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Where all the money goes

This morning’s blog has been inspired by the many supporters who continuously challenge why we can’t have a bigger transfer budget when we pull in hundred’s of millions from TV, ticket sales, sponsorship and retail.

To first understand how we spend the money we have to understand how West Ham earns their money.  During 2017/2018 season of which accounts have been published the turn over of the Hammers is £175m.

In that last full season, TV revenue was £118.5m, Ticket sales were £24.5m, Commercial activities including sponsorship and corporate hospitality were another £24m while Retail and merchandising were £8m.

The money went out as fast as it came in with £106m spent on wages £32.5m was paid in ongoing player transfer payments to other clubs and £3m in rent for the stadium.

Others expenses included £4.6m for club shop stock, £10m paid back for a short term loan, £1m in tax and £4.5m paid to the shareholders in accrued interest.

The Hammers still made £33m profit for that season, however, they spent £41m in incoming transfers and pulled in £30m from player sales leaving a £11m loss on player trading.

When we look at the current season it gets much worse, they spend £89.5m in transfers over the summer while the income will remain broadly the same and the wage bill will rise again. With no big sales last summer, we are heading for a large loss for this season when accounts are published at the end of the year.

Those losses are not sustainable and the club just can’t invest £90m every summer without a large injection of more cash or significantly more revenue.

The owners haven’t injected their own cash since 2013 and this is fast becoming the norm in the Premier League by expecting clubs to stand on their own two feet without constant injection of shareholder cash.

 

About Sean Whetstone

I am Season Ticket Holder in West stand lower at the London Stadium and before that, I used to stand in the Sir Trevor Brooking Lower Row R seat 159 in the Boleyn Ground and in the Eighties I stood on the terraces of the old South Bank. I am a presenter on the West Ham Podcast called MooreThanJustaPodcast.co.uk. A Blogger on WestHamTillIdie.com a member of the West Ham Supporters Advisory Board (SAB), Founder of a Youtube channel called Mr West Ham Football at http://www.youtube.com/MrWestHamFootball, I am also the associate editor here at Claret and Hugh. Life Long singer of bubbles! Come on you Irons! Follow me at @Westhamfootball on twitter
 

3 comments on “Where all the money goes

  1. That, in a nutshell, explains how misguided it is to go on about being a ‘big club’ & getting into Europe etc. Leaving aside yesterday’s reminder of where we really are. Even with the bigger stadium ticket sales are a small proportion of revenue. Whether it is Pellegrini or the Great Houdini in charge makes no difference to the cold financial facts. I should say that this does not particularly bother me. I have no real interest in us getting into CL or Europa League. But unless we sell out to a multi billionaire,It does mean we have to adopt the mindset & policies of a middle ranking club. Perhaps your final stat-about the owners not injecting money since 2013- shows we are already doing that. I think it is going to be quite a struggle in the future even maintaining ‘mid table mediocrity’. But that would do for me – perhaps lower top half mediocrity.

  2. Thanks, Sean, that makes it pretty clear that we don’t generate the revenue to let us ‘spend, spend, spend’ every year. Our owners are extremely wealthy men but not in the same league as the owners of the top 6 clubs, so we shouldn’t expect ourselves to operate in the same marketplace. It’s like a fancy shop window – if you have to ask the price, you probably can’t afford it. We are a middle-ranking team with owners with limited funds. We have a fantastic support, a great heritage, a large stadium which allows more fans to watch home games, and an inconsistent team (what’s new?).

    Very, very occasionally, we hit on a formula with a particular group of players that allows us to compete with the big teams for a few seasons (eg. early 80’s) or at least play the exciting football that we want to see. But those squads have never been expensively assembled. They have usually been the product of a combination of home-grown talent, some good scouting, some bargain-buys who came up trumps for us and the occasional big-money buy. Sounds a bit like our current squad, once we weed out a few of the over-paid under-achievers, so maybe there are grounds for optimism.

    However in recent years some factors have raised what, for me, are unrealistic expectations – a larger stadium, talk of ‘going to the next level’, mention of a ‘big team mentality’. Not altogether helpful. Top level football has turned so much into a big-money business that those clubs with the real financial clout are still going to be moving away from us. You have to spend big just to stand still, it seems. One year we may ‘do a Leicester’ – but how do you sustain it, without the cash? The football world is different to when Forest could become a European force.

    Spurs have grown organically to be able to compete with, but not necessarily come out on top against, the real big money clubs. But Spurs were building on a successful history, a large support and have done it through the sustained business accumen of Daniel Levy and others over many years. They’ve not ‘done a Leeds’ and gambled and lost. Getting into a Europa League place even on a regular basis won’t move us into the big league. Even Man City’s billions haven’t won them the Champions League yet.

    So, in conclusion, in my opinion, we should have realistic expectations and show patience. We’ve waited 39 years, so we’re good at that anyway. We should realistically expect our owners to run the club as efficiently as possible. We should realistically expect them to generate as much revenue as they can without fleecing the fans and to spend the money wisely (more Valbuenas and fewer Wiltshires). And we should expect them to honour the traditions of the club, our love of home-grown talent and our playing style and provide sustained top division football every year for the fans. Maybe, it’s 2 steps forward and one step back, but overall, I think it’s moving in the right direction.

    On a final note, we should have realistic expectations of our coaching staff and our players to earn their money and respect the game, the club and the fans. If, like me, you were at Cardiff yesterday, or saw or listened to it, you’ll know what I mean!

  3. Sean its surprising to fans that we don’t have a bigger budget because again we have been consistently given the expectation that more was to come, here the board have form. As Hammer 64 says the “Big Club” mentality has become the club catch cry and to achieve this with the budget being mentioned would be a miracle on levels not seen in the Premier League before. While I don’t doubt the accuracy of your figures or the accuracy of the information you’ve been provided, you have consistently reported that we need to move large numbers of players on this summer. Those players need replacing and Pellegrini’s aim if not expectation would be to improve the quality of the team in the process while keeping a similar number of players to maintain the squad approach he’s undertaken this season. So the work here for the club and especially the board is to explain openly and clearly to supporters what we can realistically expect for next season rather than selling us and potential transfer targets that we are Europe ready. Our performances and finances as you have outlined clearly show that were aren’t. Ambition is a great thing and required for any great club but its starting to look like we are going down a familiar road where ambition is being confused for realistic expectation.

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