The authoritative Swiss Ramble takes a look at the accounts of Hull City for 2018/19. Profit before tax decreased from £24m to £3m, mainly due to profit on player sales falling by £26m from £31m to £5m. Revenue was down £7m (13%) to £48m, because of lower parachute payments. Partly compensated by expenses being cut by £12m.
The main driver of the £7m revenue reduction was a £6m cut in parachute payments from the Premier League from £43m to £37m, but the other revenue streams also declined: match day was down £1.1m (15%) to £6.1m, while commercial was £0.6m (20%) lower at £2.3m. Revenue has dropped £69m (nearly 60%) from £117m to £48m in the two years since relegation, mainly broadcasting £54m, but also match day £10m and commercial £5m. Excluding parachute payments their revenue would put them 18th in the Championship.
The revenue reduction was offset by further cost-cutting at the club with wages slashed £6m (20%) to £25m, as more expensive players were released, other expenses down £6m (39%) to £10m and interest payable £0.8m lower.
Despite the fall, Huil's £3m profit would have been 3rd highest in 2017/18 Championship. The financial performance was particularly impressive, as it only included £5m profit from player sales. The previous season benefited from £31m here, including sales of Sam Clucas to Swansea, Andy Robertson to Liverpool and Harry Maguire to Leicester City.
The club has been profitable in five of the last six years, making £62m profit in the last three seasons alone. The £21m loss in 2016 was impacted by £10m promotion bonuses. As parachute payments have now stopped, a loss is likely in the 2019/20 accounts.
Much of the improvement in profits has been due to player sales. The club essentially broke-even on this activity in the five years up to 2014, but have since averaged £17m profit a season. Few sales of note in 2018/19, but they do have a 15% sell-on clause for Harry Maguire.
Attendances have slumped from around 24,000 in the Premier League in 2013/14 to just 9,500, partly due to fans’ unhappiness with the owners. This was exacerbated by implementing a controversial membership scheme, though concession prices have now been reintroduced. The average attendance of 9,477 is nearly 3,000 lower than the previous season’s 12,447. This is now the smallest in the Championship.
The £25m wage bill is now firmly in the bottom half of the Championship, a long way below the likes of Aston Villa £73m, Fulham £54m and Wolves £51m. That said, it was higher than Sheffield United £19m, who secured promotion to the top flight last season.
Hull's frugal approach is highlighted by their very low 51% wages to turnover ratio, which would have been the lowest in the 2017/18 Championship (by an amazing 17%).To place this into perspective, more than half the Championship clubs have ratios above 100%.
Gross debt was cut by £13m from £63m to £50m, which means that this has halved from £101m in last 3 years. In that period, the club has repaid £27m to the owners and £23m to the bank. Amounts owed to Hull by other clubs reduced from £20m to £5.5m in 2018/19.
The Allam family has been looking to sell the club since 2014. They have made it clear that they want to recoup the money they have invested, so would need £50m, i.e. the current level of debt. As Allam said, 'The lower the loan, the lower the asking price.'
The Swiss Ramble concludes, 'The Allams say that Hull City "will continue to invest in its Academy, which is integral to the strategy of returning the club to the Premier League.” However, given how they wasted the money from previous promotions, it’s difficult to see how things will improve without their exit.'
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