Accountants warn Hull City over club finances
Hull City's accountants have warned that the club will need to raise £23 million in order to balance the books should they suffer relegation from the top flight this season.
A report from accounts Deloitte, which was filed five months late, largely addresses the club's finances from their promotion campaign in 2007-08 but also advises the Tigers as to how to manage their financial situation in the months ahead.
Deloitte believes that Hull will need to raise £16 million if they recover from a disappointing start to the season, but that figure will increase should their two-season stay in the top flight come to an end next summer.
In the accounts for the year ending July 2008, Deloitte detail how the club made a loss in excess of £9 million during the season in which they won promotion to the Premier League. The firm has also warned Hull that their "ability to continue as a going concern" could be at risk.
"These forecasts demonstrate that in order to operate within the company's finance facilities Hull City AFC will need to generate a surplus £23 million during the next 12 months through player trading, match day and commercial income and/or through additional finance raising," the report said.
"In the event that the club retains Premier League status for the 2010-11 season, the additional funding required for the 12-month period will be in the region of £16 million. This is reduced as a result of the guaranteed level of Premier League distributions that will be received.
"As is common with all football clubs, Hull City AFC will make player purchases and sales during the course of the season to manage the company's cash flow as and when required. The directors acknowledge that player purchases and sales are uncertain in terms of timing and quantum and some uncertainty exists over the availability and quantum of additional facilities should such be required.
"These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern."
Hull, though, remain confident once the additional revenue from their first Premier League campaign is factored in - worth an estimated minimum of some £40 million - then the results for 2008-09 will be more positive.
The directors' statement concluded: "The financial benefits arising from the Premier League's broadcasting rights are not recognised until the following financial year, where the losses incurred this year are forecast to be made good.
"The club are currently in advanced discussions with finance providers for the acceleration of known Premier League distributions for amounts of £7 million. These discussions are expected to be concluded in the near future and would reduce the surplus finds required by £7 million. The directors have a reasonable expectation that the company have adequate resources to continue in operational existence for the foreseeable future.''