http://www.wsc.co.uk/the-archive/30-Clubs/6205-hull-on-earth He has since revealed he can’t even sell “Fer Ark” (as the ground’s faulty illuminated sign now describes Boothferry Park) to developers as Kwik Save, a supermarket with a 125-year lease attached to the North end of the ground, won’t sell out claiming it’s one of their most profitable stores.
Done that.....but nowhere does it mention the (alleged) cross-directorships. Or have I missed something? P.S. - I wasn't querying the 125-year lease.
Went under in 2007 but CostCutter brought the Kwiksave shops back last year, I didn't even notice that.
After reading the Moyes thread today, i went looking for when he was appointed as i m sure i said i didnt think he was that great at Everton and got jumped on. Then i saw this and it made me laugh.
It still stands, I never had an issue with them getting a return on their investment, it's just become more of a concern now as the debt level is so high and they keep threatening to **** off.
I wonder how much of this mammoth debt we'll pay back if we stay in the league? I can't see us splashing out another £30m seasonal transfer budget. Although maybe if we get to the Europa league, it'd be too good an opportunity to get some players who otherwise might not come/go elsewhere to pass up on. Edit: my guess is bugger all; the Allams will hold the club and the fans to ransom with it, and probably try to blackmail the council as well.
I look at it the other way. The fact it's a loan and they want it back really restricts what they can actually do in terms carrying out any threats so whilst we're free of assets the debt is actually protecting the club. If they hurt the club they hurt themselves as they have to give up on big chunks of that money. Had it been invested/gifted it would obviously be the same end result from point of takeover to walking out, but psychologically now it's the action they're about to take that costs them the money not the things they've already done, and that makes it a lot harder for them to do anything like that.
Correct me if i am wrong here, but while the debt is that high they are taking > 5 million back per annum in interest rates. The debt also offsets tax on Allam Marine doesn't it so their potential earnings?? for the debt is quite high. Maybe they are not too bothered at getting it back yet.
It represents sound business for Allamhouse. Say they've put in £70m, I reckon thats allowed them to offset the gross profits at Allamhouse by c£20m, plus interest repayments of say c£10m over the last 2-3 of years (of which they would have got say interest of £3m anyway), they are in net terms c£47m worse off. If they claim the playing squad is worth c£30m then their net liability isn't that great whilst we remain in The Prem; they could stop investing and pull out their balance owed to Allamhouse within one season! Business people these people are
I don't know how hard-earned all of it was, I'm sure many of those who helped make his profits for him wouldn't mind some of the credit too. A football club is ultimately about the supporters, owners come and go.
The debt itself doesn't offset tax, it's just a sitting balance. What offsets the tax is any losses made by Hull City can be deducted from the profits of Allam Marine and an overall tax bill calculated. It's a benefit being able to deduct a loss in one business from the profit of another once you're in that position, but you wouldn't go "I'm making **** loads of money here, lets go and buy a business that's losing money to reduce the tax bill". At least I wouldn't, I'd rather pay £30M in tax and have £70M profit in my business (£100M pre tax profit) than than pay £25M in tax and only have £60M profit left (£85M total pretax profit) because my new business lost £15M, because £70M available to me is better than £60M available to me. (the figures I'm using are illustrative before someone points out I haven't used the correct % for Corporation Tax) The interest on the loan is a tax neutral thing for them, it's a loss at the club and a profit at Allam House so obviously when it's added up it's zero. Obviously if Allamhouse has borrowed the money from an outside lender the interest they're being charged is a pure loss to the business as it's cash being paid out. It would be tax deductable, but again, you wouldn't take a loan that cost you £4M in interest in order to reduce your tax bill by £1M. The interest is of course a transfer of value from the club to the Allams, but unless the club is actually able to pay the cash out it's a moot point. As things have been the interest has just had to be added onto the value of the loan, until the club generates a cash surplus the Allams have really had nothing out of the club. It's like me borrowing £10 off you and saying I'll give you £15 at Easter, then we get to Easter and I go "sorry not got the cash I'll give you £20 at the end of the month". Unless we reach a point where I have the cash to give you you haven't made anything out of me. I really don't think they could come anywhere close to that. The second it became apparent that's what they were doing the value of the squad would crash as clubs would know it was a firesale and just wouldn't pay. We also have a significant number of players who are out of contract either this summer or next who would have values greatly below their real market value even without a firesale. I think only McGregor, Chester, Davies, Elmo, Brady, Meyler, Huddlestone, Jelavic (2017), Long (2017), and Aluko are contracted as far as 2016 so they're the only ones we'd be likely to get a fair price for, and even then it'd only be for the first couple as then everyone would know what was happening and hold us to ransom. Think about when it comes to the last week of August, if you're valuing Elmo at the £2M we paid or him and a club is offering £1.5M you have to factor in that if you don't accept £1.5M then, when it comes to January you need a club to offer us £1.5M, plus 4 months wages just to get the same end result*. If you said £15k/wk for him, why would a club offer £1.8M in January when they know we're desperate to sell if they were only prepared to offer £1.5M in August? *the club would have to meet the wage bill of the players until they could be sold in either the summer or January window, if players go 6 weeks without wages they are entitled to cancel their contract and that would lose the Allams their entire asset value of the club. (without considering the added legal costs for breach of contract claims) For me, Long, Jelavic, Huddlestone, Davies and McGregor are the only players we could sell for a reasonable fee if it came to it. Davies we'd make a profit on, but the rest I think we'd lose money if we were selling in the situation described, and we'd be lucky to get £20M for the lot (I don't even think Long, Jelavic, or Huddlestone would attract bids that would give us a profit even if we didn't want to sell them). In the meantime our revenue is going to be more than £20M less than debt level is sitting at, and if the owners entered into that approach fans would walk away refusing to put money in to be taken straight back out. Just look at the variation in crowds we got in D3 under owners with different perceived approaches, the crowds under Fish and Lloyd weren't so far lower than those under Pearson purely due to us being bottom of the league rather than midtable (talking about Pearson with Little, Molby, and Taylor's bit before the move to the KC, not the extra crowd we got after the move and then with the promotion season the next year). It might be less than 10% of the revenue as a PL club, but we wouldn't be a PL club for long doing that so it would be an important factor. You've also to consider that each place in the PL is worth approaching £1.4M. If they start firesaling the squad they're torpedoing positions. We're 13th at the moment with a good chance to go for 10th if we can take Stoke today (personally I think a point and 11th will be the best we can hit but that's a different discussion). By turning us into a relegation certainty they'd be throwing at least £7M of that revenue away compared to our current position. From that reduced revenue we'd still have to keep paying the wage bill in order to maintain the asset value of the players, which would take out a significant amount of the cash coming in even having sold key players. If we failed to meet our football costs the FA and the PL would be entitled to withhold the transfer fees we were taking from clubs for players, as well as any TV/prize money payments or parachute payments in order to use it to meet our footballing obligations. That's particularly the case if the players start walking out and we end up unable to field a team at any point. All the prize/TV money is obviously earnt as you play games, but that along with any parachute payments is subject to the club completing it's required games each season so if we failed to do that we'd default on the money completely. This part I'll concede is guesswork to some degree, because it's trying to guess what we're likely to have to spend on transfers to maintain our position which nobody in the world can do as you don't know what the competition are going to do in that sense, and it's guessing what the next TV deal will be using recent trends, but I'd say it would be a minimum of 5 years for them to get the money out without selling the club. The only way they can do it is for the club to be stable in the PL. We know the debt will rise this season as we were told there was going to be an £11M shortfall. We don't know what the transfer budget for the season was, that £11M shortfall could have been including the Long/Jelavic transfer fees and that will put the debt at c£85M (we were going to sign Long in August when this budget was announced so his fee should be included in it, and you'd expect them to have kept a £5M+ for January in the budget, so along with the player sales that month Jelavic would be covered as well). Next season you'd look for break even, then after that you'd be looking for profits to start coming in, £5M maybe the first season, then a new TV deal will kick in which you could hope boosted revenue by another £15M a season (this season 20th gets £25M more than last season, so that's a relatively conservative boost) which would boost the profit to maybe £12M when you consider we'd probably have to spend more to maintain position as well. What will potentially help with recovering the loans from the club is that the Allams have tended to pay cash up front for player transfers, as we know from the Turner situation it's certainly something Bruce likes doing when he can because you get the players cheaper. Because of the way transfer fees are done in the accounts it means that £11M deficit might not be a loss in the accounts. It'll be an increase in what we owe the Allams, but it could be a £1M profit in the accounts, and then next year the same £1M profit would see the club have a surplus of cash to repay them. To look at it in a more personal way, it's like if O2 were offering credit on PAYG phones at half price, if you had enough cash you could put on a year's worth of credit now and use it later. You'd reduce your bank balance now, but if you were keeping track of how much your phone cost you each month you wouldn't say you'd spent all that money this month, you'd look at how much of the credit you actually used. Then right through next year whilst your credit was reducing your bank balance would be getting better because you weren't needing to top it up. NB: With regards both responses I'm making here. I realise given it's not a secret that I've got a degree in accounting and qualified to the level that I can practice in certain areas (just need to register with the bodies and I'd be good to go) it might look like I'm being patronising to you with some of the really simple comparisons. It's not intentional, regardless of whether the person I'm responding to seems to know what they're talking about I always try to put a comparison in that's understandable to somebody with no clue about how things work so that other people reading it can follow what's happening as well. I'm just mentioning this now when I don't normally because I've noticed with FFP conversations recently I've had people jump in and correct me because my comparisons have been too simple and aren't what's actually happening in an accounting sense, which just confuses the conversation more. I'm not trying to teach people accounting principles and rules, I'm trying to talk about them with those who do understand them, and explain the actual effect of them in terms of what they mean for the club to those who aren't interested in the finer details and just want to have an idea of what's going on.
Its good enough for me even if some of it did go over my head..... Which is why I'm not an accountant.
