Hammers cut their losses and manage the pandemic in 2020-21

WEST HAM United certainly missed their fans in 2020-21 as they played almost the entire season’s home games in a near-deserted London Stadium. West Ham’s income from matchday slumped by 98% to a mere half a million pounds. Aside from that expected drama, they still managed to record a rise in revenues, a 38% increase to £ 192.7 million and also reduced their pre-tax losses by 59% to £ 26.9 million.

On the field of play, the 2020-21 campaign was a satisfying one for West Ham, a final placing of sixth and qualification for the UEFA Europa League. The momentum under David Moyes has more or less continued into 2021-22.

West Ham’s revenues are close to breaking the £ 200 million mark which would be a landmark in itself, but also underlines how far away they still are from the elite half dozen in the Premier. In normal times, the Hammers could reasonably anticipate matchday income heading north towards £ 30 million and commercial activity rising above £ 35 million. However, these revenues streams both fell in 2020-21, predictably compromised by the pandemic.

The salvation for West Ham’s financial performance was broadcasting, which increased by 97% to £ 163.1 million and reached a record high in the process. The return of European football should boost the club’s earnings from TV/Media significantly, especially if they remain in the top six of the Premier League.

But the current climate appears to have limited West Ham’s transfer market activity. After two seasons of spending over £ 100 million, their expenditure dropped by 50% to £ 54 million but at the same time, they received £ 57 million from sales. Their net balance was a positive £ 3 million, the first time in a decade that they have not been net spenders. Their biggest signing of the season was Brentford’s Saïd Benrahma, who cost £ 25 million (plus add-ons) when he made his loan period permanent in January 2021. Other major acquisitions included the impressive Czech duo Tomáš Souček and Vladimír Coufal, who both arrived from Slavia Prague, costing a total of £ 20 million.

Despite the loss for the year, West Ham’s wage bill still increased by 1.6% to £ 129.4 million. The club’s salaries have trebled over the course of the decade, but they now represent 67% of income compared to 91% in 2019-20. According to leading football academic Kieran Maguire, the average wage at West Ham is currently £ 60,149 per week. 

The gross squad cost is calculated to be £259 million by Maguire, while Transfermarkt currently value West Ham’s playing resources at £ 316 million in the market, with England midfielder Declan Rice valued at £ 67.6 million. According to CIES Football Observatory, West Ham have one of the oldest squads in the Premier League with an average age of over 28. Player trading remains important to the Hammers’ business model and in 2020-21, they made a profit on sales of £ 17.6 million, around 29% lower than the previous season.

West Ham have made a number of strategic moves to counter the economic impact of covid-19. As well as the agreement of players and officials to defer wages, the club launched a £ 30 million rights issue in July 2020 and has also taken a £ 120 million term loan facility from MSD Holdings, the financial arm of the Dell family, of which they have so far drawn £ 55 million. Speculation over the interest rate being charged by MSD has been fuelled over the public knowledge that Southampton were paying 9.14% on a loan from the company. West Ham also have overdraft facilities with Barclays. The club’s net debt reduced from £ 105 million in 2019-20 to £ 89.5 million.

With the fans back in the stadium – hopefully, a situation that will continue in the weeks and months ahead – and a prolonged European run, West Ham’s financial situation should improve in 2021-22. They have already made more than £ 20 million from the Europa League group stage, if they continue to focus firmly on the competition, that figure will continue to rise. And with no silverware in more than 40 years, West Ham are certainly due some real success.