Exclusive: Allams' 'gift' to Hull comes at three times original cost

HULL CITY'S new chairman Assem Allam has revealed that the £40m needed to rescue the club from possible extinction this week was more than three times higher than the sum initially quoted when the initial deal was struck five weeks ago.

The Egyptian-born 72-year-old and son Ehab formally completed the buyout of Russell Bartlett's shareholding in the Tigers at 10.45pm on Thursday to end a worrying few months that saw the Championship outfit come within a whisker of going into administration.

As part of the deal, the Allams have agreed to make a 30m cash investment into Hull over the next 12 months and also provide personal guarantees against additional debts of 10m.

The size of the required bailout is such that Hull's head of football operations Adam Pearson admits the takeover "makes no business sense" and that the new owners, who run Melton-based Allam Marine, instead see it as "a gift to the city of Hull".

Speaking to the Yorkshire Post, Assem Allam said: "There were a couple of times during the past few weeks when the deal almost collapsed. Things got very serious and if the deal had not happened then I think Hull City would have gone under.

"There was no quick way of saving the club, to my knowledge. The cash injection and personal guarantees are 40m, which is more than three times what we first expected.

"We appointed Ernst and Young, one of the top firms in the country, (to undertake the due dilligence) and things came out that were completely different to what we had been led to believe – liabilities and things like that.

"A lot of the figures at the beginning were massive wishful thinking. The usual thing when you prepare something to sell is you give the most optimistic picture. That is why you do the due dilligence.

"Things were totally different. That is why there was such a delay (in concluding the sale).

"The club will be debt-free."

The Allams taking control has finally lifted the threat of administration, a fate that the club's new chairman insists would have seriously threatened the future of professional football in Hull.

He added: "It would have been difficult to recover if it had been allowed to go under."

A Heads of Terms agreement was first signed by the Allams and Bartlett on November 10 and the legal process was expected to be concluded by the end of the month.

Instead, the saga dragged on for another 16 days due to the discovery during due dilligence that much more money would be needed to save the Tigers than previously thought.

Under the terms of the original agreement, Bartlett had been set to retain a 20 per cent shareholding in the Tigers.

However, when the sale – which is understood to have been for a token 1 – finally went through it saw the Allams seize full control of the club and the Stadium Management Company.

Allam declined to comment when asked yesterday why he felt there had to be a total severing of the ties with the Essex-based former property investor who bought the club in June 2007 for 12m off Adam Pearson.

The new Tigers chief was, however, more forthcoming on the sale of the club and his plans for the future.

He said: "As a normal business deal, I admit I wouldn't touch it. It is really my present to my locality.

"We have removed all the big debts that carry high interest rates, such as Investec Bank. That was over 11m. There was also about 4.5m (owed) to Barclays Bank and the taxman was paid on Thursday.

"Hopefully, with my business experience we can get the club running on a different basis. We are not going to milk the club.

"A few things that have been done in the past will also not be allowed to happen in the future. Borrowing at high interest rates has crippled the club. There will be no more of this.

"The club, like many in the football industry, have made a habit of discounting future income to take money now. There are several partial payments for the future already discounted. This will not happen again.

"We will run the club on the basis that if we have a certain expense this year then it will be funded by the income from this year. No more getting future money to spend now. It is common sense."

Following the successful takeover, the players who took a 30 per cent wage deferral last summer will be repaid all outstanding monies early in the New Year, believed to total 2m.