April 22, 2024

West Ham’s annual accounts: Rice transfer loan explained, high revenue, Vlasic debt

West Ham United have published their financial results for the year ending in May 2023.

While the east London club had an annual turnover of £237million ($301.9m), the real standout figure is a loan taken out for early access to some of the money from Declan Rice’s £105m switch to Arsenal last summer. West Ham were also ranked above Ajax, Sevilla and Newcastle United, the latter two being Champions League sides this season, in terms of revenue.

A £13.5million debt to CSKA Moscow relating to the transfer of attacking midfielder Nikola Vlasic was also highlighted in the accounts.

The Athletic has analysed the main talking points from West Ham’s books…

Why did West Ham take out a loan for early access to the Rice fee?

West Ham’s accounts reveal they agreed an arrangement with a bank to get £30million of the £105m fee for Rice in September of last year instead of in July 2024. During negotiations for Rice’s departure to Arsenal, West Ham arranged to receive a large payment up front and agreed to two further instalments for 2024 and 2025.

They used a similar arrangement with the Australian bank Macquarie over the £18.8million transfer fee paid by Ajax for the striker Sebastien Haller in January 2021. This is a common practice in football as Kieran Maguire, a football finance expert at the University of Liverpool, explains.

“The correct term for it is invoice discounting,” Maguire says. “That’s what the profession likes to call it, because ‘payday loans’ has negative connotations historically with pawnbrokers and (short-term loans firm) Wonga.

“It’s cash-flow management and allows West Ham to repay their existing loan to MSD Holdings Ltd. They’ll be able to borrow at a lower rate, and from that point of view it makes sense. It’s fairly common, given the amount of money involved.

West Ham sold Rice to Arsenal last summer (Shaun Botterill/Getty Images)

Premier League clubs owe around £2billion in outstanding instalments. It makes sense that, if you’re owed money in respect to a transfer, you might as well cash in. You have the advantage of up front cash, the lender gets a chance to make interest on the difference of what they’ll give to you and what they’ll get back, and that allows them to commit to the transfer market or improve their infrastructure.”

West Ham’s stance is they have been using such advance receivables for decades. They are standard within all levels of football, in the UK and across Europe. Many clubs outside the domestic top six use them and they have been approved and regulated by the FA and the Premier League. The commercial rates for these deals are not high-interest, Wonga-like rates.

“When you take a look at a club like West Ham, from a business point of view they get money from their season-ticket sales, and a lot of them are paid as a lump sum,” Maguire adds. “The club get most of that money around March/April.

“The Premier League gives them money around June, which is the first instalment of next season’s broadcast money. Then you factor in the international break, maybe West Ham have one home game for the month… all things considered, they won’t have a lot of money coming in during the season. The sponsors normally pay at the start of the season, mainly in two instalments.

“The money going in (to the club) is lumpy, while the money going out is constant, so the utilisation of these companies and loans makes sense.”

Have other clubs taken out similar loans?

Absolutely. This is common practice across football.

Leicester City did something similar when they sold Wesley Fofana to Chelsea (for in the region of £70million in August 2022) and James Maddison to Tottenham Hotspur (for £40m in June last year),” says Maguire. “Watford did it when they sold Richarlison to Everton (for £50m in July 2018).”

This is because football clubs very rarely pay the entirety of transfer fees up front.

Maguire continues: “When Brighton & Hove Albion sold Moises Caicedo (last summer), Chelsea didn’t have £115million sitting around in (co-owner) Todd Boehly’s back pocket, so they would’ve paid a deposit and instalments ranging from six to 12 months.

“Some clubs use it more than others, Leicester and Watford, both in the Championship, have been very active. Some clubs won’t need to borrow because ultimately it’s a loan and you’re paying interest on it.”

Are West Ham in good financial shape?

West Ham’s annual turnover of £237million is the highest in the Premier League outside of the ‘Big Six’ clubs, driven by matchday, retail and commercial income. In the recent Deloitte Football Money League, which ranks clubs globally by revenue, West Ham are 15th, ahead of AC Milan, Everton, Newcastle, Ajax and Sevilla.

But broadcast revenue decreased by £16million from £164m to £148m. This is because there is less income from the third-tier Europa Conference League, which West Ham played in and won last season, compared to the second-tier Europa League, which they are through to the last 16 of in this one. 

“Since the start of 2023, we have seen a big improvement in on-field results, with many of our new signings really beginning to settle in and play a key role in our positive upward trajectory,” said the club’s majority shareholder David Sullivan. “We remain on track for a successful Premier League season, as well as having the excitement of the latter stages of the Europa League to look forward to in the new year.

“The future continues to look extremely bright for West Ham United. We have enjoyed an unprecedented level of success over the course of the past three years — but I believe there is even more to come.”

Vlasic (Ryan Pierse/Getty Images)

Do West Ham owe other clubs money?

Yes. West Ham still need to pay £13.5million to CSKA Moscow for attacking midfielder Nikola Vlasic. The Croatia international joined in the summer of 2021 for £25.7m but struggled, scoring one goal in 19 league appearances. He spent the 2022-23 season on loan at Italian club Torino before joining them permanently last summer.

But West Ham are not the only side to owe a club money, as Maguire reveals.

“In their accounts, it was revealed Manchester United owed £277million to other clubs in respect to outstanding instalments,” he says. “As for West Ham, they sold Rice and cashed in early. They also bought players and owed £171m to other clubs at the end of June 2023. Clubs buy and sell on credit, but when they sell on credit they sometimes cash in at the same time.

“In 2016, Tottenham Hotspur signed Moussa Sissoko from Newcastle in 2016 (for £30million) and paid over five years. Sometimes a club will be paying longer than a player’s contract. Clubs are normally happy to do these deals because you have the footballing creditors deal, which means if the club goes bust, you get paid. (Football’s world governing body) FIFA are very good at ensuring instalments are paid on time because if not, they’ll give you a global transfer ban.”

A delayed player loan fee of £430,828, plus £21,244 interest, has been paid to Spartak Moscow for midfielder Alex Kral, who made a single, 89th-minute Premier League appearance having been borrowed for the 2021-22 season.

This payment had previously been forbidden due to the sanctions against Russian individuals and businesses imposed by the British government after the 2022 invasion of Ukraine.

(Top photo: Richard Heathcote/Getty Images)

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