Source:
https://scmp.com/sport/football/article/3093085/hong-kong-owned-birmingham-city-show-similarities-wigan-athletic
Sport/ Football

Hong Kong-owned Birmingham City show similarities to Wigan Athletic

  • Managerless Blues, on second Hong Kong owner after disgraced hairdresser Carson Yeung, face relegation to third tier
  • ‘Massive debt to owners is Sword of Damocles,’ says co-author of ‘Haircuts and League Cups’
Birmingham City's owner, Hong Kong businessman Carson Yeung (C) celebrates at the end of the 2011 Carling Cup final. Photo: AFP

“The downfall of Wigan Athletic is proof positive that the ‘sugar daddy’ style of ownership does not work,” Daniel Ivery, co-author of Haircuts and League Cups: The Rise and Fall of Carson Yeung, told the Post.

“When any club is in massive debt to its parent company, then there is always that Sword of Damocles hanging above their head that it may be recalled.”

As anger and confusion continues over Hong Kong-owned Wigan Athletic going into administration mere weeks after being sold, comparisons have been made to Birmingham City, another English football club with a history of Hong Kong ownership.

Carson Yeung Ka-sing’s time at Birmingham City began with a protracted two-year takeover and ended with the disgraced former hairdresser standing down from the club as he awaited a jail sentence for money laundering in 2014. The club was then transferred to Trillion Trophy Asia, another Hong Kong-listed company, in 2016.

Birmingham City's Obafemi Martins (left) celebrates his goal against Arsenal during the 2011 English League Cup final. Photo: Reuters
Birmingham City's Obafemi Martins (left) celebrates his goal against Arsenal during the 2011 English League Cup final. Photo: Reuters

Like many other clubs in the 24-team second tier, the Blues have struggled financially. Last season they were docked nine points after accruing losses of £48.8 million (US$64 million) over three years. This season they faced another EFL investigation in January over a breach of the EFL-imposed business plan. Although they were found not guilty in March, the EFL appealed that ruling and it was overturned last month, but the club will not be docked any points.

They since have parted company with first team manager Pep Clotet, who instead of leaving at the end of season as initially agreed, left the club by mutual consent on July 8. Clotet’s side were 17th in the league with four games left and have since dropped a place after losing to Stoke City at the weekend. More worrying for fans is that they could be at risk of following Wigan, should their owners decide to pull the plug.

“Birmingham City are currently £91 million in debt to (Hong Kong-listed) Birmingham Sports Holdings as per the last club accounts and are in similar danger should Paul Suen Cho-hung or his associates decide they no longer wish to put money in,” Ivery said.

“The issue has always been that the owners and directors test (OADT) can only test objective standpoints such as a criminal record or previous insolvencies, whereas it cannot accurately test the subjective intentions of any owner.

“Rick Parry only compounds this further by admitting failure in being able to test even objective standpoints due to a reluctance to get records from Hong Kong and China. This is not good enough and shows why many believe the EFL is not fit for the purpose in their current configuration.”

EFL chairman Parry told the BBC that there were particular difficulties when it came to Asia, following Wigan’s move into administration.

Birmingham City supporters group Blues Trust, which was set up in 2012 following the arrest of Yeung, also see problems with the test, according to technical officer Richard Stanley. He noted that the EFL has expressed the test’s limits since Wigan went into administration.

“As previously stated, the EFL is aware of the public frustrations felt in respect to the current Owners’ and Directors’ Test and acknowledges that there is a requirement for ongoing adaptation and improvement but, from a legal perspective, it can only operate within existing parameters,” the EFL wrote on their website earlier this month.

So is Wigan Athletic merely Birmingham City 2.0?

“Probably not quite the same,” Stanley said. “I think with Birmingham the owners simply wanted the company for its HKSE listing. The initial purchasers Trillion Trophy Asia appeared to have no expertise in running a football club and it has always been difficult to know who exactly pulls the strings and makes the decisions.

Wigan’s initial owner, IEC, was also making its foray into football club ownership and did fund the club at the outset, notably investing in the academy.

“At first, with the confidence borne out of ignorance, they genuinely appeared to think they could make a success of the club simply by throwing money at it. They were extremely naive and mounting losses coupled with autocratic leadership at a UK level have caused a lot of U-turns, panic decisions and lack of consistent strategy,” Stanley said of Birmingham City’s owners.

“With Wigan, who can know the mindset of a person who buys a club and then decides not to fund it and to almost immediately put it into administration? One thing is clear: the EFL didn’t and so we come back to Owners and Directors Test.

“Proper due diligence by a prospective purchaser should have identified any financial issues before purchase. I can’t help feeling that some prospective purchasers are so blinded by the prospect of owning a football club and the kudos it brings that proper due diligence goes out of the window.

“It does seem that the EFL has at last started to recognise that they do have obligations and simply can’t walk away from them. But it was the Bury situation which perhaps made them start to wake up, rather than the Birmingham City situation.”