Hull attempt to address cost of the drop
Hull City's financial crisis is to be discussed by a further series of board meetings this week after the chairman and directors convened on Monday to address the implications of City's impending relegation from the Premier League.
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Hull are £35 million in debt and there have been reports the Tigers could be forced to go into administration. An alternative could be to seek to enter a Company Voluntary Arrangement but, like administration, that could incur a 10-point penalty next season. Reports of a precarious financial position have been filtering through all season after the departure of former chairman Paul Duffen and a major restructure and a firesale of players seem certain.
Chairman Adam Pearson, who returned to the club in November suggested at the weekend a CVA might be the preferred route, as it would at least allow the club to retain control, but owner Russell Bartlett this morning offered a more positive assessment to the Hull Daily Mail.
"We face a tough period to trade through the transitional period and readjust the business to life in the Championship, but I am confident we can do that," he said. "We are presently preparing plans to trade through and within that process is to significantly lower the wage bill and potentially to restructure other liabilities."
Hull's debts spiralled out of control in achieving and then following their promotion to the top flight for the first time in their history in 2008.
Pearson, who returned to the club for a second spell as chairman in November, last week made some forthright remarks about the financial recklessness of Duffen's tenure. Duffen resigned in October following a damaging report from auditors which questioned the club's ability to continue as a going concern.
Pearson tried with little success to offload a number of fringe players in the January transfer window and reducing a crippling wage bill of a reported £39million will now be top priority. Reports last week suggested that Hull had borrowed £10 million from an unnamed bank against an expected Premier League parachute payment.
But Bartlett added: "A significant number of the player contracts contain step-down clauses in the event of relegation, coupled with five players coming out of contract or loan players returning to their clubs, which will help reduce the wage bill for playing staff to about £21million."
Those remarks contradicted a common belief that there were no relegation clauses in player contracts but, nevertheless, Hull are likely to have to part company with their star players.
Stephen Hunt - for whom the club reportedly rejected bids in January - is likely to be in the shop window along with the likes of Jimmy Bullard, Geovanni, Anthony Gardner, Kamil Zayatte and Jan Vennegoor of Hesselink.
Bartlett added: "We must now get down to concentrating on reducing the wage bill to about £15million in the Championship to establish financial viability and stability.
"Subject to this, I anticipate we will be very competitive next season."
The situation is a far cry from last summer when Duffen and ex-manager Phil Brown spoke openly of their attempts to sign the likes of Michael Owen, Alvaro Negredo and Bobby Zamora.
Pearson has raised the possibility of reinstating Brown as manager. Brown was relieved of his duties last month and replaced by Iain Dowie, but remains on gardening leave.
With Dowie only on a short-term deal, and because of Brown's status granted the title of Football Management Consultant it could be the cheapest option.