By David Owen
March 7 – The sale of the Boleyn Ground and of Dimitri Payet, the club’s one-time talisman, have helped West Ham to become the latest Premier League outfit to report a thumping profit.
Pre-tax profit for the year to 31 May 2017 soared to £43.5 million against a £4.9 million loss the previous year. Turnover climbed from £142.1 million to £183.3 million, as the East London club benefited, like all its rivals, from the league’s new TV deal.
The Boleyn Ground, the club’s traditional home, was sold for £38 million in July 2016. Since the net resaleable value in the accounts was £30 million, and since a further £0.7 million was generated via the sale of stadium assets, this made for a gain of £8.7 million, taken as an exceptional item.
The profit on player sales, notably those of Payet, who returned to Olympique Marseille, and defender James Tomkins to Crystal Palace, weighed in at £28.4 million.
While joint chairman and majority shareholder David Sullivan said that the club, which has taken up residence in the former London 2012 Olympic stadium, was “in the healthiest financial position it has been in for years”, his colleague Karren Brady underlined in her vice chairman’s review that, while it had made “a good profit”, this was “not reflected in the cash at year-end”.
This was because the “cash cost of moving to the new stadium was all upfront”. The consolidated cash flow statement for the corporate entity, WH Holding Limited, showed that, while over £39 million of net cash was generated from operations, some £37 million was used in investing and financing activities.
Net debt, taking into account £30 million of cash, was down over £20 million year-on-year, at £45.6 million.
In October 2016, the repayment date for £45 million of shareholders loans was extended to 1 January 2020. This was after the company had repaid £4.2 million of shareholder loan capital, along with £2.2 million of accrued interest, that August.
The loans from shareholders are unsecured, with interest accruing at 4-6% per annum. The accounts state that interest accrued as at the balance-sheet date, 31 May 2017, amounted to £12.7 million. Related party disclosures suggest that was split almost equally – more than £6.3 million each – between Sullivan and fellow director David Gold, who owns just over 35% of the club.
It was reported last September that a wealthy American, J. Albert Smith, had taken a 10% stake in West Ham.
The new accounts disclose that Smith’s company provided the club with a £9.5 million interest-free loan, repayable only in the event of a change in control.
The accounts also reveal that last August the club paid a further £10 million in “partial settlement” of interest accrued on the shareholder loans. It is not actually stated that this was paid to Sullivan and Gold, but if it was, that would take a huge bite out of the £12.7 million, referred to above, accrued up to last May.
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