By David Owen
March 9 – Yet another Premier League club has revealed that it haemorrhaged red ink during the covid-battered 2019-20 financial year, with high-flying West Ham posting a pre-tax loss of £65.3 million for the twelve months to end-May.
The East Londoners have confounded expectations by rising to fifth in the English top-flight table under former Everton and Manchester United boss David Moyes, with players such as midfielder Tomas Soucek, acquired from Slavia Prague, emerging as genuine Premier League stars.
But hitting the financial highlights has proved more of a challenge, with a sizeable chunk of broadcast income, as with other clubs, shunted into the 2020-21 financial year.
This resulted in turnover slumping from more than £190 million to £139.5 million. And with staff costs dipping just £5 million to £130.8 million, including £3.5 million of termination payments, operating losses including player trading more than doubled from £36.7 million to £85.1 million.
There was a £25 million profit on player disposals – about double the previous year’s – with ex-striker Marko Arnautović sold to China in July 2019 for a hefty fee. The consolidated cashflow statement shows just over £88 million spent on players in 2019-20, with £53.4 million of proceeds from player sales.
An accompanying announcement made clear the extent of the measures taken by the club last summer, after the 2019-20 year-end, to counter the covid hit.
First and foremost, on July 1, the joint chairmen injected £30 million via a rights issue, while also deferring interest payments on loans. In August 2019, the club had made payments of more than £950,000 to 51.5% shareholder David Sullivan and David Gold in partial settlement of interest accrued up to that point. At the same time, £1 million was paid to Gold as part-repayment of a loan.
As well as the rights issue, senior figures including vice-chairman Karren Brady and Moyes took a 30% deferral in pay, while players also agreed to wage deferrals.
At the financial year-end, the total shareholders’ deficit shown on the consolidated balance-sheet had jumped to £84.8 million from just £19.4 million the previous year. At the same time, total borrowings stood at just under £119 million, up from £77.7 million a year earlier.
The club has now revealed that it has become the latest to accept financing from MSD, personal computer pioneer Michael Dell’s investment firm.
Less than two weeks ago, MSD provided a new £120 million five-year term loan. The club says its intention is to “draw down against the new loan” in order to repay two other facilities: a one-year £55 million facility expiring in July; and a £20 million overdraft facility with Barclays, agreed last October and also expiring in July. West Ham said the balance, once this was done, would be “available to cover cash shortfalls caused by the pandemic”.
The new accounts also disclosed that agreement was reached with Eintracht Frankfurt last September to defer a €26 million balance remaining on the transfer fee for striker Sebastian Haller until September 2022. Haller was sold to Ajax in January.
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