs, something that Pannu was keen to announce, boasting that they were “nowhere near the level of some major Premier League clubs and some of the powerhouses in Spain and Europe.” That’s true, even though his grasp of European geography seems rather loose, but the revenue generated by those clubs is considerably higher.

In fact, Birmingham’s debt is effectively higher, as they also owe £13 million to other football clubs for transfer fees, of which £8 million is due in the next financial year. Stage payments of transfers is a fairly common practice, but this is quite a high sum for a club of Birmingham’s size and it has been increasing over the past few years.

They also potentially owe the taxman £5 million on image rights if Her Majesty’s Revenue and Customs win a court case against a number of football clubs. Similarly, the club has provided around £1 million for a VAT dispute.

However, the majority of the debt has come from Birmingham’s recent largesse in the transfer market. People might be taken aback by the fact that Birmingham’s net spend of £36 million over the last two seasons is the third highest in the Premier League, only behind Manchester City and Chelsea. In a way, this is perfectly understandable, as a team promoted from the Championship has to improve their squad to be competitive in a higher division, but it’s still a surprising statistic.

Although Carson Yeung has not quite delivered on his initial pledge to spend £80 million on new players (“£40 million in the January transfer window is my commitment to the Birmingham fans. And next season we put another £40 million into the team.”), this still represents a significant outlay. Of course, boasting about such spending power did not appear to be a wise move from a negotiating perspective and Yeung has since admitted, “In hindsight, I can see that wasn’t the best thing to do. We learned one lesson – that suddenly prices shot up.” Well, they would do, if you show your hand so blatantly, e.g. the price of Roman Pavlyuchenko jumped 50% overnight.

Looking at Birmingham City’s profit trend, we can see why Yeung’s loan was so important in funding the transfer spend. Even though the club was one of a select few to make a profit last season, it was extremely small at £0.1 million, necessitating cash injections. Let’s be very clear about this: Birmingham City have been run very well from a financial point of view, reporting profits in six of the last eight years, but they simply don’t produce enough cash to justify their recent activity in the transfer market.

At its simplest, Birmingham are profitable in those seasons when they play in the Premier League, but make a loss if they drop down to the Championship. In 2008/09, the club took the calculated gamble of retaining most of its players, which paid off in the sense that Birmingham came back up at the first time of asking, but this did produce a hefty £19 million loss. This was in contrast to the approach they took after relegation a couple of seasons before, when they “took immediate action to alleviate the financial implications” by releasing 13 first team squad players in order to cut the wage bill and realise some profit on player sales (mainly Emile Heskey and Jermaine Pennant to Liverpool), though they still had the “highest investment in the division.”

I should note at this stage that the last accounts only cover ten months, as the accounting close was changed from 31 August to 30 June, in order to be in line with the parent company BIH. This probably has limited impact on the revenue figures, as the TV money from the Premier League is distributed during the football season, while matches are not played in July and August. However, costs are booked evenly throughout the year, so a full year’s costs would have been higher than reported.

Despite turnover more than doubling on Birmingham’s return to the top tier from £28 million to £56 million, this is still relatively low for clubs in the Premier League. Even though it’s a different year, if we take the Money League for 2008/09 as a comparison, Birmingham would have been in 15th position or about the same level as Stoke City. To place that into context, Manchester United’s revenue is nearly five times as much, while Aston Villa earn 50% more.

The graph of the revenue mix vividly highlights Birmingham’s challenge with almost all of their income (£42 million) being derived from television, leaving relatively little from the other revenue streams with £7 million coming from each of match day and commercial. The difference between TV revenue in the Premier League and the Championship is by far the biggest swing factor in each year’s revenue. In fact, it has become increasingly important over the years. Note that match day revenue in the earlier years was over-stated in the accounts, as it included “FA and League distributions.”

In fact, 74% of Birmingham’s total income comes from TV, which is only behind Wigan in terms of Premier League clubs’ dependency on the small screen, even though their £42 million is nowhere near as much as the leading clubs earn, mainly due to the money those teams earn from the Champions League. Like others, Birmingham have enormously benefited from the Sky revolution with £41 million of their £42 million broadcasting income emanating from Murdoch’s empire.

The distribution of the Premier League TV revenue is therefore of particular interest to a club like Birmingham. Much of it is shared out equally, namely 50% of the domestic rights and 100% of the overseas rights, but not all of the money is allocated in this manner. Merit payments account for 25% of the domestic rights with each place in the final league table being worth around £800,000, which we have already seen is important for Birmingham’s cash flow. In addition, the remaining 25% of the domestic TV rights comes from the facility fee, which is based on how many times Sky broadcast a club’s matches live. Last season Birmingham were shown eleven times, while the viewing public was treated to Manchester United the maximum 24 times.

As such, Birmingham’s turnover is heavily influenced by the timing of broadcasting deals, with the significant increase in 2008 revenue being partly due to promotion and partly due to the new Sky agreement. Happily for the Blues, they can anticipate a similar boost to revenue in next year’s accounts, as the central payments from the latest three-year deal, which kicked off in the 2010/11 season, will climb by around £7-10 million, largely thanks to the steep increase in overseas rights.

Although the parachute payments paid to clubs dropping out of the Premier league have been increased to £48 million (£16 million in each of the first two years, £8 million in each of years three and four), this would still represent a drastic reduction for Birmingham. They can expect around £48 million revenue from the Premier League this season, so they would have to manage a £32 million reduction in their revenue, which is a big ask to say the least.

The accounts proudly announce that match day revenue increased by £2 million from £5 million to £7 million, though this is partly due to promotion. In a way, this was still impressive, as season ticket prices were reduced by 10%, but this amount is still insignificant compared to most other clubs. If you consider that clubs like Manchester United and Arsenal collect over £100 million of match day revenue, it’s hardly a level playing field. In fact, only three clubs have lower gate receipts: Blackburn Rovers, Bolton Wanderers and WBA.

This is pretty much in line with crowd levels, as Birmingham’s average attendances rising of 25,000 (up from 19,000) were the 16th highest in England last season, partly because only 84% of St. Andrews’ 30,000 capacity is being filled. In fairness, the West Midlands has been stricken by severe unemployment, with many manufacturing plants (notably Longbridge) being closed down and other workers having their hours reduced.

"Big Ben Foster"

The club has invested some money into the stadium in the past, with the accounts specifically mentioning £1 million on refurbishing the main stand in 2008 and £2 million on the ground and training facilities in 2007, but the 2004 proposal to build a 55,000 capacity City of Birmingham Stadium has been put on hold, after the government refused to issue a licence for a super casino.

If the Blues are adversely impacted by low match day revenue, the picture is even worse when it comes to commercial income with only WBA earning less than Birmingham’s £7 million. Again, the “big boys” generate substantially more revenue here with Manchester United and Liverpool receiving ten times as much at around £70 million. Note that the £10 million commercial revenue reported in 2008 was artificially inflated by the £2.5 million compensation received for former manager Steve Bruce joining Wigan.

The shirt sponsorship deal with F&C Investments is worth just £650,000 a season, which compares very unfavourably with the £20 million that Standard Chartered pay Liverpool. In fact, only Blackpool’s deal with the inappropriately named Wonga is lower in the Premier League.

As of this season, the club has signed a five-year deal worth £7 million with Chinese sportswear manufacture Xtep to provide kit, replacing the three-year deal with Umbro. Peter Pannu was proud of this off-pitch signing, “Not only is it a superb deal commercially, being the biggest sponsorship the club has acquired, but also on a brand level, as it promotes the club internationally.”

"Karren Brady - the first lady of football"

This is part of the owners’ long-term strategy, which was outlined after the acquisition, “We believe that there is a major opportunity to build BCFC’s fan base in China and to generate new sources of revenue for the club.” Former chief executive Karren Brady gushed, “I can foresee links with the powerhouse Chinese economy”; while one BIH’s legal advisors went even further, “With a population of 1.3 billion in China, the prospects are unlimited.”

Stirring stuff, but is it really credible? Sure, football is widely followed in China with Premier league matches broadcast on free-to-air state channel Guandong TV, but even franchises like Manchester United have struggled to make any tangible impact there. Indeed, only a tiny percentage of United’s revenue comes from outside the UK. Of course, Yeung has many more local connections, which he believes will lead to Birmingham being “more popular than Manchester United and Chelsea”, but there’s been little evidence of that so far, beyond a pre-season tour. It’s obviously early days in the relationship, but to break through in a major market like China is likely to require the kind of funds that Birmingham do not appear to possess.

Where Birmingham can be justifiably lauded is their cost control. In five years, total expenses have only grown from £45 million in 2005 to £55 million last year, though we should probably pro-rate 2010, as those accounts only cover ten months. If we do that, we get £65 million, which gives a growth of 44%, which is not too bad. As a comparison, Bolton, a club with similar revenue (£56 million), has seen cost growth of 95% in the same period.

Using the same pro-rata technique, the annual wage bill is £44 million, which is one of the lowest in the Premier League at 15th. This means that Birmingham significantly outperformed their expected league position based on wages when they finished 9th. To place their wage bill into context, teams like Aston Villa and West Ham pay 50% more.

This is an area that the board takes very seriously, indeed it is listed as the club’s principal risk in the accounts, “The acquisition of players and their related payroll costs are deemed the core activity risk and, whilst assisting the manager in improving the playing squad, the Board is mindful of the pitfalls that are inherent in this area of the business. The aim is therefore to manage these costs whilst being as competitive as possible within the club’s financial constraints.”

In 2007 wages were cut following relegation, but this was not repeated in 2009 when the club was again demoted, leading to an unsustainable wages to turnover ratio of 100%. This was lowered to 78% last season, due the rise in turnover following the return to the Premier League, but this is still a little on the high side. To be fair, this could fall to UEFA’s recommended maximum limit of 70% with a £7 million increase in revenue, which is entirely possible following the new Sky contract.

The question is what would happen if Birmingham were to be relegated? Yeung has spoken in the past of maintaining a “magic formula of 60-70%” and “a fall-back option in case you are not in the Premiership”, which implies that there would be a sale of players in this eventuality, unless the players’ contracts include clauses reducing salaries in the Championship.

Similar to wages, player amortisation of £12 million is far behind most of Birmingham’s Premier League rivals, who are still “paying” for the transfer excesses of previous years. Amortisation is an “accounting” expense, which occurs as the result of transfer purchases. When a player is bought, the cost is capitalised as an intangible fixed asset and amortised (written-off) over the length of his contract. This means that the costs of buying a player are not fully reflected in the books in the year of purchase, but over time the amortisation costs can have a real impact on the profit and loss account, e.g. Manchester City’s annual amortisation is an astonishing £71 million. Again, for Birmingham, this expense tends to rise and fall, depending on whether the club is in the Premier League or Championship.

The impact that the new owners have had on the club’s transfer policy can be seen by looking at the net spend over the last decade. During the last eight years of the Sullivan and Gold era, this amounted to £41 million, but this has almost been matched with £36 million in the two years under Yeung. OK, a couple of the buys in 2009 took place when the “two Davids” still had their hands on the tiller, but the point largely remains valid.

Many of the purchases, such as defenders Roger Johnson, Scott Dann and Craig Gardner have proved quite astute, while the club has also made good use of the loan system over the years, most notably with goalkeeper Joe Hart from Manchester City last season, but also the likes of Sebastian Larsson, Fabrice Muamba and Nicklas Bendtner from Arsenal.

This is an example of the thrifty stance adopted by the previous owners, Sullivan and Gold, who appear to have provoked contrary reactions in most supporters. On the one hand, they rescued the club from receivership in 1993 when they bought it for £700,000 and they ran the finances in a sensible manner, generating profits in many years, which is a rare feat in the pressurised world of football. On the other hand, they were criticised for milking the fans and not investing more of their own money, leading to two relegations in four years, which many felt could have been avoided.

Indeed, the former regime’s reputation for financial competence has taken a few hits in recent years. In March 2010, Sullivan himself declared, “Last summer we knew the club had a financial problem, as we publicly stated we loaned it £5 million to pay the deposits on two new players, because there was no money to do that.” In the same interview, when confronted with Birmingham’s £19 million loss in 2009, he admitted, “I can’t see where this loss has come from”, even though he had sanctioned the policy of retaining the Premier League squad in the Championship – which, admittedly, was vindicated when promotion was secured.

"Gold and Sullivan - the dynamic duo"

Then, there’s the small matter of a few legal difficulties, including a tribunal finding against the club in 2007 over the issue of reclaiming VAT on agents’ fees, and Sullivan and Karren Brady being arrested the following year on suspicion of conspiracy to defraud and false accounting (though no charges ensued).

While these incidents may have raised supporters’ eyebrows, they were more angered about the size of Brady’s pay-off, when the club was sold. According to the circular sent to Birmingham City shareholders, this amounted to a staggering £959,000, comprising 12 months’ notice £179,000; once-off bonus on company sale £520,000; and a bonus for each season played in the Premier League, starting 2009/10 £260,000.

Indeed, Yeung sued the former owners, as he believed that they had taken too many management fees out of the club, and even though they ultimately dropped the lawsuit, the 2010 accounts did note that the club recovered a total of £2.65 million “relating to management charges incorrectly invoiced to the club in previous years.”

Of course, the old saying caveat emptor springs to mind and it is fairly obvious that Yeung’s due diligence could have been better, especially as this was his second bite of the cherry, having failed to raise sufficient funds in his collapsed takeover bid of 2007, when he had to settle for a 29.9% stake instead. Despite this inside track, Yeung surely over-paid when he finally bought the club in late 2009 for £81.5 million, which was £17.5 million more than Randy Lerner paid for Aston Villa and £58.5 million more than Venky’s paid for Blackburn Rovers (though in both those cases, the new proprietors took on more debt).

"McFadden - absence makes the heart grow fonder"

In this case, Sullivan was right on the money, “He merely asked us about ten questions and failed to bring in accountants or auditors. It’s a bit like me buying a house and failing to conduct a survey and then moaning when the damn thing collapses.”

A similar lack of attention to detail was exposed when Yeung’s company lost a court case to stockbroker Seymour Pierce, who had sued the club for £2.2 million of unpaid fees relating to advice provided in the initial takeover bid, apparently because they had failed to submit three months’ written notice. At one stage, there was talk of this case causing the owners to lose control of the club, which may have been an improbable scenario, but it did raise questions over the strength of their financial backing.

As Seymour Pierce’s lawyer said, “Any reputable business would not choose to be in contempt of a British high court. If they are well funded and they are as substantial as they have told people, they would easily be able to fund the fee and then try to get leave to appeal the judgment.”

There has always been a dichotomy at the heart of Birmingham’s new owners: plenty of bullish talk about money being made available for new players, even though the holding company appears to have little financial substance. Indeed, Grandtop made significant losses in the four years prior to the acquisition and required a £57 million bridging loan to fund the takeover, which was only repaid after a share issue. This was a sign of things to come, as the current working capital issues are once again being addressed via another share placing.

"Nikola Zigic - more bang for your buck?"

If that’s not bad enough, there is also confusion over the identity of the real owner of the football club with some questioning Carson Yeung’s role, leading to a rebuttal by Peter Pannu, “He is not a front man, he is the main man”, though even he admitted, “I can understand why people have made assumptions. The legal documents are very complex and difficult to explain.”

That’s certainly true, but the latest placing document clearly identifies the anticipated dilution of Yeung’s stake that would result from this process. He currently holds 18.54% (in his name 5.82%, wholly owned Great Luck Management Limited 12.72%), which would fall to 16.25% after completion of the fully underwritten element and 12.47% if the maximum number of “best effort” shares are placed.

Apart from demonstrating the lack of confidence in BIH, given that less than 25% is underwritten, this share placing raises a couple of important questions: (a) If Yeung has so much money, why is he prepared to let his stake be diluted, especially as the price is half of what he previously paid? (b) How can he still be the “main man”, when he will own less than an eighth of the company?

In fairness, he would still be the major shareholder, if not the majority shareholder, and it is possible that other large shareholders are close business associates, who are happy to see him to lead the organisation. That said, he sure has come a long way since the days he ran a chain of hair salons, before apparently making money from the ubiquitous “property development” and becoming chairman of Hong Kong Rangers football club.

"The focus of Roger Johnson"

The company’s share placings have been under-written by Kingston Securities, a Hong Kong brokerage owned by Pollyanna Chu, chief executive of the Golden Resorts casino hotels company in Macau and reputedly one of the wealthiest women in Hong Kong. There are suspicions that she is the true power behind the throne, with some believing that it is only a question of time before she shows her hand, especially with BIH’s continual financial headaches, but Pannu has denied her involvement. Such a change might be welcomed by Blues fans, though it could be a case of jumping out of the frying pan into the fire, as she has a somewhat controversial past, having been investigated by the Hong Kong Securities and Futures Commission for “unauthorised and improper trading activities.”

There have been a number of bizarre potential acquisitions announced by BIH, including Peace International Creation Limited (aviation), Diligent King Investments Limited (telecoms) and Good Partners Group Limited (property), though none of these appear to have been completed. Again, it makes you wonder what are the attractions of these unknown companies, when there many businesses around that would be far less speculative investments. As Spandau Ballet once sung, “Questions, questions/Give me no answers.”

In fairness to Carson Yeung, he has so far delivered on a number of promises: the money was found to purchase the club, the bridging loan was repaid and money has been provided to fund transfers (albeit not to the levels initially pledged). That said, the lack of transparency must be a concern for Birmingham City fans, not helped by the club’s parent company being incorporated in the Cayman Islands, an offshore tax haven. The Premier League have been satisfied to date, but their tests only require a guarantee that the club is funded until the end of the season and is not designed to look at long-term solvency.

"Calling Cameron Jerome"

Push will come to shove soon enough, as Birmingham’s ageing squad will need to be rejuvenated and that will require a fair bit of cash. The concern is that the complicated structure is acting as the proverbial smoke and mirrors to disguise fundamental financial weaknesses, while the hope is that the club do indeed manage to break into the lucrative Chinese market and reap the benefits. We shall see.

Encouragingly, Peter Pannu recently stated that Birmingham had to be “financially prudent” and could not be run on a “benefactor’s model” otherwise they would end up like Portsmouth, but he also said that Yeung was not going to “turn off the taps.” It’s a delicate balance that affects all clubs, but many of them do not suffer from the Blues’ Byzantine ownership structure.

In many ways, Birmingham City is an admirable club with solid, down-to-earth principles. They have a small budget, but have continued to punch well above their weight, earning the respect of the Premier League. Much of this is due to a fiercely loyal support that deserves more clarity from the club’s owners. As Peter Pannu said, when talking about the previous administration, “The fans would like to see the lifting of the corporate veil and their club run in a responsible and open way.” I couldn’t have put it any better myself.

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