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.

West Ham United – now a good proposition

ONE of the most enjoyable aspects of the 2021-22 season has been the form of West Ham United and their positive momentum under manager David Moyes. They are currently in the Champions League slots, but such has been the unpredictable nature of West Ham’s history that nobody is getting too carried away about the immediate prospects of the east London club. The Hammers, despite their colourful history, have a relatively empty trophy cabinet – three FA Cups (1964, 1975 and 1980) and a European Cup-Winners’ Cup triumph in 1965. It has been over 40 years since their last success.

When the club moved to the former Olympic stadium, there were mixed feelings. It was easy to agree with the club’s grandees that the relocation could prove to be the catalyst for success, but many of their fans didn’t necessarily agree. They liked the homely, outdated and very urban Boleyn Ground, a football ground that had a certain kind of atmosphere and ticked all the boxes in terms of the image of the traditional stadium. But the Boleyn Ground was limited and would never have allowed the club to become the sort of modern institution that some of their London rivals had evolved into.

Naturally, change wasn’t accepted by everyone, especially legacy fans that felt comfortable among the intimate, back streets around Upton Park. From day one, the audience was split, but West Ham also had around 25,000 extra fans watching them, many of whom were new generation supporters. There’s no doubt the stadium was not the ideal venue, but it would surely gradually become more like home for the club’s fans, would it not?

While the fans were less than happy with the club’s owners for disposing of the family treasure, the Sullivan-Gold regime, in 2020-21, West Ham seemed to find some stability and their final placing of sixth was their best top flight finish since 1998-99, thus qualifying for the UEFA Europa League, their ninth European campaign.

The ability to draw almost 60,000 to the London stadium and the club’s proximity now to central London and the City of London, makes West Ham a much more attractive club to investors and businesses than they were a decade ago. The pandemic has hit West Ham worse than some of their peers. In 2019-20, their turnover, at £ 140 million, was 27% down and their net loss more than. Doubled to £ 65.3 million. The club curbed expenses by more than £ 3 million, including a 6% cut in wages. 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. 

David Sullivan and David Gold have been looking for fresh investment in the club and they may have found it in the form of Czech billionaire Daniel Kretinsky. He’s a dispassionate businessman who has stakes in Sparta Prague, French newspaper Le Monde and Sainsbury. His hard-nosed approach has earned him the nickname of the “Czech Sphinx”. 

There’s talk of Kretinsky paying £ 150 million for a 27% stake in West Ham, a deal that would effectively value the club at between £ 600 and £ 700 million. Sullivan and Gold have already rejected would-be buyers, notably the private equity firm PAI Capital. Whether a partial sale would herald the start of the current board exiting remains to be seen, but this may not come until 2023, the expiry of the clause demanding any profit from selling a stake in the club has to be shared with the London Legacy Development Corporation.

Should the sale of 27% take place, it will introduce a fresh dynamic to the ownership of West Ham. Sullivan and Gold own 51.5% and 35% respectively, with Tripp Smith, a director of Blackstone, owning 10%. 

On the pitch, West Ham moved into the bracket that is now confronting the so-called “big six”, although both Arsenal and Tottenham are now clinging on to the shirt-tails of the Manchester clubs, Chelsea and Liverpool. West Ham and Leicester are the challenger clubs and are enjoying European football this season, while Tottenham have had to settle for Conference League football and Arsenal are completely out of the picture.

West Ham have the potential to be a regular European contender and can also leverage their position in London to grow their financial platform. Any club with almost 60,000 people coming through the gate on a regular basis has to have a chance. The future could be very bright in Stratford.

The roller-coaster ride of Fulham

WHEN Fulham kick-off the 2021-22 season against Middlesbrough on August 8 at Craven Cottage, it will herald the start of their fifth consecutive campaign of changing divisions. Promoted twice, in 2018 and 2020, Fulham have also suffered two relegations, in 2019 and 2021, and undoubtedly, they will be among the favourites for promotion from the Championship in 2022. Life is rarely dull in Stevenage Road, London SW6.

Fulham have recently published their 2019-20 financial statements (why does it take so long for football clubs to reveal their finances?) and although the they were successful on the pitch, they posted a pre-tax loss of £ 49 million. This should come as no great surprise as the club saw its revenues drop by 58% in 2019-20 to £ 58 million, once more underlining the imbalance between the Premier League and the English Football Club  – in 2018-19 they generated £ 137.7 million. 

Fulham may have offloaded some of their bigger earners after relegation in 2019, reducing their wages from £ 92.6 million to £ 72.6 million, but the wage-to-income ratio almost doubled in 2020 from 67.2% to an intimidating 125.2%.

The club’s bottom line was improved by a £ 25 million profit from player trading, a tenfold increase on 2018-19. Their last notable sale was Ryan Sessegnon who moved to Tottenham for around £ 25 million in August 2019.

Fortunately, Fulham have a generous, and it would seem, patient owner who has funded the club’s ambitious plans, including something of a spending spree when promotion to the Premier was achieved in 2018. Fulham spent over £ 100 million in 2018-19, the third highest outlay in English football that season, but the data-driven acquisition of mostly little-known but potential-rich players didn’t yield the envisaged success – Fulham went through three managers and were relegated after looking naïve and lacking in experience. The club is still paying for that summer of high enthusiasm and even higher hopes.

A more cautious approach in 2019-20 saw them win promotion again via the play-offs. Shahid Khan, the owner since 2013, injected £ 78 million of cash into the club in 2020, which has been converted into equity. Without Khan’s backing, Fulham’s finances would look a little scary.

But they still need to have more than one eye on Financial Fair Play. Their loss limit for 2019-20 was £ 61 million, so they were heading ominously towards that figure. However, the rules have been loosened a little around FFP due to the pandemic and will treat 2019-20 and 2020-21 as a single season and work on an average loss over the two. 

As well as relegation in 2019, the 2019-20 season was hampered by the pandemic, which meant matchday income dropped by 48% to £ 5.6 million and broadcasting revenues were 60% lower at £43.7 million. Even commercial income, which has held up well at many clubs, dropped by 52% to £ 8.5 million. Overall, Fulham’s revenues were the highest in the Championship, although Leeds, West Bromwich Albion, Huddersfield, Swansea and Stoke were not far behind. Fulham’s matchday income should increase in the near future as the redevelopment of the Riverside stand nears completion, a project that will add more than 4,000 to the capacity of the popular and iconic Craven Cottage.

But Fulham’s swift return at the end of 2019-20 should come as no great shock given their wage bill, which was the second highest in the Championship after Leeds United, who were also promoted. There are also parachute payments to consider, Fulham received £ 42 million and were one of seven clubs benefitting from post-relegation compensation.

Fulham’s status at the moment is a club with strong ownership that just cannot consolidate in the top flight. Their financial strength gives them an advantage over many clubs, but after securing promotion, they come up against opponents with greater resources and more savvy. 

Stability is needed for Fulham to look beyond one-season stays in the Premier League, which includes both income and team management, as well as a pragmatic mindset. Just a few seasons among the elite, as opposed to the current game of snakes and ladders, would make such a difference to one of English football’s most popular institutions, both on and off the pitch.

@GameofthePeople