Birmingham City’s PSR Gamble: Is Heavy League One Spending Paying Off?

Birmingham City's PSR Gamble: Is Heavy League One Spending Paying Off?

When Knighthead Capital and Tom Brady took over at Birmingham City in 2023, their primary goal was to reach the Premier League as quickly as possible, regardless of the cost.

However, what the new American owners would not have planned for is relegation. Not only because relegation is not a thing in US sports, but because these new owners are serial winners in everything they put their name to.

Those who have watched the new Birmingham docu-series on Amazon Prime have been privy to the cut-throat, win-at-all-cost mentality that has been brought to St Andrews. A fascinating insight into the ambition of the owners, and the mammoth task that stands in their way.

Birmingham City minority owner Tom Brady calls some of the club's players "lazy and entitled" as they suffered relegation in the 2023-24 season, in a new documentary series released this week. pic.twitter.com/AJQCrJhCma

— Match of the Day (@BBCMOTD) July 30, 2025

After their relegation, the sums of money being handed out were unlike anything ever seen in League One, and whilst it delivered the main aim, promotion, we analyse if that risk has paid off.

The League One Hail Mary

In recent times, we have witnessed huge clubs tumble down the football pyramid; all it takes is a bad season or two. This is something that the higher-ups at Birmingham City knew and were keen to avoid. They had to throw everything at getting out of League One at the first attempt, or suffer the fate of other fallen giants.

New manager Chris Davies took over after Wayne Rooney's ill-fated tenure and was given a straightforward aim: to get back into the Championship.

To achieve this, the Blues threw everything at the transfer market. They broke the league transfer record three times in a single window, including the transfer of Jay Stansfield from Fulham, which is reported to have cost between £15 million and £20 million.

We are delighted to confirm the signing of Jay Stansfield. 💙

The 20-year-old attacker joins from Fulham for an undisclosed fee and has agreed terms on a seven-year contract.

— Birmingham City FC (@BCFC) August 30, 2024

That summer, Birmingham's transfer spend accounted for approximately 63% of the entire league's spending.

This gung-ho approach, unsurprisingly, worked. Davies' side obliterated the single-season record for points total with 111, with many suggesting that their squad was already befitting of a Championship side.

How Can Birmingham Afford To Spend So Much?

The financial rules in League One are very different from what clubs face at higher levels. Instead of the strict Profit and Sustainability Rules in the Championship, League One follows something called the Salary Cost Management Protocol (SCMP). In simple terms, clubs can spend up to 60% of their turnover on wages and transfers (50% in League Two).

The key difference, though, is that owner investment doesn't count towards that limit. So when Knighthead put money in, Birmingham could pretty much use it all on building the squad.

This meant that Birmingham was able to construct a Championship-level squad under more lenient rules, and now in the Championship, they can add more quality while adhering to the league's rules.

Birmingham City FC submit 23/24 accounts 🔑figs
Revenue £28.7m ⬆️45%
Wages £33.7m ⬆️17%
Wages £117 for every £100 revenue ⬇️£29
Underlying loss £29.8m ⬆️12%
Player sale profits £15.4m
Loss before tax £16.1m⬇️37%
Player purchases £5.6m
Player sales £17.2m
Borrowings £142.8m
Losses… pic.twitter.com/edJdIKdjqT

— Kieran Maguire (@KieranMaguire) April 3, 2025

This Summer's Business

As expected, the spending hasn't stopped at St. Andrews, with further quality signings being added to Chris Davies' side throughout the current transfer window.

In terms of outgoings, there have been a few that leave a void in the starting side, and the incomings have added further quality.

Birmingham City 2025/26 - Transfer Incomings (Transfermarkt)

Some of the notable signings have slotted straight into the side, including Kyogo, Osayi-Samuel and ex-Blue Demarai Gray. Brady and Co. will be delighted with the start to the season, with seven points from their first nine, and they sit in 5th place.

Is The Gamble Paying Off?

From the outside looking in, it seems as though Chris Davies and his side are executing Knighthead's vision perfectly. On the pitch, they have started in great form and boast a squad that is capable of dealing with the rigours of a long, long Championship season.

Off the pitch, the club appears to be in a very healthy financial position, and the infrastructure, specifically St. Andrews, has been heavily invested in.

And finally, the fans, after years of mismanagement at the top. The Birmingham faithful are finally happy with their owners, and they have adopted this winning mindset.

Birmingham certainly looks to be on a good trajectory. Could we see them back in the Premier League soon?

👏 | Birmingham City are now unbeaten across their last 27 home league games, scoring 53 goals and conceding just 12 in that time.

Unreal consistency. #BCFC pic.twitter.com/CuAfo8qM2S

— Betfred (@Betfred) August 23, 2025