Post by QPR Report on Mar 19, 2010 6:57:03 GMT
Guardian/David Cunn
Iain Dowie and Hull City wary of Portsmouth's cautionary taleHull would prefer a £16m Premier League problem to the £21m headache awaiting in the Championship
Iain Dowie is due for a surprise first appearance in the Fratton Park technical area tomorrow, as Hull City travel to Portsmouth for a crunch meeting with the club whose multiple woes shape the Premier League's most cautionary tale. Bust, in turmoil and relegated is a place Hull's chairman, Adam Pearson, is determined his club must never be but Pompey, after their nine-point deduction for going into administration, look irretrievably down.
The idea of Portsmouth's administrator, Andrew Andronikou, mounting a challenge to the nine-point penalty appears wilfully blind to the reasons it has been imposed. Portsmouth, like all clubs who declare insolvency and enter administration, will emerge, under whichever new owner, having almost certainly not paid their debts in full. HM Revenue and Customs, and all the high-and-dry creditors in the usual dispiriting list, will be asked to take a cut of what they are owed, while "football creditors" – the amply rewarded players – will, according to the league's rules, be paid in full.
Clubs themselves, first in the Football League then in the Premier League, voted overwhelmingly for points penalties to be imposed on clubs who do this. The principle is that, if clubs do not meet their responsibilities, they cannot compete without sanction against others dutifully paying their way.
Pearson, the commercial director who managed to emerge with an unblemished record even as Leeds United "lived the dream" around him in 2002-03, is shaped by that experience into trying to manage football dreams with care. He bought Hull out of their own wretched administration in 2001, oversaw the club's rebuilding and move to the KC Stadium, then in 2007 sold out to the current owner, the Essex property investor Russell Bartlett. Pearson bought into Derby County, then returned to Hull last October at Bartlett's invitation, after the former chairman, Paul Duffen, resigned. Duffen claimed he was owed money on his contract and Hull then sued Duffen, claiming he had been suspended before his resignation and accusing him of accepting payments from agents, unnamed, for directing club business their way. Duffen denied it all, then the case was settled last month on terms neither side has revealed.
What did become certain, and was reinforced this week, is that Hull have financial challenges, having made a £13m loss under Bartlett and Duffen to gain promotion from the Championship. The club's accounts for the 14 months to 31 July 2008, filed several months late, carried the warning that Hull had to repay all their £22m bank loans by July this year and so would need £23m extra if they found themselves relegated, £16m even if they stayed in the Premier League. The accountants, Deloitte, decided that position was shaky enough to "represent a material uncertainty that may cast significant doubt over the company's ability to continue as a going concern".
Pearson, on taking over, argued that the £36m wage bill had to be wrestled down, and £5.3m had been committed in agents' fees. Duffen had argued the wage bill was not excessive and predicted the club would show a profit for 2008-09.
Hull's accounts for the year to 31 July 2009 were published this week and did indeed show a profit, of £1m. The wage bill, £34m then, looks manageable as the club recorded a turnover in its first Premier League season of £51m. Yet Deloitte issued almost exactly the same warning again. Hull, the accountants said, will need to find an additional £21m from selling players or raising finance if relegated, and £16m even if Dowie can harangue his inherited team into staying up. Again the accountants judged this represented "a material uncertainty" about the club's ability to stay in business.
The key to the club's dilemma is in its bank debt. The amount owed is down now to £4.6m, which Pearson justifiably described as the lowest in the league – yet it has to be repaid in full by July. The money is owed to Investec, which has been advancing Hull loans in the Premier League against TV and other money the club were due to receive from the League. That £4.6m is but a fingernail of the monster which has devoured Portsmouth, yet Hull were also stated to owe £15m to "trade creditors" and £4.5m in tax.
The accounts stated that they are trying to borrow again: "The club is currently in advanced discussions with finance providers for the acceleration of known Premier League distributions [money due from the Premier League] for amounts of £7m."
Pearson, who ran Hull prudently for six years before coming back to deal with all this, said this week he is confident the club will manage. He will, though, be hoping fervently that Dowie can steer Hull into the £16m Premier League problem, rather than the £21m headache lurking in the Championship.
www.guardian.co.uk/football/blog/2010/mar/19/hull-city-portsmouth-finances
Iain Dowie and Hull City wary of Portsmouth's cautionary taleHull would prefer a £16m Premier League problem to the £21m headache awaiting in the Championship
Iain Dowie is due for a surprise first appearance in the Fratton Park technical area tomorrow, as Hull City travel to Portsmouth for a crunch meeting with the club whose multiple woes shape the Premier League's most cautionary tale. Bust, in turmoil and relegated is a place Hull's chairman, Adam Pearson, is determined his club must never be but Pompey, after their nine-point deduction for going into administration, look irretrievably down.
The idea of Portsmouth's administrator, Andrew Andronikou, mounting a challenge to the nine-point penalty appears wilfully blind to the reasons it has been imposed. Portsmouth, like all clubs who declare insolvency and enter administration, will emerge, under whichever new owner, having almost certainly not paid their debts in full. HM Revenue and Customs, and all the high-and-dry creditors in the usual dispiriting list, will be asked to take a cut of what they are owed, while "football creditors" – the amply rewarded players – will, according to the league's rules, be paid in full.
Clubs themselves, first in the Football League then in the Premier League, voted overwhelmingly for points penalties to be imposed on clubs who do this. The principle is that, if clubs do not meet their responsibilities, they cannot compete without sanction against others dutifully paying their way.
Pearson, the commercial director who managed to emerge with an unblemished record even as Leeds United "lived the dream" around him in 2002-03, is shaped by that experience into trying to manage football dreams with care. He bought Hull out of their own wretched administration in 2001, oversaw the club's rebuilding and move to the KC Stadium, then in 2007 sold out to the current owner, the Essex property investor Russell Bartlett. Pearson bought into Derby County, then returned to Hull last October at Bartlett's invitation, after the former chairman, Paul Duffen, resigned. Duffen claimed he was owed money on his contract and Hull then sued Duffen, claiming he had been suspended before his resignation and accusing him of accepting payments from agents, unnamed, for directing club business their way. Duffen denied it all, then the case was settled last month on terms neither side has revealed.
What did become certain, and was reinforced this week, is that Hull have financial challenges, having made a £13m loss under Bartlett and Duffen to gain promotion from the Championship. The club's accounts for the 14 months to 31 July 2008, filed several months late, carried the warning that Hull had to repay all their £22m bank loans by July this year and so would need £23m extra if they found themselves relegated, £16m even if they stayed in the Premier League. The accountants, Deloitte, decided that position was shaky enough to "represent a material uncertainty that may cast significant doubt over the company's ability to continue as a going concern".
Pearson, on taking over, argued that the £36m wage bill had to be wrestled down, and £5.3m had been committed in agents' fees. Duffen had argued the wage bill was not excessive and predicted the club would show a profit for 2008-09.
Hull's accounts for the year to 31 July 2009 were published this week and did indeed show a profit, of £1m. The wage bill, £34m then, looks manageable as the club recorded a turnover in its first Premier League season of £51m. Yet Deloitte issued almost exactly the same warning again. Hull, the accountants said, will need to find an additional £21m from selling players or raising finance if relegated, and £16m even if Dowie can harangue his inherited team into staying up. Again the accountants judged this represented "a material uncertainty" about the club's ability to stay in business.
The key to the club's dilemma is in its bank debt. The amount owed is down now to £4.6m, which Pearson justifiably described as the lowest in the league – yet it has to be repaid in full by July. The money is owed to Investec, which has been advancing Hull loans in the Premier League against TV and other money the club were due to receive from the League. That £4.6m is but a fingernail of the monster which has devoured Portsmouth, yet Hull were also stated to owe £15m to "trade creditors" and £4.5m in tax.
The accounts stated that they are trying to borrow again: "The club is currently in advanced discussions with finance providers for the acceleration of known Premier League distributions [money due from the Premier League] for amounts of £7m."
Pearson, who ran Hull prudently for six years before coming back to deal with all this, said this week he is confident the club will manage. He will, though, be hoping fervently that Dowie can steer Hull into the £16m Premier League problem, rather than the £21m headache lurking in the Championship.
www.guardian.co.uk/football/blog/2010/mar/19/hull-city-portsmouth-finances