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Hull City’s 2018/19 financial results covered a season when they finished 13th in the Championship. Manager Ian Adkins resigned in June, replaced by Grant McCann. The owners, Assem and Ehab Allam, have been looking to sell the club for some time. Some thoughts follow #hcafc
#hcafc 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 #hcafc £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.
The revenue reduction was offset by further cost-cutting at #hcafc 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. Player amortisation rose £0.7m to £13m.
#hcafc 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.
In fact, #hcafc have 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.
Worth noting that stadium management activities, including KCOM lease, is handled by Superstadium Management Company Ltd, another company in the Allamhouse Group, which is run at a loss (£2.1m last year). This needs to be taken into consideration for a fuller picture of #hcafc.
Much of the improvement in #hcafc profits has been due to player sales. Club essentially broke-even on this activity in the 5 years up to 2014, but have since averaged £17m profit a season. Few sales of note in 2018/19, but they do have 15% sell-on clause for Harry Maguire.
#hcafc EBITDA (Earnings Before Interest, Depreciation and Amortisation), which strips out player sales and non-cash items to give underlying profitability, rose from £8m to £14m (including parachute payments, which the club excludes from this metric for some unexplained reason).
In fact, #hcafc EBITDA of £14m would have been the highest in the 2017/18 Championship season, ahead of Norwich City £9m, Middlesbrough £7m and Burton £0.4m. Those were the only four clubs to generate positive EBITDA in the division, emphasising the strength of Hull’s figures.
#hcafc 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. Parachute payments (77% of total revenue) have ended, so 2019/20 revenue likely to slump to around £18m.
Despite the revenue decrease, #hcafc revenue of £48m would still have been the 5th highest in the Championship in 2017/18, but a fair way behind Aston Villa £69m, Sunderland £64m, Middlesbrough £62m and Norwich City £62m. Average for the division around £31m.
#hcafc only received 2 years parachute payments, as they were relegated after just one season in the top flight. This season will drop by over £30m to the £4.6m solidarity payment (unless promoted). This will give a total of £7-8m TV money including £2.3m EFL distribution.
#hcafc match day income fell £1.1m (15%) to £6.1m, which is around £10m (62%) lower than the £16m they generated in the Premier League. This put them around mid-table in the Championship, earning half as much as Aston Villa £12m.
#hcafc 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.
#hcafc 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, though it should be noted that the club’s figures are around 2,700 lower than the Soccerway website which has 12,165.
#hcafc commercial income fell 20% from £2.8m to £2.3m, comprising commercial £1.5m and retail £0.7m. Down from £7.1m in the Premier League. Would have been 2nd lowest in the 2017/18 Championship season, which is poor for a team that’s been in the top flight for 3 of last 6 years.
#hcafc shirt sponsorship with SportPesa has been extended by one year for the 2019/20 season. Umbro has been kit supplier since 2014/15. Club has also announced a three-year deal for back-of-shirt with local business On Line.
#hcafc wage bill decreased £6m (20%) from £31m to £25m, so has been cut by £36m (60%) from £61m following relegation. As former manager Adkins said, “The wages being paid previously in the Premier League can no longer happen. We’ve got to cut our cloth accordingly.”
#hcafc £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.
#hcafc 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%.
#hcafc fans can criticise the club’s owners for a lot, but not directors’ remuneration. As Assem Allam said, “Do you know that Ehab and I, for eight years, have not made £1 in salary, wages or directors’ fees? Absolutely nothing.” In contrast, £2m was trousered at Sunderland.
After many years of growth, #hcafc administrative expenses fell £1.4m (15%) from £9.4m to £7.9m in 2018/19. Indeed, excluding wages, player amortisation and depreciation, Hull’s other expenses dropped by £6m (39%) from £16m to £10m with no explanation.
In contrast, #hcafc player amortisation, the annual charge for writing-off transfer fees over the length of a player’s contract, rose £0.7m (6%) from £12.3m to £13.0m, though this is still only around half of the £23m booked in the Premier League.
Maybe surprisingly, #hcafc £13m player amortisation would still have been the 6th highest in the 2017/18 Championship season, though a fair way behind big-spending Middlesbrough and Aston Villa, both £24m.
#hcafc net transfer spend averaged £22m between 2013 and 2015, but they have had net sales in each of the last 3 years. As Allam said, “Spending more on players is only going to increase our level of investment and the asking price.”
#hcafc 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.
Although debt is high in the Championship, most of it is provided by owners who charge little or no interest. However, #hcafc £2.4m interest payment would have been the second highest in the division in 2017/18, though lower than prior year’s £3.1m.
#hcafc fans will be disappointed to see that the club’s cash balance increased from £3.0m to £9.7m, the third highest in the Championship, as they would presumably rather see that money invested in the squad rather than sitting in the bank account.
#hcafc generated £23m from operations, partly due to £14m fall in debtors (other clubs’ stage payments on transfers), boosted by £3m net player sales. Most used to reduce Allams’ loans by £13m. Also spent £2m on interest and hefty £4m on tax, but almost nothing on infrastructure.
The £4.4m tax payment made by #hcafc is virtually unprecedented in the Championship. Only £800k tax was paid by all clubs in 2016/17, including £0.7m by, you’ve guessed it, Hull. This is because previous years’ tax losses appear to have been utilised in other parts of the group.
Since the Allams bought #hcafc they have put in £65m of funding (via loans and share capital), while £29m has come from operations and £23m from asset sales. Majority of this (£59m) has gone on net player purchases, followed by £23m interest payments and £17m loan repayments.
#hcafc have no FFP concerns, as they are profitable over 3-year monitoring period). As Allam noted with a fair bit of understatement, “We have the biggest amount of head room, in terms of financial fair play – more than any other club in the division.”
The Allam family has been looking to sell #hcafc 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 Allams say that #hcafc “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.
