West Ham United Accounts Ending May 2017

Chairman’s Statement

My Board and I were hopeful that we would build on the fact that we finished 7th in the Premier League in the 2015-2016 season, but as a result of unprecedented major injuries we had to endure, coupled with a difficult start to the season in our new stadium as we ironed out the teething problems associated  with moving into a new ground and dealing with an outside operator, we are satisfied to have finished 11th.

At the start of the season we invested a total of £80.8m and bought Andre Ayew, Manuel Lanzini, Sofiane Feghouli, Havard Nordtveit, Arthur Masuaku, Edimilson Fernandes, and Ashley Fletcher. Further signings  of Jose Fonte and Robert Snodgrass were added to the squad during the January 2017 transfer window.

During the season, we sold two major players for a significant profit, James Tomkins and Dimitri Payet, the former to Crystal Palace, the latter to Marseilles despite using our best endeavours to keep him.

Subsequent to the year end, we have further invested in the playing staff for the 2017-18 season with the significant  investment into the purchases of a club-record signing Marko Arnautovic, Chicarito Hernandez, Pablo Zabaleta and Sead Haksabanovic.  We also signed Joe Hart on a year-long loan.

Once again, this season, our second at the London Stadium, we know will bring its own challenges,but we continue to believe we will deliver both on and off the pitch by investing in the team, the brand and managing the business well. We all, as usual, hope it will be one of our best seasons ever.

I would like to thank Daniel Svanstrom who resigned from the board on 21st September for all his hard work over the past 5 years and welcome Tripp Smith to the board as a Director and investor in the club.

Finally, I would like to pay tribute to every single member of staff who gives 100% of their commitment and loyalty to the club every day and of course to our supporters, who frankly are the best in the world.

Mr David Sullivan

KARREN BRADY – VICE CHAIRMAN’S REVIEW

Overview

2016-7 was a satisfactory year for the club, finishing 11th in the League whilst at the same time moving into our new home in the London stadium, which won the coveted “Stadium of the Year” prize for 2017 for the best new stadium in the world opened in the past year.

Once again, we were officially recognised as one of the world’s leading football brands by Brand finance, placing us in the top 8 most valuable brands across Premier League clubs and 17th overall in the world’s top 50 most valuable football brands for 2017.

Off the  pitch

All areas of income increased, resulting in the creation of additional revenue of £41.3m this year, taking our turnover to £183.3m, which is a club record.

Broadcast income increased by £32.6m, up to £119.3m, due to the new Broadcasting deal.

The Ticketing  team increased ticket sales by 6.3% from £26.9m to £28.6m. Season ticket renewals of 52,000 for 2017/8 have already exceeded a record for any London Premier League club for the second year in a row.

The Retail team drove a 2% increase in sales, growing the retail business to its largest turnover in history of£9.6m.

The Commercial  and Sponsorship  departments generated £25.8m of revenue, an increase of35.7%. Apart from the significant increase in income, in particular the Broadcast income, the Club has received exceptional  profit from the sale of the Boleyn Ground of£8.7m, and on the sale of players of£28.4m.

As a result of these three factors, for the year under review, the Group recorded a profit before interest and taxation of £48.5m. It is worth noting that the Club would have made a similar profit had it remained at the old stadium as the majority  of the profit for the year has been generated by the new broadcast agreement and by profit on player sales. The gain on the sale of the Boleyn Ground has been partially offset by the cost of moving to the new stadium. The One-Off Usage fee of£15.0m, however is being expensed over the term of the lease.

It is also worth noting that although the Club has generated a good profit, this is not reflected in the cash at year end. This is because the cash cost of moving to the new stadium was all upfront and exceeded the net proceeds from the sale of the Boleyn Ground once the CB Holding loan and the £15.0m One Off Usage fee had been paid.

Furthermore, the nature of player purchases is that the cash is paid over one to two years, whilst the cost is amortised over the term of the player contract which is usually longer than this, which means that the cash is usually upfront and the cost is spread over a longer term in the accounts.

Through the hard work of a dedicated, loyal and determined team both on and off the pitch the club has grown  in size,  revenue  and in stature  this season. The management team off the pitch were able to capitalise and maximise on all the opportunities  the Manager and the team delivered on the pitch.

London Stadium

There was an immense amount of work behind the scenes in preparation for our move which took place in June and July 2016. It is already apparent that our new home is one of the greatest arenas in world football and a platform to transform  the future of our great club.

We have been very focused  on delivering  a ground that looks and feels like the home ground of West Ham  United.  We invested  a significant  amount  of money, running  into millions  of pounds,  in the external wrap, the digital screen and branding inside and outside the stadium. We are delighted with the hospitality  lounges and the concourses  which feature all the Legends who have played for this great Club, we have been mindful to bring our past with us to our future.

The hospitality  areas, which are significantly  bigger than those we enjoyed at the Boleyn Ground, are completely sold out for the next three years with a substantial waiting list.

We continue to work with a highly-organised  group of supporters called the SAB (Supporter Advisory Board) and the DSAB (Disabled  Supporters  Advisory Group) who spend their time with the Club and have become the Club’s  consultants  in effect with regards to everything we do that involves the fans and the club. My team and I remain grateful to them for the time and effort they put into ensuring that the club always  has the supporters  at the heart of every decision we make. I would like to personally thank them for their efforts and the significant contribution they have made to the club during the past year.

We are pleased to say that every single  person who works at the football club, on a full or part-time basis is paid the London Living Wage.

Football

The Board is determined to maximise the Club’s prospects of retaining Premier League status by making a significant investment in the playing squad. There was an investment of £80.8m in transfer fees in the year while the major component of the annual wage cost of £95.0m was wages for the first team squad and management.  David Sullivan is in charge of this operation, and in effect takes a Football Director role in helping to select and negotiate  all football transfers alongside the Manager. The Board would like to register its thanks to him for all the hard work he puts into this extremely important role.

Future Prospects

Being in the world’s  best league, the Premier League, for the 2016-7 season, has allowed the club to continue  to  benefit   from  increased   Premier  League  distributions  from  the  second  year of  the broadcasting agreement. Retention of our status in 2017-18 season is an absolute necessity for the future well being of the Club.

Financial  Fair Play is the legislation which, for the next two seasons at least, will limit the ability of clubs to over-extend themselves on players’ costs. This will likely enable all clubs, including ourselves, to increase profitability, and we continue to operate within the rules.

We also renewed and increased our short-term secured facility for a further year in August 2017 which enabled us to invest in more on-field talent.

The London  Stadium  offers  enormous  commercial  and  brand opportunities,  and we have a proven strategy to deliver sell-out crowds and field a team that are befitting of such an amazing iconic venue. Our next priority is to increase the capacity to cope with the demand for tickets.

Finally, we know that we have set a level of expectation among our supporters this year, our second at the London Stadium, and I, my Board and all the staff on and off the pitch relish the opportunity to enjoy a wonderful and successful year and believe we have both the strategy and people to deliver much more in years to come.

Karren Brady

TV deal increased by £32.6m to £119.3m, ticket sales increased from £26.9m to £28.4m and commercial and sponsorship revenue went 35.7% to £25.8m. The club’s operating profit of £48.5m before tax and interest, with additional revenue of £41.3m which took turnover to a club record £183.3m.

Its worth noting that the club made a profit on the sale of players of £26.9 million and Loan fee received £1.5 million, providing a total profit of £28.4 million for player sales ending May 2017.

Also in the report the club took out a loan of £30 million in August 2016 from Rights and Media Funding Limited, which has been repaid in full on 14th July 2017 .

Back in December David Sullivan mentioned in an Interview with the Guardian that West Ham are about £10 million pounds better off a year at the London Stadium. In today’s modern game £10 million will certainly not take the club to the next level, which asks the question…. Was it worth us leaving the Boleyn ?

You can view the full accounts report on companies house website by clicking HERE