By David Owen
November 12 – West Ham United, the east London club gearing up to move to the Olympic stadium next year, has suffered a fall in annual profits owing to rising costs.
A 13.8% jump in employment costs to £72.7 million helped to cut pre-tax profit in the year to May 31 to £3 million, down from £10.3 million in 2013-14. Karren Brady, vice chairman, said the “major component” of these costs was wages for the first team squad and management.
Retention of the club’s Premier League status in 2015-16 was, she said, “an absolute necessity for the future wellbeing of the club, as we will be moving to our new home in the 2016-17 season and a new improved broadcast deal will be in place.”
Brady said there had been a net investment of £32.5 million in transfer fees in 2014-15. A note to the accounts explains, moreover, that a net £36.8 million is payable for transfers completed subsequent to the year-end. Happily for the Hammers the team is prospering under new Croatian manager Slaven Bilic, with the likes of Dimitri Payet, Mauro Zárate and Winston Reid propelling the club to sixth in the Premiership.
Turnover edged up from £114.9 million to £120.7 million.
Interest costs of £5.7 million were a further factor eating into profit. The accounts put the club’s creditors at the end of May at some £173 million, of which £23.5 million arose from player transfers, with £39.3 million categorised as bank and other loans and £49.2 million as loans from shareholders.
The accounts note that loans from shareholders are unsecured and subordinated to the secured bank loan. “Interest is accrued at 6-7% but will not be paid or added to the loans until the loans are repaid. The interest accrued as at the balance sheet date amounts to £9,336,477.” Joint chairman David Sullivan owns 51.1% of the club.
Directors’ emoluments rose 9.5% to £925,000, although those of the highest-paid director climbed only from £636,000 to £646,000.
Regarding the Olympic Stadium, the accounts indicate that the club expects to enter into a 99-year lease commitment beginning next June. On commencement of this lease, the club has agreed to contribute £15 million of “lease-related costs”.
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