Hull City v Sunderland: Troubled Tigers see debts soar to £35m

ON a weekend when Hull City could be all but relegated from the Premier League, the dire state of the club's finances can be revealed with the debt understood to have soared to around £35m.

The Tigers are counting the cost of two years among the elite despite turnover rocketing from 15m to 52m during that time.

Wages are the cause of the club's bleak balance sheet with this season's bill expected to be 38.9m, almost 80 per cent of Hull's total income.

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Such a high ratio is, clearly, unsustainable with the upshot being Hull's debt levels rising markedly every week.

And with relegation now looming, the board are desperately trying to find a solution to the club's mounting problems.

Neither chairman Adam Pearson nor owner Russell Bartlett, who has never given an in-depth interview since taking charge at the KC Stadium in 2007, were available for comment last night.

But possible options open to the directors include administration, though this would surely be the last resort as control of the club would then pass to insolvency experts.

An alternative would be to take Hull into a Company Voluntary Arrangement (CVA), whereby creditors would be asked to accept a proportion of what they are owed.

The amount could vary with all football debts – wages, transfer payments and so on – having to be paid in full.

Any money due to the taxman, who is not believed to be owed a huge sum by Hull, may also have to be settled in full due to the Inland Revenue having got tough with football clubs since losing their protected status in the list of creditors several years ago.

Other creditors, though, may be willing to accept a lower percentage in the pound to ensure a higher return than would be the case if the club was forced into administration.

Adopting a CVA would allow Hull more time to pay off the debts, while also protecting the club from creditors. Crucially, it would also allow Pearson and Bartlett to retain control.

The Tigers, even if relegated, can look forward to 32m in parachute payments from the Premier League over the next two years.

Such a sum could prove to be a lifeline, though the Yorkshire Post understands that Hull have already borrowed around 10m from the banks to meet month-to-month running costs. It is believed the promise of the first payment of 16m, which is due this summer, was used as a guarantee.

Reports yesterday did suggest the Premier League had already forwarded the money to Hull but, due to relegation not having yet been confirmed, this would have contravened top-flight rules.

Hull's finances have been a major concern since previous chairman Paul Duffen left the KC Stadium last October in the wake of a damning report from the club's auditors.

The report into the 2007-08 accounts questioned Hull's "ability to continue as a going concern" without the introduction of significant funds.

Deloitte's analysis of the 2008-09 figures painted an even bleaker picture, claiming the club faced a 21m shortfall if relegated and 16m if they stayed up.

At the time, chairman Pearson labelled the figures "inaccurate" and denied demotion would trigger a financial collapse similar to those at Leeds United and Bradford City.

He did, however, concede that getting Hull back running along the right lines "would not be pleasant" with the slashing of the wage bill a necessity.

The problem for Hull should the worst happen today and they lose to Sunderland as West Ham beat Wigan would be finding clubs for players on such high wages.

And with the contracts of high-earners such as Jimmy Bullard, on a reputed 45,000 per week, and Seyi Olofinjana not believed to contain any relegation clauses whereby their wages would be reduced in the Championship, moving on the big-earners may prove very difficult.

On the pitch, Iain Dowie accepts today's meeting with the Black Cats at the KC Stadium is a "must win" game – though refutes it could also be the day Hull are effectively sent back to the Championship.

He said: "No, I see it as the day this club puts itself back in the shake-up.

"Losing to Aston Villa (in midweek) was a blow, but it was our best passing performance at home all season. We are getting a reaction, that is for sure. These players aren't folding and they are giving everything."

Hull City v Sunderland

Team news: Jan Vennegoor of Hesselink could be out for the season after being knocked out in City's midweek defeat to Aston Villa, meaning a possible recall for Jozy Altidore. Iain Dowie also has to decide whether to abandon the formation with a lone frontman that has been used in the past two games.

Last six games: Hull City LWLLDL, Sunderland WDLWLW.

Referee: P Walton (Northamptonshire).

Last time: Hull City 1 Sunderland 4; December 20, 2008; Premier League.

SkyBet odds: Hull to win 5-4; Sunderland to win 11-5; Draw 12-5.