Relegation = Very Negative Impact

Birmingham City have announced the interim results.

The Chairman's statement reads:

The six months under review was a difficult one for the Club in terms of footballing performance and eventually resulted in relegation. This is of course tremendously disappointing, but we need now to look forward and everyone at the Club is totally committed to returning to the Premiership. As ever we recognise the importance of our loyal core of supporters and dedicated staff during this difficult period. I should like, on behalf of my Board, to thank them for their commitment to the Club, which gives us hope for the future.

The contracts of several senior players have expired and they will be leaving the Club, including Stan Lazaridis, Jamie Clapham, Kenny Cunningham, Mario Melchiot and Nico Vaesen. I wish to give special thanks to Stan and Nico who have been exemplary examples as professional footballers and deserve great credit for the long and loyal service they have given the Club. It is loyalty such as this which is the foundation upon which the Club has been built and is the spirit of which we intend to rebuild for the future. We wish them all the very best in the future.

The Managing Directors statement added:

Following a number of years of significant improvement, the 2005/2006 season has seen the Club relegated from the FA Premier League to the Championship.

The figures reported on in this period cover the first half of last season (entirely in the Premier League) and show a similar turnover figure to the previous year of £24.5m (2005 H1: £24.4m). Operating profit before interest and taxation of £1.3m was down on the previous year (2004 H1: £5.7m): wage costs increased by £1.2m and there was a loss on the sale of player registrations, £1.1m compared to a profit of £2.3m in the previous year. The full year results will include the remainder of the period in the Premier League but will also include our first month of the new Championship season. There will therefore be a reduction in turnover for the full year.

The financial effects of relegation to the Championship are significant, with media and broadcast income likely to decrease by as much as £20m. We also expect revenue generated from ticket sales, sponsorship and other commercial streams to fall. We can offset this to some extent by savings in wages for players: we have negotiated the early termination of several players' contracts and have also returned loan players to their clubs. We will also receive a Premier League parachute payment of £4.5m next year. The Club has not exercised options on players where we do not believe their contracts have significant asset value. Given the large number of players who are leaving the Club (11 in total), it may be necessary to sell further players to raise funds to invest in a squad which can compete in the Championship.

We have also undertaken a fundamental review of staffing levels within the Club and these changes will help to provide financial security as we attempt to regain Premier League status.

The Academy has had a good year with six players coming through to play for the first team. The Club has secured the services of the following young prospects: Marcus Painter, Mathew Sadler, Neil Killkenny, Matthew Birley, Colin Doyle and Samuel Oji, whom we have rewarded with new contracts. There will be a restructuring of the Academy to reflect the importance the Club gives to it. It will now be under the direct control of the Managing Director's office to ensure that it continues to thrive and receives the appropriate investment and acknowledgement for its development of young talent.

Unfortunately, success in football can never be guaranteed and our current misfortune will have a very negative impact on the business. Nonetheless, I believe that the steps the Club has taken to reduce its costs for the coming season have left us in a much better position than many others who have previously faced relegation. However, it is imperative for the long term future of the Club that it regains its position in the Premier League as soon as possible, hopefully during the 2006/07 season, and the Board will ensure that the Club focuses its investment to this end.

A full copy of the results are available by clicking this link: Click Here

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