please log in to view this image Hull city council could have lost thousands of pounds over its KC Stadium lease, it has been claimed. Under the terms of the lease, the council is entitled to a share of any profits generated by the Stadium Management Company (SMC). The agreement is based on a sliding scale, with the SMC required to pay 5 per cent of any annual profit up to £1m, 7.5 per cent on a profit between £1m and £1.5m and 10 per cent on any profit over £10m. However, since the stadium opened in 2011, the council has only received a total of £49,669 from the SMC. In the past three years, under the ownership of the Allam family, the SMC has not paid anything at all to the council after posting a series of net annual losses. Speaking at a council scrutiny meeting, Councillor John Shipley said he believed the authority was being short-changed. "I have read the last SMC accounts and they show four different trading areas of the business," he said. "The profit generated by one area is offset by the losses in the other three. "I suspect the finances have been arranged to ensure there isn't a profit. "If that is the case, the council could have missed out on quite a lot of money. "The only way to see if it has is to go through all of the SMC accounts from the past 13 years." Councillors heard Guildhall officials had recently requested a more detailed breakdown of the SMC finances. Council solicitor Peter Dearing said: "I understand certain information on financial issues has been requested from the SMC because we do not operate open-book accounting with them." The latest accounts for the SMC in 2013-14 show a net loss of £33,655. Although rental income from Hull City provided a £1.6m net profit after accounting for direct costs, this was wiped out by a £1.1m net loss on income received from Hull FC, a £234,795 loss on the Airco Arena and a further £236,249 loss attributed to other events. In 2012-13, the SMC posted a net loss of £583,583. Criticism of the council's role in the sale of the SMC by Adam Pearson to Russell Bartlett in 2007 in the latest SMC accounts by chairman Assem Allam prompted a review of the lease deal by scrutiny councillors. But the issue now appears to be at an end, with councillors accepting a further report tabled this week. Councillor Tom McVie said: "The key point is that we own the stadium, it hasn't cost us a penny since it opened and it is up to the SMC to make a profit on running it. "If the SMC ever collapsed, the stadium would still be there for Premier League football or Super League rugby. "Only then would we have to make a decision on who would operate it." Profit share ebbs and flows at the KC TWO-thirds of the profit share income received by Hull City Council from the company running the KC Stadium was paid in the venue's first three trading years. The SMC made a net loss in its first full year, ending in July 2003, but then paid the council £17,900 and £15,959 over the next two years. At the time, the SMC was run by original owner Adam Pearson. It also coincided with a period when the stadium hosted a number of major live music concerts and international sporting events. Profits slumped in 2007, providing a payment of just £126. Under Russell Bartlett's ownership, the SMC continued to make modest profits and contributions to the council despite Hull City's first historic promotion to the Premier League. However, since the Allam family's takeover, the SMC has posted three successive net losses in its accounts. http://www.hulldailymail.co.uk/Hull.../story.html#EMgXhFp6l8RwJ2UI.99#ixzz3S5n5UUy4
To be fair, hasnt significant money been spent on stadium maintenance? Relaying the pitch Replacement of under-soil heating New "Big" screen and media centre improvements ongoing floodlight replacement You'd have to be a mug to post a profit when you can offset said profits against other losses, creative accounting or just common sense?
Just a simple 'Management Charge' invoice from Allam Marine to SMC for AA's time can wipe out any profits and thus any payment to the Council.
Did anyone expect it to be making a profit under the current terms and with the way FC are hugely subsidised? Where do people think the needed improvements cash comes from?
There was a debate over how much work should have been done by previous regimes that has fallen to the current people, and also how much of the work should have been under some form of warranty.
I think the KC may be heading back to Hull City Council to run. I maybe completely off the wall but the drip drip of stuff from the Council all points towards a new arrangement for the KC. They could sell it but then they'd have to hold a referendum and they couldn't guarantee a yes vote. Especially if the future home of Hull FC was in doubt.
Looking at the figures the problem is obviously Hull FC , they must have got a great deal with everybody else subsidising them
The four numbers in the article and the total loss don't add up. Based only on those numbers it'd be a small profit. What am I missing?
It depends on how they apportioned indirect charges like accountancy, office staff, etc. without seeing the accounts its hard to say.
FC pay around £40k a game when you break it down, the losses mentioned equate to £75k per game. Meaning it costs £115k to host a game operating at half capacity. Seems a bit steep to me. Also when FC wanted to host a testimonial there, they were told it would cost them 45k, which begs the question why would the Allams want to subsidise a RL testimonial to the tune of £70k? Also if it costs 115k to host a half capacity game surely it costs more to host a full capacity game, 19 of those and the amount City pay doesn't even cover the costs never mind make a profit.
Council Quote "However, since the stadium opened in 2011, the council has only received a total of £49,669 from the SMC." The Stadium opened on Wednesday 18th December 2002. No wonder our Council is in such a mess when they dont even know when their own stadium opened.
"The agreement is based on a sliding scale, with the SMC required to pay 5 per cent of any annual profit up to £1m, 7.5 per cent on a profit between £1m and £1.5m and 10 per cent on any profit over £10m." Does this mean they pay nowt for any profit over £1.5m & under £10m?
The whole situation between the SMC and the HCC has been a joke from day one. HCC have much to answer for. In saying that many of the problems lay at the door of Carl Minns and the Lib Dems when they were in office.
