The Third Meeting.

[howdentiger]

The Allams have been unrealistic about their valuation of the club since day one and they continue to do so. When we get into next season and the parachute money is coming to an end, with a significant amount of the debt (if not all) having been paid down, hopefully this will change.

The only thing II don't really understand, is what they're doing with the SMC. They have been running football costs through the SMC for several years, making the losses artificially high (cumulative losses in the last accounts were around £10m) and I'm not sure why they're doing this.

Tax benefits for their other companies?
Something to do with the lease agreement?
Make it unattractive to buyers so they get to keep it when they sell? (god knows why they'd want that)
Screwing the council someway?

I've no idea why they'd do it either but there will be a reason, they are idiots but when it comes to stuff like this they ( or the people around them ) are switched on

 

[The Omega Man]

The only thing II don't really understand, is what they're doing with the SMC. They have been running football costs through the SMC for several years, making the losses artificially high (cumulative losses in the last accounts were around £10m) and I'm not sure why they're doing this.

This has been a concern of mine for a while. I come across this every now and again, in fact I have a simlar situation happening at the moment. If the improvements made are soley to enable the football team to compete, that should be reflected in a contra between the club and SMC. In the case that I have, 75% of all supplies go through one group company but only 25% of the sales. All of the debt is being run through one company and the other has all of the profit.

 

[Obadiah]

This has been a concern of mine for a while. I come across this every now and again, in fact I have a simlar situation happening at the moment. If the improvements made are soley to enable the football team to compete, that should be reflected in a contra between the club and SMC. In the case that I have, 75% of all supplies go through one group company but only 25% of the sales. All of the debt is being run through one company and the other has all of the profit.

Its fairly simple. If the SMC made a profit they would have to pay a share of those profits to Hull City Council.

 

[balkan tiger]

Its fairly simple. If the SMC made a profit they would have to pay a share of those profits to Hull City Council.

Nothing with the Allams is that simple, there is a reason why they are loading debt onto the SMC. I think there are many more ways they can pile **** onto the supporters, Hull City and the HCC.

 

[originallambrettaman]

The SMC would still not have made a profit, even without the loading of the costs of meeting Premier League requirements, there must be more to it than that.

Some of it made sense, the Premier Club used to be run by the SMC, but was replaced by the Premier Tiger (I **** you not), run by the club, to get out of an arrangement that saw Hull FC benefit from corporate memberships. Even now, the Premier Club (I'm not calling the Premier ****ing Tiger) will still generate £2-2.5m a season, so it's a significant amount to switch.

Loading the SMC with the costs of new Premier League required floodlights and media centre etc don't have such an obvious benefit.

 

[The Omega Man]

Its fairly simple. If the SMC made a profit they would have to pay a share of those profits to Hull City Council.

I understand why, its being done, but I am surprised that on the face of it, nothing has been done about it.

 

[Chilton's Hundreds]

Yes it would see Rule 12.3 of the EFL.

Club going into admin 12 pt deduction
associated company going into admin possible 12pt deduction depending on circumstances

The latter is such a grey area

 

[originallambrettaman]

Club going into admin 12 pt deduction
associated company going into admin possible 12pt deduction depending on circumstances

The latter is such a grey area

The 'inextricably linked' group company rules are there to stop any jiggery-pokery with regard to switching assets from one company to another to avoid a points deduction, as Southampton tried a while back. There's never actually been a points deduction for a club in rude health, who put an associated company into administration, it's theoretically possible, but as you say, the rules are far from clear.

 

[balkan tiger]

I understand why, its being done, but I am surprised that on the face of it, nothing has been done about it.

It may be because there is nothing in the lease agreement to stop it.


Whats going on with the quotes thing today? it's all to cock.

 

[Obadiah]

Club going into admin 12 pt deduction
associated company going into admin possible 12pt deduction depending on circumstances

The latter is such a grey area

It is but the solvency of the SMC is significantly dependent upon how much rent Hull City pay for the ground. I would say the directors of Hull City letting the company that runs the ground go into administration or insolvency would result in a deduction.

 

[PLT]

The Allams have been unrealistic about their valuation of the club since day one and they continue to do so. When we get into next season and the parachute money is coming to an end, with a significant amount of the debt (if not all) having been paid down, hopefully this will change.

Ehab said the other day that he wants to get his money back and he thinks that's fair. It might be fair in his opinion but that's not how valuation works. It's worth what it's worth, and the fact that the Allams have put money in and made the club worth less at the same time is their own fault.

It's the same as the argument that they can only sell while in the Premier League. You just have to accept it's not worth as much.

Whats going on with the quotes thing today? it's all to cock.

The quotes work based on textual tags in the post. If anyone accidentally messes with part of the tag it breaks the quote, and when that broken quote gets quoted it gets worse and worse. I've fixed them now.

 

[balkan tiger]

Ehab said the other day that he wants to get his money back and he thinks that's fair. It might be fair in his opinion but that's not how valuation works. It's worth what it's worth, and the fact that the Allams have put money in and made the club worth less at the same time is their own fault.

It's the same as the argument that they can only sell while in the Premier League. You just have to accept it's not worth as much.



The quotes work based on textual tags in the post. If anyone accidentally messes with part of the tag it breaks the quote, and when that broken quote gets quoted it gets worse and worse. I've fixed them now.

Ta very much.

 

[Chilton's Hundreds]

The SMC would still not have made a profit, even without the loading of the costs of meeting Premier League requirements, there must be more to it than that.

Some of it made sense, the Premier Club used to be run by the SMC, but was replaced by the Premier Tiger (I **** you not), run by the club, to get out of an arrangement that saw Hull FC benefit from corporate memberships. Even now, the Premier Club (I'm not calling the Premier ****ing Tiger) will still generate £2-2.5m a season, so it's a significant amount to switch.

Loading the SMC with the costs of new Premier League required floodlights and media centre etc don't have such an obvious benefit.

I thought the SMC was in dispute with the council over the cost of repairs ? Something to do with original warranties/guarantees when the stadium was built.

Remember reading that somewhere but I can't recall where.

Maybe it's those costs (or some of them) which have made such a dent of their finances.

 

[ImperialTiger]

I thought that maybe it was a vindictive play. Usually companies that are being struck off (dissolved) need the agreement of their creditors (creditors can stop such arrangements as they are owed money by a legal entity that will cease to exist).

By putting all the profits through the club and loading up the SMC with debt, can they get the club into a net assets situation and then try and wind it up without creditors?

 

[Boothferry2Wembley]

When the Allamhouse accounts come out in a couple of months, they’re likely to show around £200m income and over £40m in profit, with the SMC being the only group company making loses (of probably around £1.5m).

Are this years losses and all the accumulated losses owed to Hull City or is this money owed to allamhouse?

Does the total amount owed (over 10 million?) form part of the overall debt?

When the club is debt free, will the Superstadium management company become debt free as part of this process?

 

[ImperialTiger]

Are this years losses and all the accumulated losses owed to Hull City or is this money owed to allamhouse?

Does the total amount owed (over 10 million?) form part of the overall debt?

When the club is debt free, will the Superstadium management company become debt free as part of this process?

The answer is in the accounts thread.

Edit: SMC owed HCTL £13.1m as of last June.

 

[Barchullona]

It is but the solvency of the SMC is significantly dependent upon how much rent Hull City pay for the ground. I would say the directors of Hull City letting the company that runs the ground go into administration or insolvency would result in a deduction.

And how would Hull FC who also pay rent be affected?

 

[Boothferry2Wembley]

If it did they wouldn't get next year's parachute payments and we'd be out of the English Football League. Have a look at the history of Newport County to see what a struggle they had to get back into the Football League and their name back after the original club went into liquidation.

The assumption would be that a process such as the one described would only take place after the last parachute payment.

Last time the club changed hands, we were told by Adam Pearson no less, that the club had been one hour from liquidation as there was nothing to administer.

There were outstanding parachute payments due to Hull City when the club changed hands last time?

 

[Obadiah]

And how would Hull FC who also pay rent be affected?

It depends on whether the liquidator can sell the lease. If he (they are usually male) sells the lease Hull FC and Hull City's agreements remain in place. If the lease is forfeited the stadium reverts back to the Council and Hull FC, the college, Tigers Trust and Hull City have to renegotiate a new tenancy. Another reason why the Allams would be reluctant to put the SMC into liquidation.

This financial advice comes with the proviso that it might be bollocks but its my best guess.

 

[Boothferry2Wembley]

The answer is in the accounts thread.

Edit: SMC owed HCTL £13.1m as of last June.

So when Hull City pay back Allamhouse the full amount, somebody somewhere will have to buy the smc including the debt when they sell the club. Would that be taxable profit?

Or, would it be easier for the smc to be liquidated/placed in administration, even if that did mean a new buyer started with a 15 point deduction.