By Sean Whetstone
The Hammers published a record £253m turnover with pre-tax profits of £12m and no net debt last season, a high place to drop from if relegated this season.
Should West Ham be relegated they will need to rely on parachute payments with ticket revenue, commercial revenue and retail at least halved.
In the first year of the Championship, West Ham would receive 55% of the equal share worth around £44m, which reduces to 45% or £36m in the second season and 20% or £16m in a third season.
The Hammers would receive £46m in parachute payments and broadcast revenue in the championship with ticket revenue of around £16m, commercial revenue of around £12m and retail of around £6m.
At a reduced turnover of £80m the club would need to sell players and drastically reduce the £135m wage bill while remaining competitive to get promoted again.
The £173m drop in revenue would be funded by a fire sale of West Ham’s best players and a corresponding drop in their Premier League type wages.
I would expect the wages to at least reduce by 50% to £67.5m, the London Stadium rental would also half to around £2m due to a relegation clause, and many West Ham staff would also lose their jobs as the club would go on a cost cutting drive.
West Ham could get as much as £100m from outbound player sales as the best are sold way under market value.
The likelihood is that the directors would need to inject some cash in the Championship to ensure promotion. maybe as much as £50m perhaps in the form of a rights issue or perhaps a shareholder loan from Kretinksy, alternatively they could borrow the cash from MSD Holding as part of the five year credit facility at 9% per annum interest.
Ironically from the financial perspective West Ham are in fine financial health so you could say there is no better time to withstand the massive drop in revenue with no net debt.
However, the on the field impact would be devastating as we would almost need to rebuild the squad from scratch setting West Ham back in their promise of next level football.