Since my last piece on West Ham’s finances, there have been a number of developments and updates about our club. Arguably one of the biggest saw David Gold and David Sullivan cut the amount of interest they charge on shareholder loans from an average of between six and seven per cent to four per cent.
There is an outstanding balance of £45m of shareholder loans which date back to 2011. A senior source me: ‘At the new rate of four per cent, the shareholders charge the lowest amount they thought HMRC would accept as a commercial rate. They felt, due to drop in base rate that four per cent was acceptable. Our third party overdraft loan is a much higher rate of six and a half per cent plus a 0.5 per cent annual facility fee.’ D
The shareholder loans of £45m plus interest are due to be paid back in January 2020 while the £50m credit facility from Media rights and Funding is due to be paid back at the end of this season. West Ham have drawn down £25m of the credit facility so far attracting the six and a half per cent interest from the time it was received while 0.5 per cent is charged on the full £50m available to them.
Board critics will point to previous statements that the owners said they would never draw a salary from the club and to be fair to them technically they haven’t. The owners would probably say themselves that they could have earned far more in nine years if they had invested their money in property and again they would probably be right about that too.
The truth of the matter is, no bank would lend to us so they stepped in as a bank of last resort. Some people will have a problem with this but personally, I don’t. In other news, I was delighted to see the Icelandics finally breaking all ties with West Ham as CB Holdings sold their remaining 10 per cent shareholding of WH Holdings to an American multi-millionaire called Tripp Smith.
Albert ‘Tripp’ Smith joins the board of West Ham directors to oversee his new investment. He is a senior managing director of The Blackstone Group and a founder of GSO Capital Partners, which he sold to Blackstone in 2008 for about $1bn. But Smith has bought the shares personally as a private investment.
A senior source at the club told me: ‘He just likes football and West Ham. It’s not a financially motivated move for him but driven by his love of football and West Ham. ‘He will help us spread the West Ham brand in the USA. He is not going to buy any more shares, but it’s good news for the club.
‘We are 100 per cent owned now by friends.‘ The amount Trip paid remains confidential but is thought to be significantly higher than Gold and Sullivan paid for their shares in 2010 and it is rumoured to be a package which includes other things beyond the shares. The new shareholder, however, is said to be shy and is said not to want any publicity about his shareholding or directorship and wants to remain low profile at West Ham.
The sale of shares ends an 11-year association with the former Icelandic consortium who were victims of the 2008 financial crisis. Moving on and the last set of accounts show that the Hammers turnover increased by 17.7 per cent to £142.1m and within that figure ticket sales for the last season at the Boleyn Ground rose to an impressive £26.9m.
TV rights income two seasons ago grew to £86.7m for finishing seventh and commercial and sponsorship revenue was up by 31 per cent to £19m while retail and merchandising sales grew by 29 per cent to £9.3m. The Boleyn Ground land was sold last year to developers for £38m with £15m going to pay off all external bank debts that were mortgaged against it and a further £15m going to stadium owners LLDC to contribute towards the £323m transition costs of the former Olympic Stadium.
The remaining £8m was used for the WestHamification of the London Stadium including fitting out the club shop, the seats and the Claret and Blue branding so the Boleyn Ground stadium money has all been spent. In my estimation, West Ham should publish a record turnover of around £197million when the next set of financial accounts are published.
The Hammers earned around £122m from the new £8 billion TV deal after finishing 11th in the Premier League last season. Each Premier League club received £85m but the Irons received £18m for having 15 games televised and a further £19m for finishing in 11th place. On top of the TV money, ticket sales and match day activities at the London Stadium are expected to rise by £12m from the record £27m received from the last season at the Boleyn Ground to £39m at the London Stadium.
Retail shop and commercial sponsorship income are also expected to increase by around 30 per cent from £29m in 2015/2016 to £36m in 2016/2017 after the club megastore size doubled and more commercial sponsorship opportunities have arisen at the new stadium. The sale of the Boleyn Ground Sale for £38m and outbound player sales of James Tomkins to Palace for £10m and Dimitri Payet to Marseille for £25m as considered capital sale of assets and therefore not factored in turnover figures.