The authoritative Swiss Ramble reports on the 2019/20 accounts of Hull City when they still made a profit of £3m despite Covid-19, but were helped by player sales where there was a £23m profit. This was in a division in which most clubs lose money.
They have been profitable for six of the last seven years. Player sales have averaged £18m a year from 2015. Only five Championship clubs were profitable in 2018/19, with the highest profits at Bristol City and Brentford.
The Swiss Ramble states: 'After initially saving the club from going bust, the Allams have managed a steady decline, going from Premier League to League One in the past 4 years. Although their finances look better than most in the basket case that is the Championship, the lack of investment has cost them.'
Revenue fell from £48m to £16m. This was one of the lowest revenue figures in the Championship. The average is £32m. It should be noted that Championship revenue is heavily influenced by parachute payments, However, even if they were excluded, Hull City would still have one of the lowest revenues in the Championship.
The main driver of the revenue reduction was broadcasting, which fell £32m (79%) after parachute payments from the Premier League stopped, but the other revenue streams also declined: match day was down £0.8m (13%) to £5.3m, while commercial was £0.2m (10%) lower at £2.1m. The revenue reduction was partly offset by further cost-cutting at the club with wages slashed £7m (28%) to £18m, as more expensive players were released.
In the three years since relegation, revenue has dropped £101m (87%) from £117m to £16m, the lowest since 2008. Decrease is mainly broadcasting £86m, but also match day £11m and commercial £5m. Parachute payments, which accounted for 77% of total revenue, have now ended.
Match day income fell £0.8m (13%) to £5.3m, partly due to playing 4 home games behind closed doors because of the pandemic. This is around £11m (67%) lower than the £16m they generated in the Premier League. This was firmly in the bottom half of the Championship.
Attendances have slumped from around 24,000 in the Premier League in 2013/14 to just 9,300, partly due to fans’ unhappiness with the owners. This was exacerbated by implementing a controversial membership scheme, though concession prices have now been reintroduced.
Commercial income fell 10% to £2.1m, comprising commercial £1.3m and retail £0.8m. Down from £7.1m in the Premier League. Would have been second lowest in the 2018/19 Championship season, which is poor for a team that’s been in the top flight in three of the last seven years.
The wage bill decreased for the third year in a row, by £7m (28%) from £25m to £18m in 2019/20. This means that wages have been cut by £43m (71%) from £61m following relegation from the Premier League. Will fall further in League One, due to departures and relegation clauses.
The wages to turnover ratio more than doubled from 51%, when they benefited from parachute payments, to 113%, the highest since 2013. However, this is pretty much the norm in this division, where 15 clubs are above 100%, much worse than UEFA’s recommended 70% upper limit.
Gross debt was cut by £7m from £50m to £43m, almost entirely £42m owed to the Allams, which means that this has fallen by £58m in last 3 years from a high of £101m. In that period, the club has repaid £35m to the owners (including £8m last season) and £23m to the bank. It could be argued that the money from the player sales has essentially been used to reduce the owners' debt.
Although debt is high in the Championship, most of it is provided by owners who charge little or no interest. However, Hull City are an exception to the rule, as their £1.7m interest (at a reported 4%) was the highest in the division, though down from £2.4m the previous year.
Since the Allams bought the club they have put in £57m (net of loan repayments), while £23m has come from asset sales and £7m from operations. Most £37m has gone on net player purchases, then £24m interest, £16m bank loan repayments and £6m tax. Only £4m invested in infrastructure. In the last decade the Swiss Ramble estimates that the Allams have received £36m from the club: £22m interest on their loans plus £14m dividends and £2m directors fees.
The Allam family has been looking to sell Hull City since 2014. They have made it clear that they want to recoup the money they have invested, so would need at least £42m, i.e. the current level of debt.
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