West Ham debts in excess of £100m
Tuesday 19 January 2010
New West Ham owner David Sullivan revealed he has inherited a club with over £100million in debts.
Sullivan and new Hammers co-chairman David Gold, sold their interest in Birmingham last year, having previously owned 27% of the Hammers 22 years ago.
Sullivan has now returned to take a 50% stake in West Ham, with Icelandic bank Straumur holding the remaining half.
But despite describing their excitement at taking control of a club close to both of their hearts, Sullivan's estimation that the Hammers owe in excess of £100million and have limited incomings grabbed the attention.
"We wouldn't buy this club at all if this wasn't West Ham. It makes no commercial sense for anyone to buy this club and it's amazing that two other people wanted to buy it.
"One is another West Ham supporter (Tony Fernandes) and the Italian (Massimo Cellino), I'm not quite sure if he looked at the books properly, but if he looked at the books he might have walked away.
"We've paid down some of the debt and injected some working capital but there's still more than £100million of debt.
"In that there's £50million owed to banks, there's £40million owed to other clubs. There's not a penny to come in, they (the previous owners) have borrowed against the next two years of season-ticket money. The sponsors have paid 70% of their three-years up front.
"In addition there's the club's settlement to (former manager) Alan Curbishley, so the real debt is about £110million."
The new Hammers ownership team revealed their first achievement had been to avert the need to raise £20million in the next two transfer windows to keep the club afloat - £8million in January and £12million in the summer.
Gold told Sky Sports: "The first thing we needed to do was not to bring in new players, the first thing was to make sure no players left. Up until a month ago you constantly read and saw on TV that the current owners would have to sell their best players to stay in business.
"We can reassure fans who were terrified that they were going to lose two or three of the best players that that is now not going to happen."
Sullivan believes the club's future would be brighter if they could move to the Olympics stadium in east London after the Games in 2012, but admitted they would have to reach some kind of compromise over the running track.
Asked whether they would be happy to live with the track around the pitch, he told Sky Sports News: "Ideally no, but there may be a way we could lay the running track for three months or something. It may be cheaper to build a running track somewhere else. I don't think running tracks work, particularly behind the goal. The customers are so far back it doesn't work.
"We don't want to buy (the Olympic Stadium), we want to rent it. The Government promised to keep it alive for 30 years, it's going to cost them more to keep it alive. With us it's going to cost them nothing - we would pay all the running costs."
Sullivan's deal sees him taking strategic and operational control of the club with his 50% stake, while he has an option on the remaining shares which will exist for a four-year period.
Nevertheless, with the club in a perilous state, he is instead hopeful of attracting a team of wealthy investors to help get the Hammers back on track.
"We own 50% of the club but I have an option on the other 50. I would share that with David but I would like to have four or five West Ham supporters with lots of money to come in.
"The debts here are so large that most Englishmen can't carry them so we would like to share them with others and help take West Ham to the next level.
"The bank Straumur own the other 50% right now and my option to buy is for anytime in the next four years.
"Our preferred option is that we find other people who want five or 10% and we will go to Tony Fernandes, who was one of the others interested in buying the club.
"If you imagine a government of national unity in national crisis this is the board equivalent and we want people to come in and help dig the club out of that.
"Every stone you turn is a negative to the cash flow of the club and viability of the club.
"They (the previous owners) have done a fantastic job of keeping the club alive but the cost is we are taking over an incredibly bad situation. However, we will sort it out because we are good at it."
One of the new regime's initial concerns is to press ahead with plans to take over the stadium being built three miles down the road for the London 2012 Olympic Games.
While it is far from probable the Hammers would be granted use of the facility, Sullivan believes it would be the best possible legacy.
"It is a priority for West Ham that we move to the Olympic Stadium, three miles from where we are now," he said.
"If we have a huge ground, we can take football back to the people, reduce admission prices and become the cheapest Premier League ground in the country.
"If (our chances) are not better than 50-50, I'd be very surprised. It can't be comprehended that a government can build a huge ground, then reduce it and use it for rugby, which would be empty.
"There's a precedent with Manchester City getting the Commonwealth Games stadium so, to a large extent, we should get it, but we are in negotiations."
Sullivan went on to predict a top-flight side other than the Hammers could go to the wall before the end of the season.
Asked about the general state of finances across the Premier League, he answered: "If a club doesn't go into administration before the end of the season, I'd be very surprised.
"It is possible that the club, which will remain nameless - not this one, though - has football debts that may exceed the value of the club, which would put that team out of business."
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