Post by QPR Report on Oct 28, 2009 6:48:18 GMT
GUess proromotion doesn't exactly solve all financial difficulties!
Guardian/Stuart James
Hull City warned by accountants of struggle to remain a going concern• Hull require £16m surplus to meet current liabilities
• Players sales recommended as way to raise funds
Hull City have been warned their uncertain financial position threatens the club's "ability to continue as a going concern". The club's accounts, filed five months late to Companies House, say that in the event of relegation the Premier League club will need to generate a £23m surplus just to meet their existing liabilities.
The grim forecast from the club's accountants, Deloitte, emphasises the need for a financial overhaul during the next 12 months to safeguard Hull's future. Although the figures for their first season in the top flight will not be available until next year, the independent auditors' report, with its stark warning, does cover the club's current financial situation.
In the accounts for the year ending 2008, which were due on 31 May but only filed this month, the club made a £9,764,850 loss during a period that culminated in winning promotion to the Premier League.
Most telling, though, is Deloitte's prediction that Hull will need to raise an additional £16m should they retain their Premier League status this season and a further £7m again if the club, currently ensconced in the bottom three, slip back into the Championship.
The report proposes that Hull might seek to recover those sums through a combination of player trading, commercial activities and/or a cash injection. However, Hull have already sold their best player, Michael Turner, who joined Sunderland for around £6m this summer, and there are few other significant assets within Phil Brown's struggling squad.
It is significant that the auditors, in these latest accounts, do not suggest that the Essex-based property investor Russell Bartlett, who took over from Adam Pearson in 2007, will invest further in the club to make up the shortfall, as often is the case with football benefactors.
"These forecasts demonstrate that in order to operate within the company's finance facilities Hull City AFC will need to generate a surplus £23m during the next 12 months through player trading, match day and commercial income and/or through additional finance raising," the report said.
"In the event that the club retains Premier League status for the 2010-11 season, the additional funding required for the 12-month period will be in the region of £16m. This is reduced as a result of the guaranteed level of Premier League distributions that will be received ...
"As is common with all football clubs, Hull City AFC will make player purchases and sales during the course of the season to manage the company's cash flow as and when required. The directors acknowledge that player purchases and sales are uncertain in terms of timing and quantum and some uncertainty exists over the availability and quantum of additional facilities should such be required.
"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."
Although Hull supporters might point to the pot of gold that accompanies winning promotion to the Premier League as a reason to believe the accounts for the year ending 31 May 2009 will be more encouraging, much of the money is likely to have been swallowed up in salaries and transfer fees. Paul Duffen, the Hull chairman, claimed last month that the club had spent £19m buying players in January and the summer, while receiving at most £10m from the sales of Turner and Sam Ricketts to Bolton Wanderers.
Duffen also said at that point that "there are no problems here, the club is properly financed" when questioned about why the accounts had not previously been filed with Companies House.
He went on to say: "We are in discussions with our auditors about the wording of the notes to the accounts." No one at Hull City was available to make any comment last night.
www.guardian.co.uk/football/2009/oct/28/hull-city-accounts-losses
Guardian/Stuart James
Hull City warned by accountants of struggle to remain a going concern• Hull require £16m surplus to meet current liabilities
• Players sales recommended as way to raise funds
Hull City have been warned their uncertain financial position threatens the club's "ability to continue as a going concern". The club's accounts, filed five months late to Companies House, say that in the event of relegation the Premier League club will need to generate a £23m surplus just to meet their existing liabilities.
The grim forecast from the club's accountants, Deloitte, emphasises the need for a financial overhaul during the next 12 months to safeguard Hull's future. Although the figures for their first season in the top flight will not be available until next year, the independent auditors' report, with its stark warning, does cover the club's current financial situation.
In the accounts for the year ending 2008, which were due on 31 May but only filed this month, the club made a £9,764,850 loss during a period that culminated in winning promotion to the Premier League.
Most telling, though, is Deloitte's prediction that Hull will need to raise an additional £16m should they retain their Premier League status this season and a further £7m again if the club, currently ensconced in the bottom three, slip back into the Championship.
The report proposes that Hull might seek to recover those sums through a combination of player trading, commercial activities and/or a cash injection. However, Hull have already sold their best player, Michael Turner, who joined Sunderland for around £6m this summer, and there are few other significant assets within Phil Brown's struggling squad.
It is significant that the auditors, in these latest accounts, do not suggest that the Essex-based property investor Russell Bartlett, who took over from Adam Pearson in 2007, will invest further in the club to make up the shortfall, as often is the case with football benefactors.
"These forecasts demonstrate that in order to operate within the company's finance facilities Hull City AFC will need to generate a surplus £23m during the next 12 months through player trading, match day and commercial income and/or through additional finance raising," the report said.
"In the event that the club retains Premier League status for the 2010-11 season, the additional funding required for the 12-month period will be in the region of £16m. This is reduced as a result of the guaranteed level of Premier League distributions that will be received ...
"As is common with all football clubs, Hull City AFC will make player purchases and sales during the course of the season to manage the company's cash flow as and when required. The directors acknowledge that player purchases and sales are uncertain in terms of timing and quantum and some uncertainty exists over the availability and quantum of additional facilities should such be required.
"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."
Although Hull supporters might point to the pot of gold that accompanies winning promotion to the Premier League as a reason to believe the accounts for the year ending 31 May 2009 will be more encouraging, much of the money is likely to have been swallowed up in salaries and transfer fees. Paul Duffen, the Hull chairman, claimed last month that the club had spent £19m buying players in January and the summer, while receiving at most £10m from the sales of Turner and Sam Ricketts to Bolton Wanderers.
Duffen also said at that point that "there are no problems here, the club is properly financed" when questioned about why the accounts had not previously been filed with Companies House.
He went on to say: "We are in discussions with our auditors about the wording of the notes to the accounts." No one at Hull City was available to make any comment last night.
www.guardian.co.uk/football/2009/oct/28/hull-city-accounts-losses
