Club Finances

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Top_Tiger said:
An excellent review of the finances someone posted on Facebook. So nothing to do with me.

https://www.facebook.com/share/p/1Sn1UrJZbE/?

Our 2023/24 season financial accounts are now publicly available on Companies House, so I’ve put together a quick write up for anyone interested in our financial position.

https://find-and-update.company-information.service.gov.uk/company/04032392/filing-history

TL;DR:

Our 2023/24 accounts paint a very concerning financial picture. The club is currently being run in a completely unsustainable manner, and is dependent on generating big transfer sales to stay within the PSR rules (ie not get a points deduction).

Whilst revenue grew by 17.4% in 2023/24 to £21.2m, operating expenses ballooned by 23% to £47.7m. Our wage costs are 139% of our revenue, which is far above the recommended level of 70-80%.

The club posted a £18.8m pre-tax loss, significantly higher than the £5.2m loss in 2022/23. Over three years, we remain under the £24m PSR loss limit, but only due to a £20m debt write-off from the Allams in 2021/22 as part of the takeover deal. Without this debt write-off, our three-year losses would breach the PSR cap and we would likely face a points deduction next season.

Looking forward, the club must generate an accounting profit this season or it will violate the PSR rules and potentially face a points deduction. That is, unless Acun injects additional equity into the club instead of funding the club through loans from Acun Medya (his current financing strategy).

Revenue:

Positive news on the revenue side. Revenue increased 17.4% to £21.2m (2023/24) from £18.1m (2022/23). This was composed of:

- Match Day: £5.7m (+11.1%)
- Broadcasting: £9.4m (+4.6%)
- Commercial: £4.4m (+68.1%)
- Retail: £1.6m (+28.2%)

Looking ahead, matchday revenue is likely to plateau this season due to our current stagnating attendance figures. However, the new Sky broadcasting deal is likely to significantly boost broadcasting revenue in 2024/25. This, alongside maintaining strong performance in commercial and retail, will be key to increasing revenue this season.

Operating Expenses:

Our day-to-day expenses are where the problems start to arise. Last season, our operating expenses increased 23% from £38.7m (2022/23) to £47.7m (2023/24). Wage costs alone rose 25%, from £23.7m to £29.6m, pushing our wages-to-revenue ratio to 139%. This far exceeds the sustainable wage to revenue ratio of 70-80% recommended for Championship clubs.

This meant we made an operating loss of £26.5m last season. One way to think about that number is that the club is losing over £500k every week. And whilst it’s completely normal for Championship clubs to have operating losses, our losses are far higher than other clubs. The average operating loss in the Championship is £13.2m, making our losses 2x higher than the average.

Player Transfers:

The club made a £8.4m from player sales in 2023/24, down from £15.2m in 2022/23 (which was largely driven by the sale of Keane Lewis-Potter). Sales of Sayyadmanesh and Tetteh likely accounted for some of the 2023/24 income, however there must have been some additional income from historic transfer clauses to hit this figure (I don’t think anyone thinks those two are worth anywhere near that much…!).

Transfer expenditure last season was £8.5m, a very slight increase from £8.4m in 2022/23. However, this doesn’t take into account the massive increase in wages driven by signing a significant number of players on loan from Premier League clubs. This is one of the reasons our operating expenses grew so significantly in 2023/24.

Profit/Loss:

Our loss before tax was £18.8m, up 258% from a £5.2m loss in 2022/23.

Over the last three seasons, our net loss before tax is £10.1m, firmly within the £24m PSR limit. However, this position was only made possible by a £20m debt write-off from the Allams in 2021/22 as part of our takeover deal, which meant we posted a significant accounting profit in 2021/22. Without this write-off, the club’s three-year loss would be £30.1m, breaching the PSR cap.

To stay within PSR rules the club must turn an accounting profit in 2024/25, unless Acun chooses to equity finance additional losses, which would enable us to lose up to £15m this season. Acun’s financing strategy to date has been to fund the club exclusively through loans from his company, Acun Medya, so this is probably unlikely. As such, the £30m+ from Philogene and Greaves’ sales will likely be used to offset operating losses this season rather than fund significant reinvestment in the squad. My guess would be that we have very little wiggle room in January for more permanent signings unless we can shift some players out the door for decent fees.

Financing:

Losses over the last two seasons have been funded solely by loans from Acun Medya, with no additional equity injected since his takeover of the club. This structure benefits Acun personally as he has a right to recoup the loans in the future, however this financing strategy increases the financial risk to the club due to the large debt overhang it creates. It’s exactly the same financing strategy the Allam’s used which caused consternation amongst the fan base…

Our debt now totals £65.8m, with £43.8m owed to Acun Medya and ~£22m still owed to the Allams and other minor parties. As part of the takeover, the Allams agreed not to charge any interest on their remaining debt, and it is likely that the repayment terms are flexible.

Based on estimates from the accounts, it looks like Acun is charging the club a 5.8% interest rate on the loans he’s using to fund the club. This is unusually high for a “soft loan” from a football club owner, which are usually charged with minimal interest. To give Acun the benefit of the doubt here, this suggests that Acun Medya is itself borrowing funds from financial institutions to finance the loans it is extending to the club. Therefore, rather than trying to profit directly, Acun is likely just passing on the interest costs Acun Medya is facing to borrow the funds that they are then loaning to the club.

Other Tid Bits:

- Two members of the Acun Medya senior leadership joined the Hull City board in December 2024. The board is now exclusively populated by Acun Medya associated individuals after Tan Kesler’s mysterious exit.

- Tan Kesler was paid £309,879 in remuneration in 2023/24 before his departure. Other directors remain unpaid.

- It looks like the club paid a £111k penalty to HMRC for using a historic tax avoidance scheme (Growth Securities Ownership Plan). Other businesses have been hit with similar penalties, but there isn’t any information on exactly how this scheme was used by the club and for what purpose.

——

Hopefully this is useful to understand what’s going on at the club behind the scenes. Bear in mind that this is just my own analysis from looking at the club’s public accounts over the last couple of seasons, so please assume that there could be errors or omissions in my analysis.

The key takeaway from all this is that Acun appears to be placing all his chips on achieving rapid promotion to the Premier League. While this ambition is understandable and in line with what he’s said publicly, it does leave the club in an increasingly precarious financial position if promotion isn’t secured. The risks are even more pronounced if relegation were to happen this season, as the club would find itself in a far worse financial state than it was under the Allams during the 2019/20 relegation.

For all their flaws, the Allams maintained much tighter financial controls, ensuring the club was more sustainable during their tenure (despite repeatedly shooting themselves in the foot in a myriad of other ways). By contrast, our current approach is essentially debt-fuelled expansion over long-term stability, which could leave the club vulnerable without success on the pitch. And given how this season’s gone so far, it looks like success on the pitch is far from guaranteed…
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There's an FFP thread already but in short, some of this analysis is flawed. We didn't stay within PSR purely because of the Allam loan write off, there's other deductions that are not taken into account in PSR calculations that we are not privy to, so you can't say that with any factual certainty. For instance our spend on our Academy, work on the pitch and other club infrastructure all form part of our operating losses but would not be included for PSR purposes.

We also have no outstanding debt to the Allams unless you have seen something in the accounts no one else (other than Shark the other week) has? Can you please point to where they're listed as having debt owing?
 
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SydneyTiger14 said:
There's an FFP thread already but in short, some of this analysis is flawed. We didn't stay within PSR purely because of the Allam loan write off, there's other deductions that are not taken into account in PSR calculations that we are not privy to, so you can't say that with any factual certainty. For instance our spend on our Academy, work on the pitch and other club infrastructure all form part of our operating losses but would not be included for PSR purposes.

We also have no outstanding debt to the Allams unless you have seen something in the accounts no one else (other than Shark the other week) has? Can you please point to where they're listed as having debt owing?
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Not me that wrote it mate. Just sharing so someone more intelligent can analyse better than I can.
 
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Top_Tiger said:
Not me that wrote it mate. Just sharing so someone more intelligent can analyse better than I can.
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If you don't understand it, how do you know they're more intelligent than you?

Maybe it just fits your narrative -but ultimately, if you post it, at least have the decency to own it.?

Otherwise you might as well just chose to run a book club thread and occasionally post long form observer articles in a desperate attempt to look sophisticated.
 
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SydneyTiger14 said:
There's an FFP thread already but in short, some of this analysis is flawed. We didn't stay within PSR purely because of the Allam loan write off, there's other deductions that are not taken into account in PSR calculations that we are not privy to, so you can't say that with any factual certainty. For instance our spend on our Academy, work on the pitch and other club infrastructure all form part of our operating losses but would not be included for PSR purposes.

We also have no outstanding debt to the Allams unless you have seen something in the accounts no one else (other than Shark the other week) has? Can you please point to where they're listed as having debt owing?
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Was there something linked to Bowen or KLP that gave future sales to the Allams - I seem to remember there was something there when Acun took over which is why they agreed the price they did
 
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Charon said:
Was there something linked to Bowen or KLP that gave future sales to the Allams - I seem to remember there was something there when Acun took over which is why they agreed the price they did
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The appear to still have a debt holding. About about a 3rd of the total.

Basically our value as a league 1 club.
 
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Mckechnie Orange said:
If you don't understand it, how do you know they're more intelligent than you?

Maybe it just fits your narrative -but ultimately, if you post it, at least have the decency to own it.?

Otherwise you might as well just chose to run a book club thread and occasionally post long form observer articles in a desperate attempt to look sophisticated.
Click to expand...

You had a bad Christmas mate? Jeez. I understand what the bloke has written, as said from the start it’s someone else’s analysis. There’s no narrative, people can formulate their own opinion on the accounts, there for everyone to see. I’ll post Kieran Maguire’s analysis in a minute if that’s ok?
 
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SydneyTiger14 said:
There's an FFP thread already but in short, some of this analysis is flawed. We didn't stay within PSR purely because of the Allam loan write off, there's other deductions that are not taken into account in PSR calculations that we are not privy to, so you can't say that with any factual certainty. For instance our spend on our Academy, work on the pitch and other club infrastructure all form part of our operating losses but would not be included for PSR purposes.

We also have no outstanding debt to the Allams unless you have seen something in the accounts no one else (other than Shark the other week) has? Can you please point to where they're listed as having debt owing?
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The money owed to the Allam's is in the accounts (page 22).

The accounts wouldn't be so concerning if we weren't a lot closer to L1 than the PL.

I do wonder how a sale could happen, Acun is in for £43.8m, and then there's the Allams who are owed £21.9m. It's certainly going to be complex.

I'm also surprised to see Acun charging interest on the loan, the Allams were slaughtered for that.
 
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Shark Sports said:
The money owed to the Allam's is in the accounts (page 22).

The accounts wouldn't be so concerning if we weren't a lot closer to L1 than the PL.

I do wonder how a sale could happen, Acun is in for £43.8m, and then there's the Allams who are owed £21.9m. It's certainly going to be complex.

I'm also surprised to see Acun charging interest on the loan, the Allams were slaughtered for that.
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Page 22 of the accounts says nothing about the Allams?
 
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Shark Sports said:
The money owed to the Allam's is in the accounts (page 22).

The accounts wouldn't be so concerning if we weren't a lot closer to L1 than the PL.

I do wonder how a sale could happen, Acun is in for £43.8m, and then there's the Allams who are owed £21.9m. It's certainly going to be complex.

I'm also surprised to see Acun charging interest on the loan, the Allams were slaughtered for that.
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How / why do we owe the Allams 22mill? The sale went through 3 years ago. I don’t understand
 
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As OLM said accounts are at a moment in time so things will already be drastically different to these. They don’t look great but I’ve seen much worse in football.

I can’t find the exact wording anywhere but pretty sure they have to charge a market rate of interest on loans so Acun might not have a choice with that one, whether it is debt to Acun Medya or external financing.

Ultimately as with every football club, we’ll be alright until Acun gets bored. A lot of well known businesses outside of football rely on parent support to continue running. If he wants to sell then similarly to the Allams some of that debt will likely need to be written off.
 
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Great work everyone! My take....

The loanees cost a fortune, they backed Rosenior heavily, rolled the dice and he failed to deliver....that's why he was sacked.

They realise that's too risky, and look to own the players as assets, hoping to sell a gem each year, which feels more sustainable.

Acun has some rich mates who support the commercial revenue, a big risk to us is Acun switching attention to the club he loves, and the hype around us dwindles.

We now have a coach in place that is able to improve these players and next years accounts a more inline with the club revenue.

The championship finances are a joke, something need to be done about the disparity between it and the Premiership
 
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Shark Sports said:
The money owed to the Allam's is in the accounts (page 22).

The accounts wouldn't be so concerning if we weren't a lot closer to L1 than the PL.

I do wonder how a sale could happen, Acun is in for £43.8m, and then there's the Allams who are owed £21.9m. It's certainly going to be complex.

I'm also surprised to see Acun charging interest on the loan, the Allams were slaughtered for that.
Click to expand...

The Allamhouse accounts show a gain on the sale of group undertaking of £22,554,817. A note in the accounts refer to this is as the three companies, the club, stadium holdings and stadium management.

The latest accounts to December 2023 show "other debtors" as 2.7 million ish. No mention who this might be, but if, very big if, it is Acun, it is someway short of your figure.

Interest received given as half a million ish. Money in the bank fifteen and a half ish million. Some 3%. Again not quite your figures.

I can see nothing that still links the Allams to City.
 
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