Having relocated to the London Stadium in 2016, West Ham supporters had high hopes of
bridging the gap between the themselves and the self-styled ‘Big 6’ (Man United, Man
City, Chelsea, Tottenham, Arsenal, Liverpool).
These hopes have thus far failed to materialise.
A poor start to the 2016/17 season was followed by problems with the new stadium in terms
of logistics, stewarding and atmosphere.
And a spat with the council resulted in the capacity being capped at 57,000.
In terms of finances, the boost from moving to the more modern stadium seems to have been
a mirage in some ways, and the fans are unhappy.
Losing their home in one thing, losing it with no financial benefits in terms of competing
in the player market is another.
In 2016/17, West Ham’s overall income rose by 29%, which makes it look as though Davids
Sullivan and Gold have masterminded a superb transformation.
Over the last five years, the club’s income has more than doubled.
But how much of this is due to the owners, and how much is happenstance?
Matchday
Moving from a 35,000 to a 66,000-capacity stadium should have, in theory, created a
significant bump in matchday income, however, the move only resulted in a 6% increased from
£26.9m to £28.6m.
There are a number of possible reasons for this.
Firstly, West Ham had a dispute with the landlords which restricted the capacity to 57,000, although
this is still significantly higher than the Boleyn ground.
To give some credite to the owners they made Season ticket prices were available from £299,
and under-16’s just £99.
It could also be that the figures for the final season at the Boleyn were inflated by
extra income generated in relation to moving, as they are substantially higher than the
previous season 2014/15.
This graph shows what proportion of a club’s total income is generated by matchday income.
For West Ham, matchday is worth £1 in every £6 the club makes.
If the owners are serious about competing with the bigger clubs, they need to increase
their matchday income.
Conversely, fans aren’t exactly being taken to the cleaners with regards to the prices.
Added to that, more seats are available to every-day fans, as opposed to corporate seats,
which in theory are worth more.
Broadcasting
Broadcasting income was up by over a third to £119m.
This was due to the Premier League’s new deal with BT & Sky commencing.
This income will be largely consistent for three years (the length of the deal) but could
be increased by further TV appearances, finishing higher up the league table and qualifying
for European competitions.
Winning the Europa Cup was worth £40m in broadcasting income to Manchester United last
season.
West Ham picked up £400,000 for their stint.
Commercial
West Ham’s commercial income rose by a quarter to £35m.
They don’t have the international appeal of United and Liverpool; so their direct competition
tends to involve clubs like Newcastle, Everton, and Southampton.
However, many potential sponsors don’t particularly care where their logo appears, so long as
it gets regular exposure on TV.
In this regard, the stadium will be a useful asset.
Costs
Player wages and amortisation are usually a club’s biggest costs, which is the case
for West Ham.
Their wage bill has grown by 12% to £95m in 2017.
That’s a significant increase but it’s still behind Everton (£105m), Leicester (£112m)
and some others in their peer group.
Asides from running costs, there are also interest costs because of borrowing.
Fans might’ve thought that the Boleyn sale would repay all their debt, but this isn’t
the case.
For 2016/17, interest costs worked out at £97,000 per week.
Whilst this is lower than the previous season, half of it went to shareholders in the form
of loans from Gold & Sullivan.
This does mean that they, strictly-speaking, are correct in claiming never to have taken
a penny as a wage from the club – but £50-60,000 per week in interest is still a sizeable sum.
It is common for owners to lend money to their clubs; Mike Ashley at Newcastle for example.
But many of those owners do not charge interest on those loans.
Sullivan and Gold have lent West Ham £45m, but with a 6% interest rate.
They have charged the club £14,875,000 in interest on loans since 2011/12.
They eventually paid themselves £10 million of this sum in August 2017.
Profit
West Ham stated that they made a record profit of £43,000,000 for 2016/17, which is an after-tax
figure.
However, this is after making considerable gains on player disposals, including Dmitri
Payet, which generated profits of £28.4m.
The issue with profits on player sales is that they are volatile figures, as it depends
on individual player disposals.
West Ham’s EBIT profit (profit excluding one-off transaction and player sales before
interest and tax) was £11.4m.
Much lower than the quoted figure, but still an improvement on the previous year.
The main driver of this has been the extra £33m of TV money.
In summary, the stadium move doesn’t seem to have pushed the club onto the next level
of success in the Premier League.
There is room for improvement, but financial fair play laws make some aspects of this difficult
for clubs like West Ham.
Fans will just be hoping that they didn’t lose their spiritual home for nothing.