Hull City’s Finances Show The Downside Of “Ambition”
Football fans have become better educated in the mysteries of football finances over recent years out of necessity as much as anything else, but just occasionally old naiveties come to the fore. It might just be that they can’t believe that things could be as bad off the pitch as on it at the moment, but Hull City fans are less concerned than they should be about the lack of financial information coming out of their club in recent times, and now that the information has come out and has proved as grim as one may have feared, they still don’t sem to believe that things can be as bad off the pitch as on it; despite the phrase “significant doubt over their ability to continue as a going concern” appearing not once, but three times in a relatively short annual report and statement of accounts for the Tigers’ promotion year.
Hull’s on-field fall from grace is well-documented. This time last year, they were a breath of fresh air, with even the cynics raising a smile when they won at Arsenal. A year on and Match of the Day thought the half-time whistle was a highlight of their first-half against Portsmouth. Attention has focused on the increasingly egotistical and orange manager Phil Brown and only now that the accounts have finally arrived, late enough to have been originally drafted in Latin, has the spotlight finally turned on the real problem. A quick look at the accounts shows Paul Duffen as chairman and Russell Bartlett as vice-chairman. Bartlett is the owner, something which was not originally disclosed when Adam Pearson sold up and moved to Derby in 2007, and it is with Bartlett, not the departed Duffen, that much of the responsibility lies for the financial morass.
Bartlett was only named Hull’s owner in the latest national newspaper snapshot of Premier League clubs, in The News of the World earlier this month. Just over a year ago, The Independent listed Duffen as owner, and even when Pearson announced in 2007 that he was selling up he said it was to “Paul Duffen and his investment associates”. Only in July, when the Premier League introduced new regulations enforcing public disclosure of all shareholdings larger than 10%, did it become apparent that Bartlett, not Duffen, was the main man, but a flow chart of Hull’s ownership and loans structure would be something Jackson Pollock would have rejected as “a bit messy.”
There are a number of inter-linked Hull City companies. The accounts which have propelled Hull back into the news are for “The Hull City Association Football Club (Tigers) Limited.” Bartlett bought Hull in 2007 via “Tiger Holdings”, which remains the club’s ‘parent company’ and whose accounts were also filed late and contained the magic words “material uncertainty”. Bartlett is the ultimate beneficial owner via an offshore company, naturally, the Jersey-based Isis Nominees and somewhere in the mix is “Superstadium Management”, which runs the council-owned KC stadium and “Superstadium Holdings”, which is owned by “Superstadium Management”.
Money has been loaned regularly between these companies, sparking vigorously denied rumours that Bartlett was either using football club money for other companies in his portfolio or chasing debts in the manner of a latter-day Robert Maxwell. No evidence whatsoever has been produced to back these rumours up, and the “Hull City AFC” accounts suggest nothing of the sort. They do, howevr, suggest is that Tiger owed the football club £3.2m, Superstadium Holdings £2m and was owed nearly £2m by R3 Investment Group, another Bartlett company, and that the club owes Superstadium Management £1.2m, who, in turn, owe Bartlett £1m and R3 £6-700k, which, in turn, invested £4m in Tiger. Sorry if I’ve missed anybody out.
None of these loans have repayment dates or attract any interest…unlike the £22m loaned to the football club by investment bank Investec. None of this attracted mainstream media interest until now. Private Eye published the details while others featured Brown’s inappropriate facial hair and sub X-Factor singing voice, as Hull avoided relegation. So maybe Duffen got tired of toeing the party line on the increasingly tardy accounts, especially as the ‘line’ was often preposterous. “If it was a tyre repair firm that had put its accounts in a bit late, no-one would care”, he noted, but the analogy was hardly exact. People “care” about Hull City AFC, in huge numbers compared to even the world’s most popular tyre repair firm (unless there’s a fetish involved here that I don’t, and would rather not, know about), and his interpretation of “a bit late” was “a bit” elastic. While reports suggested the accounts were due on May 31, they were actually due by then at the very legal latest (“it is not a crime”, he told the Yorkshire Post last month, incorrectly). Arsenal, for example, produced accounts two weeks earlier than Hull but for this year, not last.
Duffen protested that the delays were due to “auditing standards having changed…and we are in negotiations with our auditors over a way round it, as are a number of football clubs”. Naturally, the global economic crisis (nee ‘credit crunch’) got its share of the blame: “Auditors have become much mores stringent about signing off accounts since the global economic crisis hit,” he told the Guardian last month. You suspect that the postal strike would have copped it for any delays beyond this week. But leaving aside why Hull would want to negotiate “a way round” universally accepted auditing standards, this still begged the question why this “number of football clubs” all managed to deal with this months earlier – even financial basket cases such as West Ham and Portsmouth.
But whatever the intricacies of Hull’s ownership, the bottom line remains the bottom line and the bottom line is not good. Hull need “to generate a surplus of £23m over the next 12 months through player trading, commercial income and/or through additional finance raising”, and that comes in the wake of a “pre-tax profit” of only “£2m after player trading” for their first season among Premier League riches, according to “draft, unaudited statements for the year ended 31 July 2009”.Player trading wouldn’t raise tuppence if recent displays are a guide. Maybe Jozy Altidore will prove a big enough hit for someone in Europe to overpay wildly for him. He is a talent, of that there is no “material uncertainty”. Maybe Jimmy Bullard will quickly fulfil his undoubted potential, sneak into Fabio Capello’s World Cup squad, where he’d surely be now if it wasn’t for his injuries, and be faced with a choice of Hull City or Real Madrid come next July. Or maybe none of these things will happen.
Other financial initiatives seem equally shaky. Commercial income? Unless there’s a rush on Phil Brown fake-tan products, there won’t be millions coming from this direction, and “additional finance raising?” Bank loans and re-financing, similar to Liverpool’s in the summer, only with the decimal point one place to the left. Of the £22m owed to Investec, £12.6m is due by next July. Whether Investec will take the liberal attitude towards Hull that banks have done towards Liverpool remains to be seen. Of course, the banks only re-financed Liverpool after insisting that their co-owners cough up some of their own cash. With so many loans between his companies with no repayment date set, nor repayment imminent, it is far from clear whether Bartlett would, or could, do likewise.
Yet some Hull fans still don’t get it. Some interpreted “material uncertainties” as the accountants “covering their back” Others thought the Premier League riches which post-dated these accounts – all £2m worth – would solve their problems (”and those accounts don’t have to be filed until May 2010 at the earliest” said one fan, missing the point to an Olympic standards), and an “accountant” from Hull suggested in the Hull Daily Mail that parachute payments would save the day, and that “If this was such a big issue, the BBC and the national media would be all over it”, which rather overlooked the fact that, with two features articles on the subject in “The Guardian” in recent weeks, the national media – or at least one corner of it – has been “all over it”.
It’s hard to know where to start if rose-tinted spectacles continue to sell so well on Humberside. Bartlett bought his majority shareholding on the back of a property boom which is already taught as history in some schools, and he has clearly borrowed excessively, but has been unable to provide a happy ending in football or in ‘real life’. The mooted return of former chairman Adam Pearson, from an ostensibly unsuccessful time at Derby, is being trumpeted as a return to the good old days by those who lived through the good old days when Hull rose through the Football League ranks. This, however, overlooks the fact that Pearson sold up in 2007 because “I had taken the club as far as I could and really needed the support of a financially stronger board”. He still does, and Russell Bartlett doesn’t appear to fit that bill anymore. It’s seems likely to be a long 12 months for Hull City off the pitch as well as on it.