Back in January 2010, David Sullivan and David Gold acquired a 50% stake in West Ham United for approximately £50 million.
Many will remember the press conference at Upton Park — perhaps for Sullivan’s claret blazer, or for Goldie excitedly telling everyone he had “come home”. Gold, of course, was born and raised on Green Street and despite his mixed record as a Hammers custodian, nobody ever really doubted that he was a lifelong fan.
Sullivan and Gold at Upton Park on the day they revealed the extent of West Ham’s debt
But beneath the celebratory mood on that day came a repeated and rather stark warning from the new owners: West Ham were in debt — and lots of it.
To paraphrase, Sullivan and Gold were keen to point out that their biggest task would be clearing that debt before the club could truly move forward.
It was difficult not to think back to that moment 16 years ago when the financial figures were released last week, revealing that West Ham are now in even more debt.
Borrowing Against The Future
Perhaps the most worrying aspect of the latest accounts is that the club appear to have borrowed heavily against future revenue.
The lending facilities used to advance money against future TV income and season ticket sales have already been widely covered on Claret & Hugh. However, the recent revelation that the club has also effectively cashed in money owed from player sales has come as a real shock.
In short, over the next three years West Ham owe £212 million to other clubs for transfer fees — including payments for players such as Mateus Fernandes, Taty Castellanos and Jean-Clair Todibo.
Ordinarily, this would not be overly concerning. Most clubs operate with staggered transfer payments and are simultaneously owed money for players they have sold.
For example, the £55 million Tottenham paid for Mohammed Kudus would normally be paid in instalments over a similar period, balancing the books to a certain degree.
Unfortunately, West Ham appear to have developed a habit of borrowing against those future transfer receipts.
As a result, the club is owed just £3.9 million for players sold across the same timeframe.
Yes, you read that correctly — West Ham owe other clubs £212 million but will receive only £3.9 million in incoming transfer payments, effectively meaning the club has taken a series of footballing payday loans.
Quite shocking, really.
It is the sort of financing strategy that would be questionable for a household — never mind a Premier League football club.
West Ham appear trapped in an ever-tightening cycle of debt which any potential buyer would surely view with alarm.
And the whole situation makes something of a mockery of that press conference back in 2010, when we were warned about the dangers of debt by the very people who have ultimately saddled the club with even more.
Guess it also demonstrates the control Gold brought, plus he was generally well liked and respected. What has concerned me for a few seasons is those loans from the media group at big interest. It makes no sense to have some of the richest owners and be getting credit from some shady characters.
Paying £22m a season in interest that’s more than a Diouf or a Pablo we are paying in interest (Bonkers) the board should sell us to someone that will pay the debts off, invest in state of the art training facilities and run us effectively.
Whatever they are doing, they appear to be doing well by it.
Maybe it is us who don’t know what we’re doing. Certainly why I worked for an employer and I was PAYE forever.
No football clubs run at a profit. All ‘ownership’ is via a series of loan making companies. If West Ham were to go bust then the owners would lose nothing. They would make arrangements for any new owners to repay the loans they had made to the club. Same for all clubs. Wrexham have no sugar daddies ploughing their readies into the club. Even Macclesfield are not a plaything.
Nothing to see here Gonzo. You are missing two key points. Firstly football clubs are not like normal businesses whose aim is to make a profit. Secondly our major shareholder is a billionaire.
Given his huge personal wealth I don’t understand why he hasn’t bought out the Gold family and then injected more capital
We have no real financial worries unlike when the Icelandic idiots owned the club
This is in the back drop of us supposed to have a financial advantage with the deal on the London stadium. So is someone going to ask is that not the case and if it is where is all the money going?
Agree 100% with that Rob. I’ve been asking the same for a while, what was the advantage of renting a stadium other than an increased gate revenue?
The club is up to it’s neck in debt, only now it has no collateral to secure it against.
What are the value of our assets? Players, sure they’d be worth a bit, but they depreciate pretty quickly when relegated, age or drop off in form.
Sounds like “accomplished” accountancy is the only thing not making this look worse than it is.
And Brady is on the tele advising budding business entrepreneurs!!!!
Sullivan loves debt and loans to the club.
he makes 4.50% interest back in his pocket.
he uses the club like a credit card, but he owns both. it’s no different than Man U but on a smaller scale.
Trouble is their football decisions have been absolutely shocking for years, he only employs managers out of work, I wonder why that is the case ?
even with Moyes they got rid first time around, they are truly terrible.
clubs go through turmoil to own their own grounds, this bloke gave ours away…
That’s if he loans the club money. The debt is the club borrowing money at high interest rates. Sullivan makes nothing from that.
This almost sounds illegal. I mean if I need to get a mortgage I need to produce P60s or wage slips to see how many times my salary I will be leant.
Who are they borrowing this money off or is it borrowed from Sullivans own wealth and he charges the club his own personal high interest rate leaving the club even more out of pocket.
I really want this pair of crooks gone but can’t see anyone being stupid enough to buy us.
Sullivan’s “own wealth” is mostly tied up in property,he has little cash reserves hidden away. He isn’t loaning these “pay day loans”,he isn’t a money lender. But if you want to carry on believing the rubbish you’re fed by the red card wavers and Hammers “United” and their cheerleaders go ahead.
Amazing that Brady gets to criticise other people’s business acumen on TV