The release of the West Ham financial accounts earlier this week has given us a chance to do an annual check up on how the Hammers are faring with the massive debts they inherited in 2010.
The accounts confirm that that they reduced bank debt by a further £12m. £2.3m was paid in interest on bank loans in the last financial year. These interest payments were paid to Icelandic shareholders, CB Holdings, Vibrac and David Sullivan, all of which acted as bankers in the last financial year.
The Hammers have a total of £91.5m of debt, of which £20.5m is due within one year and £71.07m after one year. Cash in bank was £18.07m so therefore ‘Net Debt’ has reduced to £73.5m in May.
Breaking down the debts.
£24.5m was still owed to banks or third party lenders in May although this reduced further in August by a further £6.5m
Amounts owed to other clubs for player transfers is £13m
Shareholder loans amount to £49.2m with an additional £9.33m of accrued interest charged at 6-7%
In 2010 after the take over David Sullivan explained “We’ve paid down some of the debt and injected some working capital but there’s still more than £100 million of debt. In that there’s £50 million owed to banks, there’s £40 million owed to other clubs. There’s not a penny to come in, they (the previous owners) have borrowed against the next two years of season-ticket money. The sponsors have paid 70% of their three-years up front. In addition there’s the club’s settlement to a former manager (Alan Curbishley), so the real debt is about £110 million.”
Five years on and much of this debt is now owed to David Sullivan and David Gold in the form of shareholder loans which now total £58.5m including interest. The joint chairman has constantly said they do not see a scenario where they would call in these loans. The truth is, unless West Ham make £110 million pounds of profit in the past five they were never going to be able to clear the debts themselves.
A senior insider told Claret and Hugh exclusively “You are right in your assumptions, the banks had to be paid, so the owners have pumped in money to pay them. Other than selling players, stopping buying players, there is no easy way to reduce debt.”