West Ham wiped out net debt and are prepared for relegation

The club's latest accounts show things are looking better off the pitch than they are on it

West Ham co-owner David Sullivan at the Arsenal v West Ham United EPL match, at the Emirates Stadium, London, UK on 11th December, 2021.

West Ham have reported a record turnover of £252.7m for last season, up £60m from the previous season. Ticket revenue is up to £41.3m, TV revenue is up to £163.3m, and commercial revenue (including hospitality and sponsorship) is up to £34.7m.

The Hammers also reported a pre-tax profit of £12.3m for the year to 31 May 2022 after five years of posting losses. West Ham’s net debt also fell by a massive £130m leaving it in a robust and healthy financial position with net assets of £40.9m, including cash of £96.5m at the year-end.

West Ham wages are, however, up to £135.7m from £129.4m previous season. West Ham also owed £81m to other clubs at the end of 21/22 for outstanding transfer fees but are withholding £7.8m for Vlassic to a Russian club because of the Ukraine war.

The club borrowed £80m from MSD/Michael Dell with £25m paid back, leaving £55m outstanding on an interest rate of around 9%, which is not due for repayment until 2026 if not repaid early. The West Ham transfer of player registrations completed subsequent to 31 May 2022 amounts to a net £155m (inclusive of player-related agent fees), with a further net £18m based on add-ons.

The West Ham financial accounts reveal that Daniel Kretinsky paid £125m for 20% of West Ham shares in a new rights issue last year, then paid another £43.75m for a further 7% from other directors. His combined Investment of £168.75m values West Ham at £625m, and Kretinsky has the option to buy more shares at that set price, I understand.

Of the £168.75m invested, £105.2m was paid out to directors or for the benefit of directors, leaving £63.55m invested back into the club. West Ham owners David Sullivan and David Gold’s long-term shareholder loans of £53.5m and £4.6m (total of £58.1m) were paid back to them. The total interest earned over the past 11 years paid to Gold and Sullivan totalled £23.3m.

Shareholder Tripp Smith was also repaid his £9.5m interest-free loan as a condition of his loan when there was any change of ownership. Directors sold shares worth £34.1m to Kretinsky of which they received the money directly.

The club paid a London Stadium windfall tax of £2.5m on behalf of directors relating to shares sold before March 2023. West Ham paid a total of £8m in interest on loans last season, which is £1m lower than the £9m they spent the previous year.

West Ham vice-chairman Karren Brady was paid a £1m bonus as a finders fee for introducing Daniel Kretinsky to make his investment. She was paid £2.24m in total for last season, including a salary of £1.24m. West Ham company accounts reveal that the Hammers paid £3.6m in rent last season for the London Stadium, up from £2.8m the previous season.

Initially, West Ham agreed on a deal for £2.5m per year in rent, but that figure was index-linked, and various add-ons have been made as capacity has increased and the club have received more sponsorship rights. The concessionaire agreement signed in 2013 includes 25 competitive games per season, after which West Ham must pay on a game-by-game basis.

In addition to the 19 home games, West Ham played eight Europa League games, two domestic cup games at home, taking them over their allowance by three games. With the rate of inflation hitting 11% at the end of last year, we could see another bumper rise in the rent this season, pushing the Hammers rent to over £4m.

The rent does not cover the cost of stewarding and police, with stadium owners E20 claiming it costs between £200,000 to £300,000 per match. Last month London Assembly members asked the London Legacy Development Corporation to write to West Ham to pay more of the running costs of the stadium.

West Ham have also made provision for relegation in their statutory financial accounts published at companies house last week. Now it is pretty normal to prepare for the worst in these kinds of company accounts so we shouldn’t be too alarmed at these statements in general.

The club has wiped its net debt, reduced its borrowing, and made a profit for the first time in five years, so we are in an excellent financial position to weather relegation if the worst-case scenario occurs.

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