Blues announce £20.5million losses

Birmingham City have announced pre-tax losses of £20.5million for their promotion year.

The club recorded the figure in their accounts to the year ending 31 August 2009, revealing the debt accrued under the previous owners in an attempt to keep the squad together and win promotion at the first attempt.

Blues made a pre-tax profit of £4.5m the previous year, and the directors' report blames the huge loss on "the decision taken by the previous members of the board to retain most of their playing staff from the previous Premier League season."

By keeping most of the squad on top-flight wages, £27.1million was splashed out on staff costs in 2009, compared to £26.6million the previous year. A season in the Championship hit Blues hard, with turnover down by £22million – a whopping 44.8 per cent.

The figures will further anger the new St Andrew's regime, who felt they were misled during last year's takeover. The previous owners paid themselves advance management fees of £420,000, although an offer from former co-owner David Sullivan to pay back half was turned down, not to mention ex-managing director Karren Brady's £1million severance package.

Blues' new hierarchy are reluctant to speak out over the losses, as it is believed they feel the figures speak for themselves.

But Sullivan said: "We are quite surprised the figures are as high as this. We had a policy of retaining the squad to get back up which we thought was the correct policy and was vindicated, because the club got promotion automatically at the first opportunity.

"Last summer we knew the club had a financial problem, as we publicly stated we loaned it £5million to pay off deposits on two new players because there was no money to do that."