We’re Skint | West Ham Debt Admission Exposes £90m Investment Question

West Ham chief financial officer James Taylor has confirmed that relegation halved the club’s income, forcing those in charge to balance the cost of assembling a promotion-chasing squad against substantial existing financial commitments. It is a brutal admission, particularly given the financial problems the Hammers were already facing before dropping into the Championship.

The admission appeared in the latest Fan Advisory Board meeting minutes, published by the West Ham United Independent Supporters’ Committee. However, the financial difficulties facing the Hammers should have surprised nobody. My only surprise is that more was not said about the staggering £104.2 million pre-tax loss recorded in the club’s previous accounting period.

That loss, confirmed in West Ham’s published financial results, came before relegation inflicted another enormous reduction in revenue. Clearly, some very big decisions had to be made during the summer, but the figures also raise questions about the club’s shareholders and whether more could have been done to provide direct funding.

West Ham’s Summer Sales And The £90m Question

Fortunately, the sales of Crysencio Summerville, Mateus Fernandes and El Hadji Malick Diouf generated huge amounts of money. West Ham arguably sold those players for considerably more than their established market values, despite negotiating from the weakened position of a relegated club.

Credit must be given for getting that business done.

But one significant question remains unanswered: why did West Ham’s shareholders not provide the club with more direct funding?

As Claret & Hugh previously explained, Premier League regulations had provided scope for shareholders to inject as much as £90 million over three years through a rights issue.

That was potential funding headroom rather than an obligation to invest, and it would not necessarily have been Daniel Křetínský’s responsibility alone. However, his wealth made him an obvious candidate to provide a substantial portion of any new investment.

Perhaps the ownership uncertainty prevented that from happening.

Křetínský’s West Ham Investment Remains Under Scrutiny

At the time of writing, West Ham’s official ownership information still lists David Sullivan with 38.8% and Křetínský’s 1890s Holdings with 27%.

An agreement has been reached that should eventually increase the Czech billionaire’s stake to approximately 46%, but the club has said it will not comment further until every transaction has been completed.

Interestingly, the FAB minutes describe Křetínský as the “soon-to-be single largest shareholder”, suggesting the process had still not formally concluded when the meeting took place on October 13.

The changing West Ham ownership structure is important, but I would be reluctant to portray Křetínský as a detached bystander while the club’s finances deteriorated.

He has been a major shareholder since 2021 and was already represented at board level when the club arranged expensive external borrowing.

The published accounts disclosed a £124 million loan facility with Rights and Media Funding, with £89 million drawn by the time the financial statements were signed. West Ham also recorded almost £22 million in finance costs during the accounting period.

Those figures do not establish that Křetínský personally approved every borrowing decision, but he was certainly a significant shareholder while the club’s debt accumulated.

West Ham Cannot Afford To Get January Wrong

Hopefully, once Křetínský formally becomes West Ham’s largest shareholder, we will see greater direct investment and less dependence on expensive borrowing.

Of course, additional shareholder funding does not automatically translate into unlimited spending under the Championship’s financial regulations. Nevertheless, the question of how the club funds its future remains a legitimate one.

The squad is undoubtedly strong enough to challenge for promotion, but there remain two or three glaring weaknesses. If those are not addressed in January, West Ham could discover that the cost of remaining in the Championship is far greater than the cost of strengthening the team.