KC Stadium contract blunder?

15 October 2013 08:34
A few weeks ago I read an article in the Hull Daily mail concerning an incident in West Park next to the KC Stadium.

As I read the article, one part of a sentence stood out which got me wondering about what the KC actually means to the people of Hull. The KC was completed in 2002 after a 14 month construction period and was advertised as an events stadium for the city, giving home to both Hull City Football Club and some rugby league team or other. I would suggest that the KC (as it’s commonly known) has more ownership with Hull City than any other event that takes place there.

The sentence that drew me to that conclusion was the Hull Daily Mail text “Hull City football club’s stadium.” Even the City’s official newspaper refers to the KC as Hull City’s ground first and foremost.

The £44M multi purpose facility is owned by the Hull City Council. I remember back in the 90’s a debate that asked the ratepayers of Hull to vote on either building this entertainments stadium or to have a 10 year rate freeze. It was the consensus that the City needed a modern arena to lift its profile and so here we are.

Hull City Council financed the build by selling a percentage of its holdings in Kingston Communications and let’s not forget at this point, for “Hull City Council Money”…read… “Hull rate payer’s money earmarked for re-investment into or on behalf of the city / community and its well being”

It appears to me that HCC had other plans regarding the responsibility to run it on behalf of the city and it also appears that those plans have gone terribly wrong which sees the rate payers of Hull, potentially millions of pounds out of pocket but ownership of blame seems authorless.

Whether the idea to divert its interest away from the responsibility of running the KC was a pre determined business plan or whether it was pressure from central government to cut public spending is not quite clear on the face of it so why did Hull City Council offload “the people’s asset”?

During the construction period, Adam Pearson, then owner of Hull City, formed the SMC (Stadium Management Company) and took on a 50 year lease of the stadium. Now for the remaining text,  here’s where I must mention a “Bloke down the pub sez” style bit of gossip, only this comes from a councillor who shall remain nameless…I heard, and I don’t know how true it is, that, the SMC agreed a peppercorn rent of £1 per week, payable to HCC.

A bit of shrewdity by HCC. As owners of the Stadium, paying rates to itself would be pointless. Manning the stadium not to mention the massive admin staff it would need to organise and operate events would be hugely costly so the best thing is…Give the problems to someone else. By agreeing a peppercorn rent, all the costs and operating issues are then passed, in this case to the SMC. The contract is in two parts and the part that interested the council was that they took a share of the profits from Hull City AFC games. I don’t know the exact percentages but whatever the return, it would have gone back into the local public purse (presumably.)

It is rumoured that to date, HCC have received no more than a total of £15K from the SMC as the contract had a few basic flaws in it not withstanding  that SMC made a net loss in its first year which seemed a blueprint of future issues between the 2 parties in SMC favour.

The complexities get interesting. The Allams now own the SMC which is an entirely different company from his newly administered “Hull City Tigers” and in effect Hull City rent the ground off the SMC who are the KC’s Tennants, who in turn are also collecting rents and fees for businesses and events held within the KC’s office spaces and function rooms etc etc. It would not be inconceivable for “Hull City Tigers” (Who Allam works for) to contra-charge  “SMC” for business consultancy for instance, thus emptying “SMC” business account once a year, hence showing zero profit.

The SMC can run at a loss as long as it wants ensuring it never makes a profit to share with HCC. If the Allam’s “SMC” charge its other company “Hull City Tigers” £1 per game stadium rent then he’s quite entitled to do that.

So who benefits from all the revenue raised on the back of Hull City AFC and the rugby team? The stand sponsorships as an example. Cranswick Ltd and Ideal Standard, MKM and Smith & Nephew. Who did they make their cheques out to, Hull City Tigers, HCC or the SMC?

In my opinion, HCC started out with good intentions building a new home for Hull City when they condemned Boothferry Park but have bailed out leaving Hull City without a secure residence they can call their own and the “Big Brother” company SMC is possibly being used as a loss leading patsy to boost Hull City’s coffers and keep proceeds from the HCC. Great for the Club but have the City’s rate payers been scammed by a poor flawed contract that should have seen a long term return of funds which could have gone back into community services?

So how much did the SMC charge Hull City AFC to play at the KC? It could have been a quid, a fiver, it could have been fifty grand a game. Allam has absolute control over whether SMC and Hull City runs on a financial flat line or whether it shows healthy profits but either way, the careful movement of cash within this financial construct has been protected by separating any ties what-so-ever between the name of Hull City AFC and Hull City Council by Allam re-naming the club Hull City Tigers…One more step away from Hull City Council.

One thing for sure is that Assam Allam has absolute financial control over Hull City and the situation is a double edged sword. If he stays loyal to the club he will make bags of money for it. If he gets fed up and pulls the plug, it would bankrupt the club and leave it without even a ground to call its own.

To safeguard Hull City Football Club, Should Hull City Council sell the KC Stadium to the Allams?

Not only will this give the City of Hull a massive cash injection but also ensure we will have footballing security and the Allams will be able to run The stadium as Hull City’s ground instead of a community events arena and more importantly, for him to realise his ambition of extending the ground to 38,000 seats.

We can also have a more fitting name for our progressive footballing club’s ground instead of a weak sounding, none descript “KC Stadium?”

Source: Hull City Mad