How will the move to the OS affect club revenues?

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gavrosh
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How will the move to the OS affect club revenues?

Post by gavrosh »

This is perhaps the most fundamental question about the move, but there has been little attempt to quantify it - most likely because the details are so vague. What the consensus appears to have settled on is that the club will pay £2.5 million a year in rent, which rises with inflation, and that share of matchday non-ticket sales and stadium sponsorship will take the LLDC's gross revenue to £10 million per annum. There are two sources for that, one a Charles Sale piece in the Mail in late 2012, and a quote from Brady at the Lords Select Committee hearing, where she said that the deal would pay for the stadium twice over (99*10 = £990 million > £500 million).

I'll get onto the ticketing side of thing in a minute. For comparison, though, here are the 2012/13 revenue numbers for the top Premier League clubs:

----------------Matchday------TV------Commercial-------Turnover
Arsenal------------93----------86-----------62------------------283
Villa-----------------13----------46-----------16------------------84
Chelsea-----------71----------105----------84-----------------260
Everton------------20-----------56----------11------------------86
Liverpool----------45-----------64----------98------------------206
Man C--------------40----------88-----------143----------------271
Man U-------------109---------102---------153-----------------363
Spuds--------------33-----------57-----------57------------------147
WHU---------------18-----------52------------20-----------------91

This is Deloitte's Football Rich list for 2014:

Image

So, given what we know - or perhaps rather, what we think we know, how will the move affect revenues over the long term? What follows is a couple of posts lifted from the picture thread on this.
Last edited by gavrosh on Fri Feb 13, 2015 1:51 pm, edited 1 time in total.
gavrosh
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

Just going through these numbers again (I appreciate that these figures are hearsay)....

16 boxes, average cost £100,000 pa each = £1.6 mil
1000 Boleyn places cost £2016 each = £2.16 mil
30 places at BM6 lounge, something silly like £30,000 each = £900,000

remainder approx 6800 Club London cost £4000 each = £27 mil.

Total = £31.86 mil.

Then add 46000 seats at an average seat price of say £25 (what it was in 2013/14, though one of the clubs main aims must be to increase this per seat revenue over time): £25.3 mil.

Total = £57.16 mil.

Plus whatever share of non-ticket matchday sales are due to us....

Total = £65 million? Versus £18 million last year.

Add long term potential for increasing kit deal and shirt sponsorship levels to those similar to Spuds now = £26 mil vs £7 mil last year.

Total = approx £91 mil vs £25 mil last year.

With the new premier league TV rights, that comfortably takes club income to around £190-200 million, which on the 2014 Forbes list push West Ham up to about 10-12th in Europe, and that's without the extra commercial revenues that come with more success, such as European competition revenues and merchandising.

I appreciate that this is all very assumptive and people will see holes in it, but they do back up Barry Hearn's quote that West Ham will become one of the biggest clubs in Europe on the back of the Olympic Stadium move.
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

Doc H Ball wrote:There's not that many in Club London.

Looks like the lounges range from 4k a ticket in Club London through to 2.5k in the Boleyn with all the others inbetween.

Prob more accurate to say up to 8,000 loungers/corporate at a median price of 3k - 25m ish - which is not far off your estimate.

You can deduct catering profit (something measly like 2m at the BG), rent of 2.5m and whatever naming rights they presently have - maybe 6m total?

You can then add whatever share of the naming rights we are said to have although I was told this was zero.

Overall turnover up from circa 25m to 70m more realistically I think.

Of course, I still think this is all built on sand. The numbers rely on regular top 6 football, which I think we've achieved twice in 120 years....

Maybe someone should start a revenue thread?
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Re: How will the move to the OS affect club revenues?

Post by Georgee Paris »

I reckon we will jump above Tottenham until they have their new stadium sorted. Then we will yoyo each other until everyone realises Tottenham are still in Tottenham and its still a hole and then we will gradually but surely leave them and Arsenal and Chelsea in our shadow as we become the major player in London.
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Re: How will the move to the OS affect club revenues?

Post by mdennis »

gavrosh wrote:]
----------------Matchday------TV------Commercial-------Turnover
Arsenal------------93----------86-----------62------------------283
Villa-----------------13----------46-----------16------------------84
Chelsea-----------71----------105----------84-----------------260
Everton------------20-----------56----------11------------------86
Liverpool----------45-----------64----------98------------------206
Man C--------------40----------88-----------143----------------271
Man U-------------109---------102---------153-----------------363
Spuds--------------33-----------57-----------57------------------147
WHU---------------18-----------52------------20-----------------91
Nice idea for a thread Gavrosh and it'll be interesting to keep coming back to this over the coming months when prices for certain areas are confirmed.

Out of curiosity, where did you get the above figures from? Especially the matchday figures. I'm intrigued to understand how Tottenham can be so far ahead of us when we have similar sized stadiums. Do they have a larger number of corporates than us? I appreciate Chelsea are further ahead but would imagine their corporates are charged the earth?
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

The numbers are from the published 2012/13 accounts of all Premier League clubs and were put together in this article

http://www.theguardian.com/football/201 ... david-conn

The Deloitte numbers are I think their guesstimates for 2013/14, hence the difference between the two tables.

Spuds have a much better corporate offering and of course didnt have to discount so many games as we did in the first season back in the Prem.
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Re: How will the move to the OS affect club revenues?

Post by the pink palermo »

gavrosh wrote:This is perhaps the most fundamental question about the move, but there has been little attempt to quantify it .
Not true .

I specifically asked Baroness , or just plain Karren as she was then, Brady this question at the first meeting of the SAB when the OS was being discussed .

I asked how much additional revenue would be generated as a result of the move and how much would flow into the managers budget .

Her response was "we have those numbers but we can't share them" .

Fair enough, commercial confidential stuff and all that .

The revenue growth will be from Corporate packages - effectively upping the match day income .

That's it .

The rest is about success on the pitch - sponsors want to be associated with success / exposure .
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

the pink palermo wrote:The revenue growth will be from Corporate packages - effectively upping the match day income .

That's it .
Fair enough Pinky but if the match day revenues increase by the magnitude that we are looking at - a potential rise of about 200% - then this should have a knock on effect in terms of success on the pitch because of greater investment in the squad which leads to the football club being more desirable from a sponsorship perspective and all other sorts of commercial potentials. These things are all positively correlated.
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Re: How will the move to the OS affect club revenues?

Post by the pink palermo »

Gavrosh my question was very specific .

It was the second part of my question that mattered .
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

OK so I take it you concur that we will see a pretty massive rise in match day revenues but that this will not go into the team and instead will go into Gold and Sullivan's pockets? It's a fair enough belief but it's not been backed up by the evidence we have. West Ham has been in the top six of Premier League net spend for some time now. For me, it's this, not Allardyce's 'sophisticated' management, that has led to the improvement of the club's fortunes. I don't see why that would suddenly change in the new stadium.
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

Looks like someone's been reading this thread

Why West Ham, Not Tottenham, Are Poised to Be London's Next Superpower

"the advantageous nature of the deal cannot be disputed. Upgrading their stadium by 20,000 at virtually no cost, West Ham have negotiated a move that should almost instantly elevate their financial muscle toward the biggest in the league"

Image

http://bleacherreport.com/articles/2339 ... superpower
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Re: How will the move to the OS affect club revenues?

Post by Mr Mont »

It'a long read, but well worth it. A balanced and fair assessment of what could be ahead in my view. There is a natural pessimism that is part of the baggage of following our beloved hammers, however this move will catapult us into new territory. It is going to have to be well managed for us to maximise potential, but I think our current owners can deliver on this front.

As the article pointed out:

'A new stadium, however, can change a club’s entire economic and sporting outlook in a stroke. West Ham have been presented one on a plate—and it could be their key to becoming a domestic and European force to be seriously reckoned with.'
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Re: How will the move to the OS affect club revenues?

Post by Doc H Ball »

Interesting that Arsenal have complained about our deal.

It seems that there will soon be disclosure of the finances and then, maybe, legal action depending on how the numbers stack up.

We will have to pay for this incredibly expensive stadium one way or another. Will that make us a more or less attractive proposition?
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Re: How will the move to the OS affect club revenues?

Post by spyinthesky »

Not totally true that sponsorship/income values will be solely reliant upon the performance of the club on the pitch. There is an as yet indefinable amount that will be reliant upon association with an iconic high profile stadium that will promote any brand beyond the performance of the football club ensconced there and indeed football at all but which that club can to a degree take advantage of. Only time will tell how big an influence this will be but as we have already been able to up our shirt sponsorship as compared to what we would have got had we not been moving there in 18 months shows that there is indeed an influence and potential for exploitation.

People and organisations that become involved in one aspect of the stadium 'brand' will gain advantage and exposure through all aspects of that brand to the potential benefit of all and the expanded profile will affect everything including and beyond visitors and corporate involvement. However like the incredible change that occurred with the O2 Arena that went from white elephant for years to one of the biggest venues in Europe it is almost impossible to judge prior to the event what impact this will all have, just that the potential exists. Whether the club have negotiated well or at all upon such intangibles will have an influence upon any direct benefit to the club beyond what will happen naturally from 'pick up' through the stadium's exposure and ultimate success as a multi sport/event venue which will create more competition from all and sundry to be associated with it. That effect itself will then be magnified by the teams performance upon the pitch but overall it will be something of a chicken and egg scenario overall of which the club will be but one factor.
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Re: How will the move to the OS affect club revenues?

Post by EvilC »

Doc H Ball wrote:Interesting that Arsenal have complained about our deal.
That is tremendous news - I LOVE giving those c**** one in the eye.
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

The report by the GLA Regeneration Committee provided nothing new in terms of information. The £400 million figure is one that the club came up with, and was mentioned a few months ago when Sullivan said he would welcome a minority investor in the club. The clawback on sale is also something known, but which is like the rest of the deal being kept out of the public sphere due to corporate interests; namely, the interest of the E20 LLP as Vinci, the stadium operator, negotiates with various groups about filling the stadium with events from next year. This was clearly pointed out by the LLDC and Newham at a meeting of the Regeneration Committee on the 26th of November. You can see it on this link, from 54 minutes:

https://www.london.gov.uk/mayor-assembl ... y/webcasts

As for Arsenal, one can imagine they would want to point out that they paid for their stadium. They have done nothing to oppose us so far, and given that objections from Spurs and Orient have since been shot down, I think the case is pretty watertight.
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Re: How will the move to the OS affect club revenues?

Post by Doc H Ball »

We will only know if the case is 'watertight' or not when the finances are disclosed.

One thing for sure is that lawyers for Arsenal, Spurs and others will be analysing them.

The Regeneration report did raise something new - it criticised the secrecy of the deal, urged disclosure and formally raised questions about the adequateness of our contribution.

I said at the time that Sullivan was very foolish to talk about a 400% growth in our value upon moving to the OS.
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Re: How will the move to the OS affect club revenues?

Post by gavrosh »

Doc H Ball wrote:The Regeneration report did raise something new - it criticised the secrecy of the deal, urged disclosure and formally raised questions about the adequateness of our contribution.

I said at the time that Sullivan was very foolish to talk about a 400% growth in our value upon moving to the OS.
We've been complaining for years on here about the 'secrecy' of the deal, so that's not new.

Sullivan said our value had increase 400% since they bought the club. I agree its a pretty foolish statement (especially for other West Ham employees to parrot to the GLA) but that cant all be put down to the move to the stadium.
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Re: How will the move to the OS affect club revenues?

Post by 1mcavennie »

No the 400% growth is due to all them trophies we have won and the European runs

Or maybe the mega TV deal that everyone has got
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Re: How will the move to the OS affect club revenues?

Post by hammers1954 »

Putting to one side the rights and wrongs of how much we are pay for the OS why does no one ever question what UK Athletics are paying towards the refurbishment and annual rent ?

All I know is that they will have a 50 year 'summer' lease and in that time can bid to to hold events like the world championships, as they will in 2017, and hold a Diamond League meeting each year that ensures sell out crowds of 60,000 on each of three days.

In effect it is a football club that can ensure that UK Athletics has a major stadium as a home and not another 25,000 seater like Crystal Palace. So UK sport, you're welcome!
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