Birmingham face an anxious wait before learning whether an expected points deduction is severe enough to plunge them into a relegation battle.
The Sky Bet Championship club have breached the English Football League’s profitability and sustainability rules and face a possible 12-point deduction and a transfer ban,
An EFL spokesman said: “An Independent Disciplinary Commission has today sat and considered the matter between the EFL and Birmingham City in regard to the League’s Profitability and Sustainability rules for the period 2015/16 to 2017/18. Both parties await the decision of the panel.”
The Blues, currently 13th in the table, seven points off the play-offs, lost £37.5million in the 12 months to the end of June 2018, more than double the previous year’s deficit.
The main cause of Birmingham’s deteriorating balance sheet was an increase in the wage bill from just over £22million in 2016-17 to nearly £38million the following year as both Gianfranco Zola and Harry Redknapp were lavishly backed in the transfer market.
Redknapp helped save the club from relegation in 2017 after Zola’s disastrous four-month reign but the 71-year-old Englishman only lasted eight league games last season, despite signing 14 players during the summer.
According to the accounts, Birmingham spent more than £15million on transfer fees but the most shocking figure is the wage-to-turnover ratio, a key indicator of a club’s sustainability.
With club revenues edging up to £18.8million, Birmingham paid out a remarkable £202 in wages for every £100 they brought in, double the league average, and when transfer fees are factored in, that grows to £243 out for every £100 in.
As a result, Birmingham have net liabilities of £55million and owe parent company Birmingham Sports Holdings more than £73million, a sum that will grow over the next 18 months, as the directors’ report reveals a further £39million will be needed over the next 18 months to keep the club afloat.
Under the EFL’s profitability and sustainability rules, Championship clubs are only allowed to lose £39million over three years, with points deducted on a sliding scale from three to 12, depending on the extent of the breach.
Press Association Sport understands the club faces a charge of an “aggravated breach” after signing Danish defender Kristian Pedersen for a reported £2.25million last summer despite knowing they were under investigation.
The EFL initially refused to register the signing, saying it was “exceptionally disappointed” Birmingham had bought him, although he was eventually cleared to play.
Birmingham Sports Holdings is owned by Trillion Trophy Asia, a Hong Kong-based, British Virgin Island-registered firm.