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From The Guardian
West Ham accounts reveal loss of £37m
• West Ham debts and liabilities close to £100m
• Accounts unveil 'fundamentally flawed' strategy
The shocking extent of West Ham United's financial crisis during the Bjorgolfur Gudmundsson era has been laid bare in the clubs's accounts, which have been obtained by the Guardian. The documents reveal a business strategy that, in the opinion of the club's finance director, Nick Igoe, was "fundamentally flawed".
The accounts set out a loss of more than £37.4m for the year ending 2008, which was covered by an injection of £30.5m of cash from the holding company of the former owner, Gudmundsson, and £17m of new loans negotiated with the banks in January 2008. Now that the club's parent company, CB Holding, is effectively a subsidiary of Iceland's now defunct bank Straumur, even a marginal loss this year could result in a return to the 2008 crisis.
In addition, the Hammers have net debt and contingent liabilities approaching £100m. But since West Ham are also yet to file their May 2009 accounts, the true current picture has not been presented. It is believed five syndicate banks have together raised their loans to the club to £50m and whether the auditors, Deloitte, will sign off the most recent accounts is an important consideration.
West Ham have embarked on a series of cash-saving measures but, despite net transfer proceeds in the 12 months to 5 June this year of £11.67m, troubled times still lie ahead.
Of paramount concern is the stark admission that the club had breached their debt covenants. This meant that the five banks that had then loaned them more than £20m could have demanded immediate repayment, a move that would have plunged the Upton Park club into administration. Only what the board has termed the "goodwill" of those banks prevented West Ham becoming the first Premier League club to suffer that fate.
"The scale of operating losses and wages caused the group to breach certain banking covenants in 2007-08," Igoe said. "Although the group's banking syndicate [later] waived these breaches, a business strategy which relies on the goodwill of the group's bankers to waive covenant breaches is fundamentally flawed."
At that time the annual wage bill amounted to £63.3m on turnover of £81.5m, a ratio of almost 78% that the club recognises as being "unsustainable". Only the removal from the wage bill of players such as Craig Bellamy, Anton Ferdinand, Bobby Zamora and Matthew Etherington has allowed the club to continue trading.
There are further financial pressures off the pitch that will continue to hit home. The collapse of the former shirt sponsor, XL, is estimated to have cost the club £4m. The settlement with Sheffield United after the Carlos Tevez inquiry has added another £21m in future liabilities, to be paid in four equal tranches each year to February 2013.
Add to that the £17.8m that the club owe following Gudmundsson's spending spree and it is apparent that the Hammers remain on shaky ground. "It is clear with the benefit of hindsight that not all of the investment undertaken in the playing squad in the period under review was prudent," Igoe said. "West Ham United purchased three high-profile players in 2007-08 at a combined cost of £20m with total annual wages in excess of £12m. Those players made 36 starting appearances between them in the season."
Those three players were Freddie Ljungberg, Bellamy and Kieron Dyer. While their arrivals characterised the profligacy of Gudmundsson's stewardship of the club, their injuries characterised the 2007-08 season and it was remarkable that the club finished in mid-table.
However Igoe qualified that by adding: "Whilst creditable, the 10th place finish has to be viewed in the context of a £21m increase in wages [almost exclusively player wages] and a further £15.7m net investment in transfer fees, following the £29.9m investment in the previous season. Again ignoring exceptional expenses, the group recorded a loss before player trading and after interest of £7.4m."
There lies the reason as to why Notts County were more attractive than us.
At present with the transfer window closing, it's all very easy to criticise the club and try to fathom the running of a football club. I imagine the reality of it is extremely difficult with many variables and dynamics in operation at one time - sure it's the jobs of the directors, but so many have ****ed it up. I like to think that in the post-Gudmundsson era, we've actually done very well, both on the pitch, and in terms of signings.
This is what Duckers was referring to...'a disaster'.
No wonder it has only been published after the transfer window shut.
Christ, I hope there is someone out who wants to buy our club in the immediate future!
wtf are they doing with the money... theyre stripping most of the assets the club has... they havent had a transfer window where theyve spent more than theyve sold since 2007! and were still in the red?!?! Honestly who ever is in charge isnt doing a good job.. How have these people not been fired?
Completely agree, very well said
Small change to the loss the Mancs had..47 million wasn't it ?? with a ground twice the size of ours,,,,
Stop pissing yer pants..
You know, in all honesty, this club does not deserve to be in business anymore. The last 8 years of business operations could be packaged and presented as 'how not to run a business' in any business school. It truly is embarrassing.
The worst thing is we can't even vent our collective spleen at the AGM any more. And long gone are the days when Terry Brown used to halt proceedings because 'someone is broadcasting the meeting illegally on KUMB' ...
A set of disastrous accounts. Well isn't that a novel thing.
Well, I think moaning about the lack of a new striker has now gone out of the 'window' (no pun intended) given the state of these accounts. Let's hope there are some serious intentions to sell us quickly onto interested parties.
Shocking, but we knew it was coming, just none of us knew to what extent exactly. Well now we can see we are truely scuppered, and unless someone match's the 100 million to clear out the debt we will continue in the hands of CB Holdings.
I'm sure if the said banks found out there were an offer sufficient to wipe the debt clean they would force the sale through, whereas CB seemingly want to turn a profit also!
I'd imagin we will become the next Leeds if we are not purchased outright before January
And the only remote salvation for this club, the one thing that might prompt some colossal fool to buy this train wreck, is that year after year after year all of the old-blind-dog fanatically loyal Hammers fans keep coming back to spend their life savings on West Ham in order to receive their annual kick in the head from the owners. These supporters are too good for all of these crooks. They don't deserve this treatment, and yet they do for tolerating it every year.
why havent we cancelled the contracts of fringe players we cant sell on?
hope these figures dont put off sullivan & co buying in, even though some peope knock him, he is just what we need, a stable footing!
Hillarious reference to Etherington as one of our "expensive players".
The club directors having stern words with Matty about his gambling. and they made him look like the child of Mr Scrooge and a Scotish Widow.
The debt figure pitched between zero and 100m
Does anyone know what it really is outside of journalistic hypoerbole
I read that as: Total commitments and debt = £100m,
of that £17.8m was still owed on to clubs for the players we had bought, assuming we sold the likes of Bellamy and the likes of Ashton and Dyer will hardly be triggering all the clauses for increased payments, that figure is probably now much lower, and is also a figure that every club will carry every year, as every club buys players.
So debt = £100m minus £17.8m, it also mentions the Sheff Utd liability which would not be in these accounts £21m, so thats £100m less 17.8 less 21 so debt of £60m
Presumably the cash injection from the holding company has been written off as basiclay the creditors own 100% of teh club, and will not be able to pull money out before the banks or the staff.
It says we owed the banks £20m and borrowed a furthef £17m so call that £37m debt, it also says we owe them debt of £50m
So go with the higher figure
so at the time of these accounts we were say £55m in debt.
The turnover was £81m, and wages were £63m, so thats £18m after wages to play with.
The loss was £37.4m, so
£37.4M + 18M spent but not on wages (presumably some of that is interest) so we spent £55m plus wages
so 55M minus 7.4M would make player trading £48m loss !
We need to see the accounts the Guardian is all over the place.
I think the implication is we had debts of £55m
we had stupid wages
We all know our wages have plumetted (Bellamy, Etherington, Neil, Lungjberg, Anton etc)
SD implied the increase in turnover would take care of teh Shefield uTd fine (pressumably it was that sfatey that directed teh stellement figure)
even if we made no debt repayments we must have clawed back that loss of £7m before player trading and after interest (especially if Lungjberg and Bellamy alone were taking out large slices of a £12m wage tab alongside Dyer)
I figure from all this waffle that today September 2009:
we have a turnover of £100m (based on chairmans comments).
We are making a profit before player trading (based on these old accounts and our player sales and the new sponsorship).
Player trading is either neutral or in profit (see James Collins).
We have debt of no more than £50M
Comfortably secured on UP, and protected by the PR fear of any bank who bankrupted us to get hold of it.
By Mick Platinis standards we are doing OK (today not last year).
Somehow we survived all this as a mid-table club!
Put that on your CV Curbs. You were David O'Leery and we all paid for it.
Only your swift removal saved us.
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