Birmingham City set for the blues
Relegation is a blow for any club but relegation from the Premier League comes with added recriminations and relegation from the Premier League for a club that was not expecting it can be catastrophic.
There is a firmly-held belief at PL HQ that nobody goes bust on their watch. Pompey were the exception that proved the rule, you see. And they had it coming. But this ignores what has happened to those who crashed into the Championship and kept going until League One and/or administration broke their fall. Some are still tumbling.
This is a bit like a landlord filling a sailor on shore leave full of grog but getting him out of the door just before the furniture starts to fly and of the three relegated clubs it is Birmingham City that stagger into the night in the greatest disarray.
Birmingham City face an uncertain future after relegation from the Premier League. Photo: Getty
There are three reasons for this bleak prognosis and they can all be found in the most recent set of financial accounts filed by the club.
This time-bomb of a document provides a detailed look at City's financial health as of last summer and it was signed off by majority owner Carson Yeung and his board on 25 October. That was two days after the club had beaten Blackpool 2-0 to move into a comfortable mid-table position after nine league games.
Most of the numbers were commonplace for English football: rising television revenues cancelled out by wage inflation and the drag of debt. That said, none of the figures on their own were terrifying, not by Premier League standards.
What was scary, however, came in the notes under the subhead "going concern". It was in this section the club's precarious hold on solvency was outlined.
In short, City were projected to spend more than they had coming in even after a year that had seen TV income rise from £16m in the Championship to £42m in the Premier League.
The club's forecasts revealed £7.5m would have to be pumped in to keep the Blues inside the terms of their "agreed bank facilities" - accountants' talk for staying on top of the loan and overdraft repayments.
But there was a problem with this forecast: it was based on more of the same. The year under scrutiny had been a stellar one on and off the field. New owners, ninth in the Premier League, turnover up by 105% - if this is mid-table mediocrity could we have more of it, please.
The only concession to more negative thoughts ("the sensitised forecast") was that an additional £3m would be needed if McLeish's men misfired and could only just beat the drop.
Which brings me to the second reason for concern in Small Heath: the board's plan for filling the hole that is actually much bigger than anybody was willing to consider seven months ago.
The deficit problem was supposed to be fixed by two Hong Kong stock exchange share offerings in the club's parent company, Birmingham International Holdings (BIH).
The first placement of 450 million shares was underwritten by Kingston - a brokerage firm with investments in Hong Kong and Macau - and it raised the promised £7.15m. But the second tranche of shares, 1.1 billion of them, was meant to fly off the shelves earlier this year, bringing in £17.5m.
This was a "best efforts" placing and not underwritten, making the shares less attractive and the sale has been postponed. We are expecting some news by Wednesday but no analyst I have spoken to in Hong Kong has heard a whisper about it.
Which brings me back to the mysterious Yeung.
A barber turned entrepreneur, the Hong Kong-based businessman first came to the British football public's attention in 2007 when he bought a 29.9% stake in Birmingham City from David Sullivan and the Gold brothers. The plan was to buy the whole club soon after and build the "Birmingham brand" in China.
But two years, one of which was spent in the Championship, passed before Yeung was able to complete the deal. During this time more than a few fans wondered if this self-proclaimed billionaire was quite as rich as he claimed.
This sense of unease was compounded when the complicated deal actually went through. The new owner was really a Hong Kong-listed, Cayman Islands-registered firm called Grandtop International Holdings. Yeung was the majority shareholder of Grandtop and his actual holding in City was somewhere between 25-20%. This is where it has remained over the last 18 months or so.
While efforts to attract new investment from Asia this year have stalled, Yeung has been active in trading BIH (the holding vehicle that Grandtop became) shares, first increasing his stake to 24.9% and then diluting it to 23.3%. The club's official site currently says he owns 22.5% of the shares.
This last move, which the club said brought in £3.6m, took place earlier this month. It followed news that Yeung, who remortgaged some of his property portfolio earlier this year to raise £12m, had loaned City £4m. This is on top of existing loans of £15m.
So we have money and shares going to and fro between Yeung, his holding company and fellow "third party" investors, but no indication any of it is the fresh investment needed to fill the Premier League-sized hole in the books.
And this is the final worry for City. Relegation from the Premier League, even with parachute payments of £48m over four years, hits the bottom line hard. The Championship TV deal is a paltry £3m for each club (the worst team in the top tier earns £40m) and commercial revenues (already underwhelming at St Andrews) also suffer. You can conservatively wipe £25m from next year's revenue column.
So it is hardly surprising Yeung has told McLeish he can keep his job - it would cost £2m to sack him - but only if he gets them promoted at the first opportunity.
Monday's club statement was straight out of the crisis-control manual. Praise the fans, back the manager but hint it was his fault, remind everybody of how much money you have poured in and then praise the fans again.
But the reality is that the club's wage bill will have risen again (Nikola Zigic's four-year deal alone is worth a reported £10m), the deficit remains and will get worse and now McLeish must turn around a club that has won only two league games since 27 February. He could also lose half of his squad, which may be no bad thing if there was money to replace them but there isn't.
That late winter day, of course, was when they beat Arsenal to win their first major piece of silverware for 48 years, the Carling Cup. What should have been a passport to better and bigger things for McLeish and the Blues will next year be a painful reminder of the type of football their forecasters budgeted for but can no longer afford.