Hull City. Goodbye and good riddance?

The Premier League strugglers have finally managed to produce their much delayed accounts for the year to July 2008 - the season they were promoted.

The reason for the delay is clear from the smallprint. the club and its associated Superstadium companies controlled by Essex property man Russell Bartlett, confirmed as the real owner, face a fight not just to avoid relegation but to survive financially.

Hull City must repay bank loans of at least ?22m, the figure in July 2008, by July next year, and to keep within its agreed banking facilities it has to generate a surplus of ?23m from match revenues, TV and player trading or new loans over the next 12 months. For 2008 the club lost ?10m and says there was an unaudited profit of ?2m from last season. So generating ?23m seems even more challenging than avoiding relegation. And if the drop is avoided then the club will need to find possible extra funding on ?16m for next season. This could be reduced by ?7m if the club can accelerate the Premier League payments it would be due.

Auditor Deloitte, while not qualifying the accounts, leaves creditors and fans in no doubt about the dangers. The accounts have been produced on a "going concern" basis for the 12 months from mid-October. But because of the need to repay the bank loans, the risk of failing to find new finance and the possibility of relegation, Deloitte concludes that "these conditions indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern". In other words, it may not survive the 12 months.

The accounts for Tiger Holdings - through which Bartlett bought the club for ?7m in June 2007 - also reveal that Hull City may have financed its own takeover, as Tiger owed the club ?3.2m at July 2008, which has no repayment date and pays no interest. Hull City has agreed not to demand repayment for at least the next 12 months.

Bartlett is revealed as the the ultimate owner of the club via Isis Nominees in Jersey. Why such an offshore structure exists - Bartlett appeared briefly as a Tiger director this summer but was then replaced by two Jersey-based nominees - is unclear but tax may have something to do with it. Especially should the club be sold.

Meanwhile Deloitte, not surprisingly, warns that there is a similar uncertainty over Tiger Holdings' ability to survive "as a going concern" over the next 12 months because of its reliance on Hull City for working capital.

Tiger also owed ?2m interest-free to Bartlett's Superstadium Holding, which he has agreed not to demand for 12 months. But then Bartlett's R3 Investment Group owes Tiger almost as much, also with no repayment date and no interest. And R3 invested ?4m in Tiger preference shares that part-financed the purchase of the club. These have no redemption date. But with total assets of ?100, this is not likely any day soon.

Superstadium Holdings owns Superstadium Management, which runs Hull City's KC Stadium. But as the club provides half the revenues for the management companies - the rugby league club provides the other half - both these Bartlett companies are also subject to the same "material uncertainty". Hull City pays rent to Management ?1m while Holdings owed Management more than ?1.2m.

This network of interlocking shareholdings and inter-company loans all going back to Bartlett, who bought Hull City off the back of the now vanished property boom, looks like a classic case of football hubris funded by rickety financial engineering.

Superstadium Holdings owed ?1m to Bartlett and another ?600,000 to R3 at July 2008. But more importantly it owed ?3.4m to RBS in addition to the ?22m owed mainly to Investec by Hull City. Investec's ?22m is due next year. The bank registered a new debenture last August. The RBS loans are also due but renewed in August and are now repayable over three years, with a charge on the assets and a personal guarantee by Bartlett. Holdings' assets are its shares in Management and the ?2m owed by Tiger!

So the taxpayer is on the hook for yet another Premier League club! Hull City is just like relegation rival Portsmouth - with whom the team managed an anaemic draw last weekend - only without a Saudi "saviour".

(Private Eye)

Posted By: Fast food Dakar, Oct 28, 15:07:29