Post by QPR Report on Sept 17, 2009 7:02:45 GMT
David Conn/The Guardian
Previous Blog home Hull City's overdue accounts cast shadow over endangered TigersHull have problems on the pitch while all four of the club's related companies have failed to file their books on time
Hull City were the Premier League's truly romantic tale at this stage of last season, perennially flea-bitten tigers finally roaring to life, dragging the spirits of an economically depressed city up with them. Yet survival by a hair's breadth in May, followed by summer signings which have left many fans underwhelmed, have prompted the beginnings of discontent around a club now 17th in the table after Saturday's 4-1 hammering at Sunderland.
Some are now beginning to question the extent of investment made by the Essex-based property investor Russell Bartlett, who took over the club from Adam Pearson for a reported £13m in 2007, installed Paul Duffen as the club's chairman, then triumphantly took the club to the Premier League for the first time in its history.
Duffen, below, said a year ago that they had invested £6m towards bumping up players' wages sufficiently to claim promotion from the Championship but the club's accounts, which would show that investment, were due on 31 May and have still not been produced. The accounts for the year to 31 July 2008 for the club's parent company, Tiger Holdings, are even later; they were due to be filed at Companies House on 27 February, almost seven months ago.
The 2008 accounts have also not been filed for Bartlett's two companies responsible for running the KC Stadium, which City share with Hull FC rugby league club. The stadium was built with wholly public money, £43.5m from the local council, which intended it to become a focus for civic pride and regeneration of a battered city. The council still owns the stadium; Pearson was awarded a contract to receive rent from the two clubs and maintain the KC, and Bartlett took over this arrangement when he bought the club.
Superstadium Management Company Limited, which is responsible for the KC, was due to file its 2008 accounts by 31 May this year but has not done so. On 1 September, the official registrar of companies issued a formal notice to Duffen, Bartlett and their fellow directors that the company will be struck off the register in three months "unless cause is shown to the contrary."
The parent company for the KC's administration, Superstadium Holdings, which Bartlett wholly owns, has never filed accounts. They were due to be published, to document the first year of operation after the 2007 takeover, on 23 January this year, almost eight months ago.
Substantially overdue accounts are often an early sign that companies are in financial trouble, but Duffen has rejected any suggestion that this applies in Hull City's case. Some fans have wondered whether Bartlett's property business, which he runs from offices in Shenfield, Essex, is struggling in the recession, but Duffen and Bartlett both stated it is not.
"There are no problems here, the club is properly financed," Duffen asserted. "At no time has any money ever gone out of this club, as some people have suggested, to any of Russell Bartlett's property companies. We are in discussions with our auditors about the wording of the notes to the accounts. Auditors have become much more stringent about signing off accounts since the global economic crisis hit."
Duffen explained that before pronouncing themselves satisfied that a football club is a viable "going concern," auditors look carefully at the "worst case scenario". That, for a Premier League club, is relegation, out of the pot of TV and commercial gold into the comparative financial tundra of the Championship.
Duffen said that every relegated club sells players to balance the books but Hull's auditors will not currently accept that as a guarantee that the club will remain financially healthy if it is relegated. Discussions, he said, are continuing; he did not know when the accounts will be filed, only that it will be "as soon as practicable".
Hull are the only Premier League club who have not yet filed accounts for the 2007-08 period. West Ham, the other club who were significantly late, finally published theirs earlier this month. Their holding company revealed a disastrous year of huge overspending on players' wages, producing a £72m loss under the Icelandic owner, Bjorgolfur Gudmundsson, whose own fortunes have collapsed.
This week the Premier League announced a firming up of its attitude to financial governance of clubs, including establishing a unit to inspect clubs' accounts and ensure financial budgets are viable. In response to the government's call for more responsible management, the league has also said it will ask auditors to put clubs through a "going concern" test, to make sure a club is not at risk of going bust before fulfilling their fixtures for the season. In a case such as Hull, where the accounts are late, the new system, which comes into force next season, would lead to Premier League accountants "going in" and requiring the club to prove it is viable.
The duty to file accounts is set down by law in order to ensure that anybody who deals with a company can see whether or not it is solvent and will be able to pay what it owes. Penalties are imposed on companies for failing to file accounts, set on a rising scale according to how late they are; so far the total for the four Hull City-related companies is £4,500. Not a swingeing sanction, maybe, for a Premier League club which stands to receive around £40m in TV money alone, but a touch embarrassing, at the very least, to the club and league.
Duffen said that a failure to file accounts on time is not a criminal offence, but in fact it is; Companies House official guidance states that explicitly. It explains that directors can be: "Fined personally in the criminal courts. The registrar may also take steps to strike the company off the public record."
Hull City have borrowed in advance from a bank, Investec, the payments the club is due from the Premier League – Investec have in effect a mortgage over the TV money the club will receive this season. Duffen said this was "perfectly normal business practice" to accelerate payments so that the money could be spent in the summer transfer window. Some fans have complained that in this vital second season, when clubs look to sign players who can consolidate Premier League status, Hull have shown too little ambition, making no big name signings and, on the last day of the transfer window, selling Michael Turner, who then scored for Sunderland against City on Saturday.
Duffen rejected that too, arguing that the club had spent £19m buying players in January and the summer, including £5m for Jimmy Bullard, while receiving at most £10m from the sales of Turner and Sam Ricketts. The chairman pointed to that as evidence of investment, although he would not comment on whether Bartlett has invested money personally.
Bartlett, speaking from the Shenfield office of his property company, Fortis, said he and his businesses are in good shape and not in trouble because of the recession. What shape his football club is in, last season's high-fliers turned relegation scrappers, will only begin to be glimpsed when they finally file their 2007-08 accounts, some unnamed day soon.
www.guardian.co.uk/sport/david-conn-inside-sport-blog/2009/sep/16/hull-city-finances-russell-bartlett
Previous Blog home Hull City's overdue accounts cast shadow over endangered TigersHull have problems on the pitch while all four of the club's related companies have failed to file their books on time
Hull City were the Premier League's truly romantic tale at this stage of last season, perennially flea-bitten tigers finally roaring to life, dragging the spirits of an economically depressed city up with them. Yet survival by a hair's breadth in May, followed by summer signings which have left many fans underwhelmed, have prompted the beginnings of discontent around a club now 17th in the table after Saturday's 4-1 hammering at Sunderland.
Some are now beginning to question the extent of investment made by the Essex-based property investor Russell Bartlett, who took over the club from Adam Pearson for a reported £13m in 2007, installed Paul Duffen as the club's chairman, then triumphantly took the club to the Premier League for the first time in its history.
Duffen, below, said a year ago that they had invested £6m towards bumping up players' wages sufficiently to claim promotion from the Championship but the club's accounts, which would show that investment, were due on 31 May and have still not been produced. The accounts for the year to 31 July 2008 for the club's parent company, Tiger Holdings, are even later; they were due to be filed at Companies House on 27 February, almost seven months ago.
The 2008 accounts have also not been filed for Bartlett's two companies responsible for running the KC Stadium, which City share with Hull FC rugby league club. The stadium was built with wholly public money, £43.5m from the local council, which intended it to become a focus for civic pride and regeneration of a battered city. The council still owns the stadium; Pearson was awarded a contract to receive rent from the two clubs and maintain the KC, and Bartlett took over this arrangement when he bought the club.
Superstadium Management Company Limited, which is responsible for the KC, was due to file its 2008 accounts by 31 May this year but has not done so. On 1 September, the official registrar of companies issued a formal notice to Duffen, Bartlett and their fellow directors that the company will be struck off the register in three months "unless cause is shown to the contrary."
The parent company for the KC's administration, Superstadium Holdings, which Bartlett wholly owns, has never filed accounts. They were due to be published, to document the first year of operation after the 2007 takeover, on 23 January this year, almost eight months ago.
Substantially overdue accounts are often an early sign that companies are in financial trouble, but Duffen has rejected any suggestion that this applies in Hull City's case. Some fans have wondered whether Bartlett's property business, which he runs from offices in Shenfield, Essex, is struggling in the recession, but Duffen and Bartlett both stated it is not.
"There are no problems here, the club is properly financed," Duffen asserted. "At no time has any money ever gone out of this club, as some people have suggested, to any of Russell Bartlett's property companies. We are in discussions with our auditors about the wording of the notes to the accounts. Auditors have become much more stringent about signing off accounts since the global economic crisis hit."
Duffen explained that before pronouncing themselves satisfied that a football club is a viable "going concern," auditors look carefully at the "worst case scenario". That, for a Premier League club, is relegation, out of the pot of TV and commercial gold into the comparative financial tundra of the Championship.
Duffen said that every relegated club sells players to balance the books but Hull's auditors will not currently accept that as a guarantee that the club will remain financially healthy if it is relegated. Discussions, he said, are continuing; he did not know when the accounts will be filed, only that it will be "as soon as practicable".
Hull are the only Premier League club who have not yet filed accounts for the 2007-08 period. West Ham, the other club who were significantly late, finally published theirs earlier this month. Their holding company revealed a disastrous year of huge overspending on players' wages, producing a £72m loss under the Icelandic owner, Bjorgolfur Gudmundsson, whose own fortunes have collapsed.
This week the Premier League announced a firming up of its attitude to financial governance of clubs, including establishing a unit to inspect clubs' accounts and ensure financial budgets are viable. In response to the government's call for more responsible management, the league has also said it will ask auditors to put clubs through a "going concern" test, to make sure a club is not at risk of going bust before fulfilling their fixtures for the season. In a case such as Hull, where the accounts are late, the new system, which comes into force next season, would lead to Premier League accountants "going in" and requiring the club to prove it is viable.
The duty to file accounts is set down by law in order to ensure that anybody who deals with a company can see whether or not it is solvent and will be able to pay what it owes. Penalties are imposed on companies for failing to file accounts, set on a rising scale according to how late they are; so far the total for the four Hull City-related companies is £4,500. Not a swingeing sanction, maybe, for a Premier League club which stands to receive around £40m in TV money alone, but a touch embarrassing, at the very least, to the club and league.
Duffen said that a failure to file accounts on time is not a criminal offence, but in fact it is; Companies House official guidance states that explicitly. It explains that directors can be: "Fined personally in the criminal courts. The registrar may also take steps to strike the company off the public record."
Hull City have borrowed in advance from a bank, Investec, the payments the club is due from the Premier League – Investec have in effect a mortgage over the TV money the club will receive this season. Duffen said this was "perfectly normal business practice" to accelerate payments so that the money could be spent in the summer transfer window. Some fans have complained that in this vital second season, when clubs look to sign players who can consolidate Premier League status, Hull have shown too little ambition, making no big name signings and, on the last day of the transfer window, selling Michael Turner, who then scored for Sunderland against City on Saturday.
Duffen rejected that too, arguing that the club had spent £19m buying players in January and the summer, including £5m for Jimmy Bullard, while receiving at most £10m from the sales of Turner and Sam Ricketts. The chairman pointed to that as evidence of investment, although he would not comment on whether Bartlett has invested money personally.
Bartlett, speaking from the Shenfield office of his property company, Fortis, said he and his businesses are in good shape and not in trouble because of the recession. What shape his football club is in, last season's high-fliers turned relegation scrappers, will only begin to be glimpsed when they finally file their 2007-08 accounts, some unnamed day soon.
www.guardian.co.uk/sport/david-conn-inside-sport-blog/2009/sep/16/hull-city-finances-russell-bartlett