Methinks something is rotten in the state of Denmark. So who was the senior officer who worked on the deal and walked into a job with the SMC? Anyone know the name? http://www.hulldailymail.co.uk/big-...er-SMC-lease/story-25536033-detail/story.html The big questions Hull City Council must answer about the SMC lease mess at KC Stadium Why is this scrutiny meeting being held by Hull City Council in the first place? The Council has been under increasing pressure to respond to claims made by Dr Assem Allam since he published the latest accounts for SuperStadium Management Company (SMC) last month. Mr Allam hit out at the Council over the way the club’s former owner Russell Bartlett formed a holding company (Superstadium Holdings Limited) to take over ownership of the SMC and then secured two multi-million-pound mortgage loans using the SMC lease on the stadium as a guarantee. The SMC recently agreed to spend £4.5m to clear the loans after initially challenging the actions of the lender, the Royal Bank of Scotland (RBS). What are the Council hoping this meeting will achieve? Ever since building the stadium in 2002, funded by money raised from the sale of its holdings in Kingston Communications, the running of the venue has been heavily scrutinised. With the pressure on to justify how and why former decisions were made surrounding the administration of the £43.5m stadium, they are trying to bring a degree of transparency to the case which now dates back seven years. One question which needs to be answered is why did the Council sign off Adam Pearson’s sale of the SMC to Russell Bartlett for £6m when they had given it to Pearson for free just a few years earlier? When the KC was built back in 2002, the 50-year lease with the SMC was seen as being the main element which was key to its long-term success. This agreement allowed the Council to retain outright ownership of the stadium and nearby indoor arena, whilst the day-to-day responsibility for all operating and maintenance costs fell to the SMC. Pearson, the company’s then owner, was not allowed to sell the SMC in the first 12 years of its operation unless the Council signed a document to agree to it. This did eventually happen on 4 June 2007, when Pearson received the £6m fee and the Council got nothing. So, how much due diligence was done by the Council before they signed the deal off? In documents recently published for the first time by the Council, it shows they initially objected to the transfer of shares because “insufficient information” had been provided about the proposed deal. On Wednesday 30 May 2007, the Council received additional information to help it come to a decision. Approval was subsequently given on Monday 4 June 2007 in a decision record signed by then deputy chief executive Jan Ormondroyd. That means the Council took four working days before coming to a decision on the future of its £43.5m asset. Having been permitted to spend 30 days assessing the documentation, questions could be asked about why such a decision was reached so quickly. Why did the Council allow the SMC to be sold to an off-the-shelf company? When Bartlett did gain control from Pearson, he did so via Superstadium Holdings Limited (SHL). This was a private limited company with no income, no published accounts and no trading history. The recently-released Council documents have no mention of this and refer instead to R3 Investments, another company Bartlett owned, suggesting they did not know the complexities of the deal. Documents show SHL had been registered by Bartlett on 23 March 2007, meaning sales negotiations with Pearson had already been going on for months before the Council were asked to sign off the deal. So, what documentation did the Council see on May 30 which convinced it to reverse its decision not to approve the transaction? That’s something only this week’s meeting can reveal. Did the Council know it was approving the introduction of debt to SMC when it agreed to its sale? Having received Council permission to take over from Pearson, the SHL company which Bartlett formed to buy him out of SMC borrowed £3.5m from the Royal Bank of Scotland to do so. This mortgage was secured against the SMC lease by Bartlett, introducing heavy debt to a previously debt-free company. Knowing that the SMC had only generated around £45,000 income during its first few years of operation, the Council could have checked it would be able to generate enough money to finance that mortgage. Were any written guarantees requested by the Council when Bartlett took control of the SMC? At the time they approved the takeover, the Council had the chance to write new warranties into the deal which could have ensured his ownership was conditional and in their best operating interests too. Had they done so, the Council could have regained control of the SMC if he had failed to fulfil his obligations at any stage. This would have safeguarded the running of a stadium they own and paid £43.5m to build. So, what does this mean for SMC in the future? Having signed off the deal to allow SHL to take over the running of the SMC, the Council has effectively handed over all control for the remaining 38 years of the lease. It now has no say whatsoever in the running of the KC and will not until 2052, when the current lease ends. During that time, the stadium will continue to depreciate in value. It also requires constant maintenance, which the SMC has to foot the bill for, meaning even if a profit were possible, it would make sense to plough it back in to this area rather than hand a percentage over to the Council. The company can also now be traded without any Council involvement or approval, as was the case when the Allams bought it from Bartlett by acquiring SHL for a nominal £1 fee.
Yet some people still think Dr Allam is the bad guy, and that Pearson, Bartlett and HCC are innocent victims in all this. Unberfuckinglievable.
Adam Pearson and his backer took over a bankrupt football club and turned it into a football and financial success. Under his stewardship Hull City became a valuable club. Unfortunately he sold it to someone who didn't have the financial support to pay the purchase price and get us into the Premier League. Interesting that some people on here don't think he should have sold it for a profit given the work he put in. Hull City Council gave the SMC a lease which meant it's received £50,000 in rent over 12 years. The rental money saved went into the pockets of Hull City's owners. If Hull City Council had charged an economic rent Hull City AFC would have paid more rent to the SMC with a reduction in the monies available to run the club. Getting Hull City AFC into the Premier League gave the City more than the £10 million foregone in rent. The interesting thing about this story is who is responsible for maintaining the stadium. The lease says its the leaseholder, the SMC. Presumably if they don't maintain the stadium the lease is forfeited and Hull City Council can then charge an economic rent to Hull City AFC and Hull FC. Assem Allam would then lose control over how much he has to pay to play at the KC. As the guarantees expire and the stadium ages the costs increase. If the Council plays the cards in its hands they could end up getting a substantial rental income and control over the stadium. You really should ask yourselves is that what you really want? Finally it was the Liberals that agreed to let Pearson sell and transfer the lease to Bartlett's holding company. Luckily they have been voted out.
Can Happy or Chazz please explain what's dodgy in that HDM story? Pearson was allowed to sell the company he owned for a profit. Why exactly should HCC have stopped that? Is that it? It really is embarrassing how some of our fans are determined to hate Adam Pearson, just because the notorious liar and cheat Assem Allam tells them to.
