Mind the gap

The 2016-17 accounts for Hull City show a big boost in revenue in their year in the Premier League, but also illustrate the gap between the top clubs and those that are relegated. Revenue increased from £42m to £117m, which is 33 per cent up on their last time in the top flight, but it is still among the lowest in the Premier League. Manchester United earned around five times as much, points out football financial commentator Swiss Ramble in a series of tweets.

The wage bill more than doubled from £30m to £61m, but contracts contained a relegation clause imposing cuts of 40 per cent. Clubs have learnt from earlier experiences of relegation when they found themselves locked into contracts that were unaffordable in the Championship, often for under performing players. Players now have to shape up or ship out.

The wage bill was only £6m higher than their last time in the Premier League and one of the lowest in the top flight. Their wages to turnover ratio is just 52 per cent, very near Deloitte's recommended level of 50 per cent. The Swiss Ramble suggests that Stoke City's ratio of 62 per cent might be more appropriate for a club with these revenue levels. Perhaps they should have spent more to stay up rather than generating a record £36m profit.

The club ended up with a cash balance of £21m but net debt at £81m, although brought down by £19m is still relatively high. Interest payments were relatively high at £4.3m The owners, the Allams, have injected £78m since 2011, with £63m net going on players. However, they made a net profit on transfers of £11m last season and made more lucrative sales over the summer raising £40m.

Gate receipts increased by only 10 per cent, but other matchday income was up from £2m to £8m, suggesting increased corporate revenues. Total match day income was up 75 per cent at £16m.

Commercial revenue was up from £3m to £7m, but it was still among the lowest in the Premier League with only Burnley and Watford performing less well.

Hull did collect £97m from the Premier League television deal. They will also receive £41m in parachute payments this season and £31m next season. They receive parachute payments for only two seasons as they were relegated after one season. Clubs no longer have the incentive to follow a strategy of getting promoted, spending relatively little money and collecting the proceeds.