Not his goal

Chinese owner is gutted too

As China buys up the world, there’s at least one asset that its business bosses may want to avoid: an English football club.

That’s the lesson that may have been gained last Sunday after Birmingham City got relegated from the Premier League.

The English club – founded in 1875 – was the first to experience a Chinese takeover. Two years ago, Hong Kong businessman Carson Yeung bought the Midlands team with a vision of building ties with Chinese partners, both commercially and in developing promising young soccer talent from the Chinese leagues.

But last weekend saw Yeung’s dream take an early jolt. In a tension-filled final round of fixtures, Birmingham lost their remaining game and were demoted from the English Premier League to a lower division – a slip-up that will cost the club an estimated $45 million in lost TV revenues next year.

It also makes it much less likely that many Chinese firms will be lining up to sponsor the club for the foreseeable future. And if other potential Chinese tycoons were waiting in the wings, keen to buy English Premier League clubs, they may now be having second thoughts – given Yeung’s unhappy experience.

Five teams were faced with relegation from the English Premier League on Sunday, but only three would survive. Birmingham needed a win to be sure of staying in the lucrative top division, but lost 2-1.

The following Monday, shares in Hong Kong-listed Birmingham International Holdings had lost 18% of their value (Yeung holds around 26% of the firm). It doesn’t help that the club has serious financial constraints – it has more than $29 million of debt reports the Birmingham Mail. Worse still for Yeung, in March he pledged his own property assets in a bid to raise new funds and “stave off a potential cash crisis” according to the paper.

It’s little solace to fans and shareholders alike that the club won its first major piece of silverware in 38 years earlier this season. Winning the League Cup qualifies the club to participate in the Europa League next season, but the loss of Premier League TV revenue means it’s unlikely to be able to hold on to all of its best players.

At this point Yeung might be ruing his decision not to buy an NBA or NFL club instead – two sporting leagues where demotion to an inferior league is impossible.

But at least Birmingham has been through the experience of relegation before – it spent a year out of the top league in 2009, and managed to claw its way back up. Premier League rules mean that it will also receive crucial ‘parachute payment’ cash for a limited period in the lower division (£16 million next year). With that money, it will be hoping to compete strongly enough to earn an immediate return to the footballing elite.

If it can do that, perhaps it can finally start winning the hearts of Chinese fans too?

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