🇺🇸 The Takeover of Birmingham City FC is Fascinating

This is the League 1 table at the time of writing this newsletter.

Birmingham are not officially crowned Champions yet, but they will be very soon. Which will be welcome news to Knighthead Capital. The new American owners of Birmingham City Football Club.

Their story, similar to the story of Wrexham, is a fascinating one.

Prior to the takeover, Birmingham City were in a bad way financially. Their financial results made for pretty dark reading:

• 2020: -£18.1m

• 2021: -£4.6m

• 2022: -£25.0m

Knighthead Capital’s takeover of Birmingham City was never just about saving a struggling football club however. It was about building something bigger.

Since completing their acquisition in July 2023, Tom Wagner and his team have moved with clear intentions:

He has stuck true to his word too.

In July 2023 Knighthead (Shelby Companies Ltd) officially acquired 45.64% of Birmingham City PLC. The transaction was interesting for four key reasons:

1. Knighthead only paid a reported £6m for the club, showcasing how much debt Birmingham were in at the time

2. Knighthead remain a minority shareholder in the club as Hong Kong-based owners, Birmingham Sports Holdings (BSH) still own 51%

3. Knighthead took 100% ownership of the infamous St. Andrew’s stadium. This was a key driver in Wagner’s decision to buy the club

4. Knighthead assumed 100% operational control of the club from the day of acquisition

And full operational control of the club was key for Wagner. He got to work quickly.

In August, Tom Brady was unveiled as a minority owner and chair of the club’s new Advisory Board. In October, John Eustace was sacked as manager and replaced by Wayne Rooney. The stadium was then rebranded “St. Andrew’s @ Knighthead Park” and the training ground “Knighthead Training & Academy Grounds."

Critics scoffed at the owners naming the ground after themselves. This bounced off them however, as the vision is longer term. Knighthead announced an injection of £100m into a new "Sports Quarter" in East Birmingham. It includes plans for a 60,000-seat stadium, new training facilities, and a world-class academy. Eagle-eyed readers of you will notice that these plans are eerily similar to Jim Ratcliffe’s plans with Manchester United. Ratcliffe and Wagner only hold partial ownership of the club, but have raised clear signals to invest into the city the club plays in, not just the football club itself.

On the pitch though, the ride has been bumpier.

Wayne Rooney controversially became the manager despite Birmingham sitting 6th in the Championship at the time. The gamble somewhat backfired. Rooney couldn’t get a rise out of the squad, and Birmingham tumbled down the table, eventually relegated to League One at the end of the 2023/24 season.

This season has been more dominant. Rooney was fired and the squad was overhauled. They now sit top of the league and off-the-pitch the club is unrecognisable compared to two years ago:

• Commercial revenue is at an all-time high

• Stadium and training facilities have been modernised

• Fans feel a sense of optimism for the first time in a long time

The owners are effectively betting that investing in excellence, in infrastructure and in players will propel the Blues back to their previous Premier League heights. Their ambition is to make Birmingham City Football Club a beacon of excellence for the city of Birmingham and a club that can eventually thrive in the Premier League. All within a few seasons.

Time will tell how they fare in the Championship next season!

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See you next week.