He made an error of judgement over 2 years ago, but he's spot on with this. There needs to be a review. Theres way too many smoke and mirrors around this issue and it needs clearing up.
It was not HCC which sold him the SMC, it was Bartlett, the only real issues are why his legal team & accountants did not pick this up during due diligence as any charge against the lease should have been one of the first things they checked. I'm guessing it is more likely they believed that the charge would remain with Bartlett rather than the SMC The current council (who were not in charge at the time of the mortgage) have said that there was no need for Bartlett to seek permission under the lease, it's unlikely they would be supporting former political opponents (they would be capitalising on it)
There's no smoke or mirrors. The council let Hull City and Hull FC have the KC virtually rent free. Do you really think we'd be in the Premier League now, or in 2008, if the Council had been collecting £2 million a year rent for the past 12 years?
Dont think he did. He knew and still helped us out. Anyway full marks to Tory John Fareham. Something stinks here. http://www.hulldailymail.co.uk/Hull...calls-review/story-24364212-detail/story.html A Hull city councillor says there needs be a "full and frank review" of the KC Stadium lease. Conservative group leader Councillor John Fareham spoke out after criticism of the council over its role in a mortgage deal arranged on the lease by former Hull City owner Russell Bartlett. The latest annual accounts published by the Stadium Management Company (SMC) have detailed how Mr Bartlett set up a holding company to own the SMC, which then provided guarantees on the stadium lease to secure two loans from the Royal Bank of Scotland used to help fund his takeover of the Tigers in 2007. Current City owner Assem Allam and his son Ehab, who are also the only directors of the SMC, claim the mortgage deal should not have been sanctioned by the city council, which owns the KC Stadium. They face having to spend £4.5m to clear outstanding loan repayments from the deal inherited after taking over Hull City and the SMC in late 2010. In the accounts, the Allams also claim that by failing to intervene, the council "lost control" over any future transfer of the SMC's ownership as any buyer could purchase the holding company. Now Cllr Fareham has called for a review into the issue. He said: "I have been advised by our officers there was no obligation within the lease for us to sign off anything because the loans were being secured through a responsible financial institution, namely RBS. "While some might argue that subsequent events elsewhere showed RBS were anything but responsible, at the time it was seen to be a responsible institution as defined in the lease. "However, I do think it is time we had a full and frank review into the SMC and the terms of the deal when it was originally set up to operate the stadium lease. "In the past, this has been pushed into the long grass but with national newspapers now taking an interest it can no longer be viewed as a little local difficulty." He said he would be urging a panel of councillors currently examining the council's relationship with the private sector to pay special attention to the SMC deal. The 50-year lease agreement with the SMC was struck shortly before the council-funded stadium opened in 2002. It handed day-to-day responsibility for the development, including all operating and maintenance costs, to the SMC. In exchange, the council was meant to receive a share of any profits if they exceeded agreed targets. However, no profit share income has ever been paid to the council and the latest SMC figures show the company recorded a £5m loss in the financial year ending in June. Cllr Fareham said: "I am getting a little bit sick of hearing certain Labour councillors blaming the Liberal Democrats for signing off the lease deal. "It's true the Lib Dems were in charge in 2002, but everyone knows they simply used the same agreed terms endorsed by the previous Labour administration." While the SMC accounts claimed an unnamed "senior executive" at the Guildhall sanctioned the mortgage, the council has denied any involvement. Cllr Fareham said: "My understanding is that the individual referred to by the Allams has left the council but that isn't a reason why we shouldn't have a review. "There are other questions that need answering, not least concerning one particular senior officer who worked closely on the stadium project and then was allowed to walk straight into a job with the SMC. "If I lost my seat I would have to wait a year before I could even apply for a job as a cleaner at the Guildhall. "There does seem to be one rule for officers and another for councillors in this context." SMC's 50-year KC deal OWNED initially by Adam Pearson, the SMC was given the job of operating the KC Stadium under a 50-year lease agreement with the city council. The deal included a profit-sharing element aimed at providing financial returns for the council to improve public services elsewhere. Before the stadium opened it was estimated the stadium complex, including the adjacent indoor arena, would cost up to £2m a year to run and that it would break even within three years. However the trigger point for any profits to be shared with the council has never been reached during the 12 years of the stadium.
Thought the rent was £600,000 with half the money from tickets sold over 12,000? FC paying half tickets over 8,000 based on averages the season before the move to the KC. Man City have a similar agreement.
Hull City and Hull FC pay rent to the Stadium Management Company which is used to maintain the stadium, pay the staff, etc. The Stadium Management Company's holding company has the lease with Hull City Council and only pays the council rent if it makes a profit. No profit no rent. For the last 12 years the SMC has occupied the KC virtually rent free. If the Council had charged a commercial rent Adam Pearson would have been paying around £1 million a year rent to the council in 2002. Because of the terms of the lease this money was available to spend on Hull City AFC.
It beggars belief that anyone who lives in Hull could support the council's position over the Allam's. They didn't know about the loans taken out against the stadium because the stadium contract said this could not be done. Then again, they should have investigated because the council overseeing it are - and almost always have been - corrupt.
I meant they paid that to the SMC. Man City pay half of revenue from tickets over 32,000, the capacity of Maine Road as well, don't they?
The loans were public knowledge before Assem Allam bought the club. From memory Amber Nectar published the accounts for City and the SMC under Bartlett. The SMC accounts mentioned both the guarantees and the mortgages. The accounts signed by Assem Allam for the year ending 2012 also mentioned the loans and guarantees.
I have the following thoughts/reservations: 1. Due Diligence is an integral part, if not an instinctive part of business. 2. I would always look to a businessman's CV for evidence of cautious, measured progression. 3. I would also look, positively, for a risk taker; a clever, well judged one. 4. I would look for his highs and lows and (having done my own Due Diligence) and question how he could account for them. A council (or any accountable body) can evade, obscure, use protocol or procedure, or simply withdraw to hide from the truth. But those who elect them, if they can be bothered, can call them to account. The problem with with our owner is that only the law impresses him (I think). I respect and appreciate what he has done for my football club; I would not only have to be mad, but also a tad bad not to. He is a businessman, he tells us he is a good one - see his CV. All of this nonsense makes his judgment questionable, for me. Adam Pearson is not beyond question; none of them are. Thankfully we are still Hull City AFC; it's a funny thing, but some seem to forget that who you are is what you are, or maybe . . .
My reference to an error of judgement was in regards to Cllr Fareham's tweet. Judging by the many differing views on what is and what isn't, what was and what might have been, I would say that the issue IS muddied, smoked and mirrored. There needs to be an open review into the whole shabby affair to stop all the speculation and guessing.
As I said no smoke or mirrors. Its all in the public record held at Companies House. When the charges were given, who the charges were given to. All for a couple of quid. The council did a deal with Adam Pearson which had the practical effect of minimising the rent paid to the council. In effect the council gave a subsidy to two of our professional sports teams. You may call it shabby I wouldn't. What do you think would happen if the lease was declared null and void? Be careful what you wish for. Cllr Fareham was on Hull City Council when the officer moved across, did he do anything at the time about it? I don't remember him making a compliant, either to the council or the police. He may have done it on the quiet, but I doubt it.
Of course there is smoke and mirrors involved in all of this. Actions have been taken that have given results desired by the parties involved. Onlookers and subsequent reviewers find it difficult to see or comprehend the rationale or mechanism of the original procedures; indeed, there has been much speculation but little true understanding. That is smoke and mirrors. Now whether or not they were deployed intentionally or not is a different matter - let an open, honest and independent enquiry provide the answer. There is one person who has ducked in and out of positions of influence since the stadium was built and it's management company first formed. He ran it, he advised on it, he understood it in every way. He worked for three different owners and he made a number of statements that gave everyone the impression he not only understood the detail of this Allam takeover but he thought them crazy to complete it. Perhaps he can offer his opinion of it all.
According to the HDM report the Council were quite happy for the leaseholder to borrow against the lease providing they used a 'Responsible Financial Institution'. The term is subjective. In the event of a dispute who would have decided which institutions are 'responsible' ? I'm surprised the Council's legal team allowed such wording.
As far as I'm aware, Man City came up with a new fixed rent deal, at the time they agreed to spending £1b on the developing the local area.
Hull City Council did not want to run the stadium and be responsible for its upkeep so they issued a 50 year lease to a company that would act as landlord, pay for the repairs, renovations and the day to day running costs. Initially, from something OLM (I think) wrote a long time ago the Council wanted the landlord to be a different company from either Hull City AFC or Hull FC. Adam Pearson persuaded them to give the lease to a company he formed. The lease rather than being for £x per year was a profit sharing scheme. This is what the Liberals moaned about prior to Assem Allam buying the club. What this lease agreement did was allow Hull City to pay less rent then they otherwise would have done. In effect over the last 12 years I'd be surprised if the amounts received by Hull City Council were more than £250,000. A straight lease may well have brought in £1 or £2 million a year. In effect Hull City Council have subsidised Hull City and to a lesser extent Hull FC for the past 12 years. This subsidy was worth between £10 to £15 million, my rough guess. Why would Hull City Council care who the shareholders of the company holding the lease is? They would have the same deal with the new owners of the stadium holding company as the old owners, ie they would get sweet FA in rent. I haven't seen the lease but it will have forfeiture clauses in if the leasehold does not maintain the stadium. The lease may also contain clauses restricting the right of the company to sell it without the Council's agreement. The day to day running of the stadium is in the hands of the SMC, a subsidiary of the holding company. The SMC receives rent from Hull City and Hull FC. The charge gave the RBS the right to collect these rents if the mortgage (for want of a better term) wasn't paid. The Council, according to the reports, didn't need to give permission for the company to borrow money against the lease. I don't really see why they would need to. Any creditor could have got a charging order on the lease if they'd gone to court. Bartlett's mortgage was registered with Companies House in 2007. It was shown in the accounts prepared by Bartlett and reproduced on Amber Nectar before we got relegated. Assem Allam would have been aware of the charges before he bought the club. He was aware of them in 2013 when he signed off the SMC accounts as they are mentioned in them. He tried to get out of paying the mortgage and lost. The charge was legal and he had to pay in full. No smoke nor mirrors, the Council gave the lease away for next to nothing. This helped City move through the four divisions because it didn't have any extra rent to pay through the SMC to the Council. Assem Allam could sell the SMC and its holding company to somebody other than the owners of Hull City, but that would be up to him. The Council will still insist that the KC is maintained and still receive next to no rent until there is a lease break. At that stage Hull City AFC may have to find an extra £2 million a year in rent.
