No promises to win the league, no claims of fabulous wealth based upon retail space on London’s Oxford Street, no threats of violence to Simon Jordan — Birmingham City takeover bombshells are not as explosive as they used to be.
Much more of this and their fans might start to miss Laurence Bassini…
Sorry, must be the heat talking.
No, what Birmingham fans really want is more of what Maxi Lopez and Paul Richardson were promising in the car park at their ground, St Andrew’s, on Tuesday morning: an actual takeover, with fresh investment, new faces and a repaired stadium.
Will they get it? Well, contrary to reports, this is not a done deal — not yet — but Lopez and Richardson are credible potential owners of Birmingham City, and that is a start.
So, let us begin there as we try to work out exactly what has happened, what must still happen and how we will know it has happened when it does. Or does not…
OK, who are Lopez and Richardson?
If you read your newspaper from back page to front, Lopez is a former footballer from Argentina who played for Barcelona, AC Milan and 12 other clubs you have probably heard of during a 20-year career that included 29 caps for his country’s under-20 side.
A tall, strong but slightly one-paced forward, “la Gallina de Oro” — “the Golden Hen” — scored more than 100 club goals, including one with his first touch for Barcelona in a Champions League knockout phase game against Chelsea at Camp Nou in February 2005. He also helped win two La Liga titles and the 2005-06 Champions League during his stint at Barcelona, although he only made 14 league appearances for them and never scored in La Liga.
But if you read your newspaper the wrong way around, Lopez, now 38, is better known as the first and now former husband of Argentinian actress, model and football agent Wanda Nara. In fact, this is how UK newspaper The Sun billed him in a headline about the Birmingham takeover on Tuesday, which seems a bit unfair.
Anyway, Nara is now married to his former Sampdoria team-mate Mauro Icardi, who plays for Paris Saint-Germain these days. You can read all about it elsewhere online. There will be lots of pictures of Wanda.
Having retired as a player last year, Lopez, who also has an Italian passport, is starting a career in business.
His first British venture is Maxco Capital, a property firm set up in London in January. One of its two directors is Christian Codoma, a London-based Argentinian who has previously been involved in online fashion.
This, presumably, is how Codoma and Lopez met Richardson, who co-owns Maxco Capital, because the 63-year-old Englishman is a big deal in online fashion himself.
Richardson’s start in business was more rag and bone than rag trade, as he became the director of his family’s skip-hire firm aged just 17. That was in 1976. The company grew into a multi-million-pound waste-management firm, which he ran until 2000.
But then came something of a handbrake turn, as he became the joint owner of AllSaints, a fashion retailer that would become a fixture in most high-end British shopping malls. In 2002, the year of their first campaign in the top flight for 16 years, lifelong Birmingham City fan Richardson joined their board as a non-executive director.
He left AllSaints and Birmingham two years later, and returned to the world of waste management. But in 2015, he was back in fashion, this time as executive chairman of Gymshark, which is one of GB plc’s biggest recent success stories.
Founded by two school pals in 2012, the online-only fitness wear retailer had reached a valuation of £1billion ($1.2bn) in 2020 when American private equity firm General Atlantic bought a minority stake. Richardson played a key role in that expansion and made £80million on shares when the Americans arrived.
That money did not stay idle, though. Last October, he bought fashion brand Hera London — somewhat confusingly based in Gloucestershire, nearly 100 miles from the capital — and the plan is to take it down the same influencer-led path to success as Gymshark.
But Richardson, who describes himself on his LinkedIn page as a “passionate entrepreneur”, has not stopped there.
Since April, he has also become a director at five other companies, including a gym that wants to use human power to make electricity.
Wow, Birmingham City could really use someone like him, right?
Founded in 1875 as Small Heath Alliance, Birmingham were founding members of the Football League’s Second Division in 1892. They won that league’s championship that year, a feat they have repeated three times since, but they have not won a top-tier title or FA Cup yet. They have, however, claimed two League Cups and spent 57 seasons in English football’s top division.
But the last of those top-flight campaigns was in 2010-11, an eventful season that saw them win their second League Cup and reach the quarter-finals of the FA Cup but pick up one point from their last six league games and get relegated.
#OnThisDay 10 years ago… 😲
Obafemi Martins scored a dramatic late winner as Birmingham beat Arsenal in the Carling Cup Final 🏆 pic.twitter.com/N0gouFMgRq
— Sky Sports (@SkySports) February 27, 2021
That was their second year under full Chinese ownership and there have been no great leaps forward since then.
Carson Yeung, the club’s first Chinese president, was arrested on money-laundering charges in Hong Kong in 2011 (we said it was eventful!). Three years later, he was sentenced to six years’ imprisonment.
Yeung, at least, seemed to enjoy owning an English football club. His successors at the various Hong Kong-listed shell companies to have owned Birmingham since his fall have shown no such interest.
Birmingham Sports Holdings (BSH) has owned 75 per cent of the club since 2016, with a British Virgin Islands-registered company called Oriental Rainbow Investments owning 21.64 per cent.
According to the official paperwork, BSH’s majority owner is a Chinese businessman named Paul Suen, while Oriental Rainbow’s beneficial owner is Vong Pech, a Chinese-Cambodian businessman. Very little is known about either of them, and neither has been seen much at St Andrew’s.
In fact, in recent months, thanks to some superb investigative journalism by Radio Free Asia, it has become clear that the real power at Birmingham has been another Chinese-Cambodian called Wang Yaohui, or “Mr King”.
His influence at the club has been whispered about for years but the details of his control over BSH and Oriental Rainbow have only just come to light in China.
The English Football League is now investigating the matter, as Wang has never taken its owners’ and directors’ test (OADT), but Birmingham’s barndoor has been flapping for years.
What we do know is that BSH issued a statement to the Hong Kong Stock Exchange (HKSE) on June 14 that said Pech, “a substantial shareholder” in the company, had agreed to sell his 21.64 per cent stake.
Initially, it seemed that he had sold it to the aforementioned Bassini. This was because the former Watford owner and serial football-club tyre-kicker kept phoning UK radio station Talksport to tell everyone that the deal was as good as done. But it wasn’t.
This prompted some to wonder if Vong/Wang had found a buyer closer to home for their shares, as there were suggestions in the Far East that they had been able to settle some debts and perhaps Bassini had been useful to them in boosting the price of those Oriental Rainbow shares.
But no! It now appears there is a British buyer after all — well, a British-Argentinian buyer — and they want the whole club.
What’s the plan, then?
The details remain sketchy, as what was billed as a press conference at St Andrew’s on Tuesday was actually Lopez and Richardson stopping to chat with Sky Sports and the local media before entering the stadium to start what you would hope (for them) will be some thorough due diligence.
But credit to Birmingham Mail reporter Brian Dick for asking the right questions, enough times, to get Richardson to reveal that he and Lopez have agreed a deal to buy Oriental Rainbow’s 21.64 per cent of the club now, subject to EFL approval.
Richardson said “the paperwork” for that was already in with the EFL and that he and his partners saw no reason why the league would block them. In fact, he said they had already been given an indication they will be fine.
The Athletic understands he might have been jumping the gun with his “paperwork in” comment, but only a tad, and nobody we have spoken to expects him or Lopez to have any trouble with the OADT from a reasons-to-disqualify-them point of view.
That, as regular readers of EFL takeover tales will know, is only half of the approval process, however.
Prospective new owners are also asked to provide a detailed business plan for the club’s next two seasons. We shall return to that.
But getting back to the two-step deal, Richardson explained that he and Lopez will then acquire BSH’s shares to take complete ownership of the club within “two to two and a half years”.
Richardson added they have paid a deposit for full and exclusive access to the club’s financial data. He did not say how much they have paid for this but The Athletic understands it was £1.5million and that it is non-refundable.
Dick pressed Richardson on what guarantees he had been given by the Chinese that they would go through with part two of the takeover and the British businessman assured him he had all the legal guarantees he needed. Sometimes, you just have to grit your teeth and jump, right?
Richardson would not share what the total cost of the takeover would be, saying only that the numbers reported in recent weeks (again, we tip our hats to Bassini) are accurate. This means the group has agreed to pay about £35million for the entire club.
The Athletic, however, understands this breaks down into an up-front payment of £25million to acquire the 21.64 per cent, full operational control of the club and Birmingham City Stadium Limited, the company that owns and operates the stadium.
The remaining payment will then come when BSH hands over its shares.
This will take some time, though, as one of the reasons it has taken BSH so long to find a buyer for the club (apart from their unrealistic valuation for a loss-making Championship side with a dilapidated home ground) is that it cannot sell Birmingham without replacing them with another revenue-generating business. If it did, BSH would lose its HKSE listing, and that is actually worth something.
Without wanting to turn this article into a guide to Chinese business practices, floating a company in China is quite hard. So, the easiest way to get your company onto the stock exchange there is to buy an old company and ‘reverse your business in’. The HKSE is full of companies, like BSH, that have changed names and aims many times.
BSH cannot just swap Birmingham for something else tomorrow, though. The new company, or companies, must have proven track records.
This is what Richardson was referring to when he told reporters his group will now “work with” BSH to help them sell Birmingham.
Is £35million a good price?
Earlier this year, The Athletic wrote a story about how you value something as unusual as a football club. It cited various methods and quoted several experts. But the best answer of all came from a Michael C in the readers’ comments.
“How do you measure the value of a club? How about love? How about love? How about love? Measure in love.”
Michael is a fan of Broadway musicals, and Richardson is a fan of Birmingham City. He must be, as the various Chinese owners of the club are at least £100million down on their investment.
Their most recent set of accounts, which deal with the 2020-21 season, show Birmingham lost almost £5million. Not bad, you might be thinking, considering that was a season played behind closed doors because of COVID-19 restrictions on crowds gathering and the club’s turnover fell from £22.8m to £13.7m. But then you remember this is the financial year which includes £26.5m in Jude Bellingham-inspired player-trading profits and that the club lost £18m in 2019-20.
They would have lost even more the year before that, but the owners used the then-legal loophole of selling the stadium to themselves, turning a £25m deficit into an £8m loss. This enabled them to avoid breaching the league’s financial fair play rules for a second time. Birmingham had lost £37m in 2017-18.
The 2020-21 accounts list more than £90m in funding from BSH and Oriental Rainbow and predict another £40m will be needed to get the club through to next January.
It has been suggested to The Athletic that BSH’s place on the HKSE could be worth as much as £100million. That sounds very steep but even if that is the going rate for a public listing, someone needs to explain to the company it is currently paying millions of pounds every year just to keep it.
And it is not as if they are getting any closer to the financial promised land of the Premier League. On the contrary, under BSH, Birmingham have finished 19th, 19th, 17th, 20th, 18th and 20th in the 24-team second tier.
Lee Bowyer was the latest manager to get the chop for failing to perform a miracle, earlier this month, while the stadium is currently operating at 10,000 seats under its official capacity because water damage has made two of the stands unsafe. In May, the club’s academy became the first to fail an audit and be downgraded.
This club need more than a spruce-up this summer.
The Athletic has spoken to several people who have had preliminary discussions about bids for Birmingham. One source, who asked to remain anonymous, said the situation was “hopeless”, with the club losing more than £500,000 a month, £8million needed to repair the stadium, a threadbare squad and not much else to come in terms of transfer instalments (although the club has great faith in Jude Bellingham’s younger brother, Jobe).
Perhaps the best method for valuing a club is just to compare it to one of a similar size that has been sold recently and, as luck would have it, Derby County, just 50 miles away and until two months ago a fellow Championship side, have recently been rescued from administration for a price that will be close to £40million once every bill is settled.
Birmingham fans, like Richardson, will tell you that £35million for a club a division higher is a steal compared to that. Derby fans, like their new owner David Clowes, will tell you that £40million for a club who are now largely debt free, and have a better stadium than St Andrew’s in Pride Park and a Category One youth academy is the steal.
Everyone else will tell them to measure their clubs in love.
What happens next, then?
If Richardson is right, the EFL goes through its OADT checklist, signs off the business plan and approves the deal. He thinks that could take two to three weeks.
In its June statement to the stock exchange, BSH said: “As at the date of this announcement, the company has not entered into nor exchanged any agreement to dispose of its approximately 75 per cent interest in Birmingham City Plc, and Birmingham City Plc and the club remain subsidiaries of the company.”
Again, if Richardson is right, BSH will have to update that statement, as entering into a two-stage process to sell the club is clearly market-sensitive information.
Money will then change hands, Lopez and Richardson get the keys, the builders start work on the Kop and Tilton Road stands and Lopez announces the arrival of his great mate Lionel Messi.
But for many Birmingham fans, the fact that their club appear to have new ownership will be enough for a celebration. It took Bassini only two phone calls to Talksport to convince some that he might not be the answer to their prayers.
The goodwill surrounding Lopez and Richardson looks more secure, but could evaporate if their timeline unravels. What if someone in the group fails the OADT test or the EFL is unhappy with the business plan? Delays to deals this complicated are usually fatal.
What if Birmingham, under new head coach John Eustace, make a disastrous start to the coming season and look like a League One side in waiting by September? Is £35million still the price if they are in the third division a year from now? The Athletic understands BSH has already negotiated a bonus payment if the club are promoted back to the Premier League within three years. Does that become five years? Or do they get a bonus for promotion from League One to the Championship instead?
But let us not dwell on such negatives right now!
Do we need to know anything else at this point?
Erm, yes. There is something, and it has already been flagged up by fans of several clubs on social media: Matt Southall, the man Richardson has lined up as Birmingham’s next chief executive.
If the name does not mean much to you, that is fine. After all, Southall is 37 years old and his only frontline job in English football so far has been a stint as chairman of Charlton Athletic that started in late 2019 and ended in early 2020.
Not long. Which should suggest to you that it did not go well.
This story is approaching 3,000 words already and hopefully, there is enough here for you to digest. But Southall’s involvement in this potential takeover will demand further explanation from Richardson and Lopez, and probably the EFL, too, because the experience at Charlton, where the investment group he was part of started fighting each other within weeks, was very bad.
And this was after he had been involved in failed attempts to buy Aston Villa and Bolton Wanderers, the latter with Bassini of all people.
The Athletic understands Southall, a former youth player at Blackburn Rovers, believes he has been unfairly blamed for disputes between investors at Charlton that were beyond his control. It is also understood that his relationship with Bassini was not close and they are not linked now.
In regards to Charlton, he believes the steps he took to exclude other directors from the south east London club and illegally change information at Companies House were motivated by a desire to find a better buyer to take over. A judge reprimanded him for those actions and awarded costs against him when the matter went to a business court in 2020. Southall admitted his wrongdoing and apologised.
After Charlton, little was heard from him for a year. He was loosely linked to Spanish businessman Erik Alonso’s amateurish attempt to buy Derby in the spring of 2021 but that probably boiled down to making a few introductions.
More significant, and potentially problematic for keeping the fans onside, is his involvement in the attempted hostile takeover of League Two club Rochdale last summer by a company called Morton House.
Like Wanda Nara and Charlton, that is another saga that warrants further reading. Long story short: Rochdale fans did not want their club to be taken over by Morton House, so got organised and fought back.
Southall, for reasons that remain unclear, ended up being Morton House’s front man in an attempt to sue Rochdale’s board and supporters’ trust. That attempt was ongoing until Monday of this week, when Southall resigned from Morton House. It remains to be seen where that goes next.
Again, it is understood that Southall has an explanation for what happened. Furthermore, The Athletic has seen a document that suggests, despite his admitted wrongdoing at Charlton, the EFL will not disqualify him as a “relevant person” at a club.
When asked about Southall on Tuesday, Richardson vouched for him, saying “there are two sides to every story”, that he has been a friend for a decade and that Southall has experience in taking the tough decisions they will need to make at Birmingham.
Is Richardson’s word enough for the fans, who will find it easy to hear contrary views from their counterparts at Charlton and Rochdale?
Maybe, but it is more likely that either he or Southall will have to spell out that other side to these unfortunate episodes.
(Top Photo: Andrew Kearns – CameraSport via Getty Images)