West Ham plans stock market flotation with pounds 50m price tag

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The Independent Online
West Ham United became the latest Premiership football club to signal its intention to float on the stock market yesterday as it announced a pounds 1.6m private placing of shares that put a pounds 50m price tag on the East London club.

Although this is more than twice the value implied by a recent bid for the club by Monaco-based former bookie Michael Tabor, West Ham's chairman, Terence Brown, insisted the price tag did not depend on the club remaining in the top flight, where it is currently languishing in the relegation zone.

The pounds 50m valuation compares with expected turnover in the year to May of pounds 15m, from which West Ham is expected to generate operating profits of about pounds 3.2m before interest charges of pounds 500,000. West Ham's valuation of just over three times turnover is much lower than more secure Premiership clubs, whose shares trade at up to eight times sales.

West Ham said yesterday it had placed 3,200 new shares at pounds 500 each with a small number of institutional and other investors. The fund-raising follows an attempt by Mr Tabor to inject pounds 8m of new cash into the club, in exchange for a 30 per cent stake. Mr Brown said any flotation would be used to fund the construction of two new stands at the Upton Park ground.

News of the proposed flotation coincided with interim profit figures from one of last year's most successful football floats, Chelsea Village, which has seen its shares triple in value since they were placed last March at 55p. Ken Bates, chairman, attempted to play down worries about spiralling wage costs as he announced reduced losses despite building works giving Chelsea its lowest spectator capacity in the history of the club.

Chelsea announced first-half losses of pounds 404,000, compared with a loss of pounds 3m in the year to last June. Attention focused, however, on operating costs of pounds 7.5m in the period, compared with pounds 10.2m for the whole of the previous year. Costs included the salaries of manager Ruud Gullit and star overseas signings including Gianluca Vialli, Gianfranco Zola and Roberto di Matteo.