West Ham United’s staff costs for the past financial year amounted to 94% of their revenue, according to accounts published yesterday. Analysts say that it is the highest staff cost to revenue ratio at a Premier League club since Queens Park Rangers finished bottom of the table in 2012-13. The high percentage can be partially explained by a significant fall in income as a result of the pandemic, with turnover down £51.2million and broadcast income accounting for £44.9m of that, but it will still be cause for concern with this season almost entirely taking place behind closed doors and revenue remaining below previous forecasts as a result.
In its review of the year, West Ham say that £25.7m in broadcast payments were deferred – the financial year, which ended on May 31, did not feature the second portion of last season – while they paid a £6.1m rebate. The additional broadcast revenue from the conclusion of the 2019-20 season will be carried over into the current financial year but other revenue streams, most notably matchday takings, will remain impacted.
Accounts show that £108m was spent on new players with £53m made on sales, while the club also spent £3.5m when dismissing Manuel Pellegrini as head coach in December 2019. The club says that it made a “strategic decision to provide funds for the new manager [David Moyes] in line with his requirements to enhance the squad,” adding that it was successful as “we were able to secure our primary aim of maintaining our Premier League status and continue to lay foundations for future growth.”
Loans
A further point of concern for supporters is the revelation that the club has organised a long-term £120m loan facility with MSD Holdings, an investment firm linked to American billionaire Michael Dell that has in the past provided loans to Southampton and Derby County. West Ham are yet to utilise the loan facility but plan to draw down an amount to pay-off a short-term £55m facility with Rights and Media Funding Limited that was agreed last October in addition to a £20m overdraft from Barclays which expires in mid-July.
The strategic review added that shareholders invested £30m in the form of a rights issue so the club can continue to grow and notably adds that the shareholders do not expect short-term returns on their investment in line with the club’s longer-term objectives. David Moyes is on course to lead the club into Europe next season, which would bring a significant rise in revenue, but there seems a remote possibility of the squad being significantly enhanced in the transfer market without another injection of funds from owners who have previously said that money is tight.
Stadium improvements
West Ham say that supporters returning to the London Stadium later in 2021 will see noticeable improvements – including reconfigured seating and a new floodlighting system. It reiterated its commitment to dialogue with supporters about the improving matchday experience and outlined how the Olympic Park’s spacious surroundings will help with social distancing once fans are permitted to attend.
Commercial catch up
While the accounts refer to Forbes’ evaluation of West Ham as the 17th biggest in the world and seventh in the Premier League, other analysts such as Deloitte rank them in the low 20s and behind Everton and Leicester City. A large reason for that is because their commercial income lags behind other clubs. The accounts show that commercial income for 19/20 was £34m, a £2m decrease compared to 12 months previous.
Arsenal, the sixth-placed English club in several money rankings, made about £140m in commercial revenue last season. Manchester United’s is close to £300m and Deloitte say Tottenham Hotspur have grown to £160m.
