West Ham suffer first covid crunch – worse to come?

WEST HAM UNITED’s 2019-20 financial accounts reveal the initial impact of the pandemic in 2020, but offer little comfort for the current season, which could be even more of a concern for the club. 

The Hammers’ turnover, at £ 140 million, was 27% down and the club’s net loss more than doubled to £ 65.3 million. West Ham’s operating loss for the season was £ 85 million (a rise of 132%) as broadcasting revenues declined by 35% to £ 83 million and matchday income fell by 17% to £ 23 million. Commercial cash also dropped by 5% to £ 34 million, hampered by a warehouse shut-down.

The club curbed expenses by more than £ 3 million, including a 6% cut in wages and pay deferrals from club executives and manager David Moyes. Despite this, West Ham’s wage-to-income ratio was an alarming 91%, some 20 percentage points up on 2018-19 and the highest in the Premier League. However, bearing in mind the damage caused by the pandemic, the ratio would have been 73% in normal circumstances. 

The bottom line was helped by a £ 24.9 million profit on players disposals, almost double the 2018-19 figure. In 2019-20, West Ham spent around £ 88 million on new players, including Pablo Fornals (Villareal), Sébastien Haller (Eintracht Frankfurt) and Jarrod Bowen (Hull City). At the same time, they recouped £ 53.4 million from player sales, the highest figure being received from China’s Shanghai SIPG for striker Marko Arnautović (£ 23 million).

West Ham find themselves in a relatively good place in terms of on-pitch performance. They have the chance to record their best-ever Premier League season, equalling or exceeding the 1998-99 campaign when they finished fifth. West Ham’s usual position in the Premier has fluctuated from around ninth to 15th or below.

This would be quite ironic given the 2020-21 season could also be one of their worst financial performances. Without any matchday income, the club could generate an even bigger loss than 2019-20. In 2018-19, for example, their matchday income was £ 27 million. If they manage to qualify for the UEFA Champions League – which may be a little beyond them – West Ham could benefit from a cash windfall in 2021-22.

On a positive note, West Ham’s owners – who describe the current environment “unique and unprecedented” – have demonstrated their commitment to the club in injecting a further £ 30 million in the form of a right issue (July 2020). West Ham have also agreed a five-year loan with financiers MSD Holdings which could eventually run to £ 120 million. These measures obviously anticipate the uncertain landscape and are aimed at securing the long-term financial stability of the club.

West Ham’s gross debt has risen from £ 78 million to £ 120 million, but their cash levels are low – only £ 15 million. Net debt is therefore £ 105 million, 59% higher than 2018-19. Just two years earlier, West Ham had double that amount in the bank. Of their £ 120 million debt, £ 66 million is in the form of bank loans and £ 54 million is shareholder debt of which £ 44 million are unsecured loans owed to David Gold and David Sullivan. Interest accrued at financial year-end due to Gold and Sullivan totalled £ 1.8 million, but both parties deferred the payment.

The club calculated that covid-19 cost them £ 40.2 million, with the deferral of broadcasting fees accounting for £ 25.7 million. 

It seems unlikely that fans will return to the stadiums in force before 2021-22, but when they do, West Ham have a 60,000-plus capacity which should equip them well to navigate the tricky period that will undoubtedly follow the crisis. Even if the go-ahead came tomorrow, West Ham would have only five home games remaining at the London Stadium in 2020-21. 

On the face of it, West Ham’s figures make depressing reading, but it does look as though the club is preparing for the volatility that awaits football in the latter part of 2021. They are not alone, this scenario will undoubtedly be replicated across English football.


Photo: PA Images

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