Under normal circumstances, news that a US finance house was charging up Kingston Hill towards St Andrew’s with a sackful of cash would be greeted with delirium at Birmingham City.
Interest from Tom Wagner and his New York-based hedge fund Knighthead Capital Management, would be seized upon feverishly by supporters desperate to see the end of ownership that has brought the Second City club to its knees.
But - as yours truly knows only too well following a chastening episode 12 months ago - no deal has been completed until the ink is dry on a contract and funds have been transferred.
And, despite suggestions from across the Pond that the deal is ‘close,’ the timing and release of details that could easily have been kept under wraps pose questions.
The news that leaked out Stateside came from trusted business source Bloomberg and smacks more of a deliberate placing of a story from the public relations arm of Knighthead than any genuine ‘scoop.’
Twenty-four hours later, it has not been denied by the two principals leading the buy-out here - former Microsoft salesman Jeremy Dale and golf executive Keith Pelley - which can lead to only one conclusion.
That this is, indeed, the firm that has signed exclusivity agreements with Birmingham City’s owners. Assuming the premise is correct - the timing and leak make no sense. We are less than two weeks into a two-month period when a deal can be concluded with these purchasers - and these purchasers only.
Why break cover? Why risk upsetting a deal that you clearly want to get over the line by making it public? There can be only one answer to that: To put pressure on the sellers. Again, why?
Let’s park that, and look at the figures. The numbers have been looked at countless times by hundreds of bean counters. Laurence Bassini had David Sullivan’s cash behind him - or so he thought - so the finance to overhaul the club wouldn’t have been in question.
Sullivan can afford to buy Blues. To him, it’s a chunk of change. But Paul Richardson and Maxi Lopez touted their deal around a number of Private Equity firms in the UK - and beyond - yet couldn’t hook one of them.
Dale and Pelley’s consortium have done likewise. No takers. That’s a red flag, surely? Or else these Americans just have a monstrous risk appetite. I’ve yet to meet a financier who likes losing money…but anyway.
The £35m asking price is set in stone. But the last accounts accepted the club would need £23m in funding between July last year and December 2023. That’s a net loss of £1.25m per month and heaven knows how much more, going forward.
Even with the slight reduction in outgoings due to players being out of contract, I estimate savings of around £3.5m per annum - but these members of John Eustace’s squad have to be replaced. So, few savings there.
Toss into the mix the long-overdue repairs to the stand - of around £5m - and any windfall from the sell-on from Jude Bellingham’s anticipated move this summer will be wiped out before a ball is kicked in the 2023-24 campaign.
Four weeks ago, I was tipped off that Dale had been shown around the Birmingham Wheels site by a helpful high-ranking council employee. That can only mean a property deal is in the offing with some land swap arrangement between the council and St Andrew’s.
Setting to one side the difference in sizes of the sites - St Andrew’s is around 7.5 acres and Wheels five times that - the development value of both isn’t as great as you might think.
I commissioned a local firm to give me their best guesstimate on the value of the current stadium and, using a similar deal that had taken place in Tyseley, they came back with a development value of £46m and costs, excluding some professional fees, of £37m.
Having taken further advice, that appears realistic. If that is extrapolated at Wheels - and there is a huge question to be answered over the existing contamination - you’re looking at a potential profit of less than £40m.
And that’s not including the build cost of a new stadium - on a site that would present huge infrastructure issues in an area of town which isn’t ideal for a fresh start.
And whichever way you cut the mustard, Hedge Funds or PE firms exist to make money. It’s what they do. They want to turn £1 into £3 as quickly as possible. Then, get the heck out and move onto the next project.
How on earth are you going to do that with Birmingham City? Finally, there’s the track record of US owners.
Yes, the Glazers have been in charge of an appreciating asset at Manchester United. So would anyone over the same period of ownership. It’s very difficult to lose money owning that football club.
The Fenway Sports’ Group at Liverpool have seen the value of that investment rocket. But these are two blue-chip football clubs. If you want two other examples, look across the Expressway at Aston Villa and down the M6 at Coventry City.
Randy Lerner loved Villa so much that he had the club’s crest tattooed on him. This affection cost him over £300m. He came, saw and almost blew the family fortune with a string of crass decisions and the club ended his reign in the Championship.
And US hedge fund SISU, down the road at Coventry City, turned a once-proud club into a basket-case - the Sky Blues ended playing at Northampton Town and spent a season in Division Four. Further afield, Todd Boehly is making a right dog’s dinner of life at Chelsea.
Of course, Knighthead Capital could be willing to spend a fortune to right these wrongs. However, how do they turn Birmingham City into an asset approaching £500m? Or £750m And how long would that take? Now, Mr Warner might be the fairy-godfather Birmingham City supporters crave.
But I very much doubt it. These guys are razor-blade ruthless. Warner and his firm aren’t managing $9bn in assets through their ability to lose money. Perhaps they know something I don’t. That’s entirely possible. At present, this deal isn’t cut and dried.
From here this looks like a god-sent opportunity to blow a bundle of cash with people who have no track record in football club ownership. As it stands, this just doesn’t stack up. But then, whenever has it at Birmingham City?
