West Ham set to turn down 'rescue package'

Gold and Sullivan's offer guarantees £20m for players in exchange for full control

David Gold and David Sullivan will make a bid for West Ham United within the next 24 hours that will involve no money being paid directly to the current owners but will guarantee a cash injection for players and urgent debt repayments in exchange for a 50 per stake in the club, and effective control. Around £20m, contractually guaranteed in return for shares, would be invested in January, if a deal can be pushed through in time. Further funds would be committed later.

"This is almost a rescue package," said a well-informed source with knowledge of the bid. "Any money that they [Gold and Sullivan] put on the table will be used to build up the football club. It's not about helping the incumbents, but helping West Ham, and possibly saving them from relegation."

The offer is likely to be rebuffed. There is a huge disparity between what Gold and Sullivan feel is a sensible way forward, and how the Icelandic owners, CB Holdings, view the situation.

West Ham have £40m in debts in bank loans alone, plus at least another £30m in other liabilities, including some £19m to Sheffield United as a result of the Carlos Tevez fiasco. Yet CB Holdings appear to believe that even in the worst recession in decades, they can still calculate the value of the club using an "enterprise value" equation that adds debt and equity values.

In layman's terms, they see the debt as £70m, and would like to pocket £50m for themselves, and thus hope they can find a buyer who will effectively stump up £120m to take control.

Gold and Sullivan see things rather more starkly, viewing West Ham at a "tipping point" where a fall from the Premier League would be a precursor to the kind of financial meltdown seen by Leeds United and Southampton among others who have fallen to England's third division in recent years.

CB Holdings is 70 per cent owned by a bank, Straumur, to whom a large chunk of the club's loans are due. Gold and Sullivan ideally want Straumur to "park" West Ham's debt (pay the least amount required to service it), while most of their proposed investment would be spent on players, wages and infrastructure to help them stay in the Premier League.

The rationale is that Gold and Sullivan feel West Ham, debt free, would be worth around £60m or so, more in a boom, less now. As a stable Premier League club a few years down the line, it could be worth twice that. Their offer effectively asks the Icelandic owners to seek long-term stability and profit rather than risk the meltdown that would almost inevitably follow if West Ham were relegated.

West Ham's chairman, Andrew Bernhardt, has said there is no urgency to sell the club, and with talk of a mystery potential bidder from America waiting in the wings, is unlikely to relish the opportunity of taking on the Gold-Sullivan deal. The gamble is that West Ham will be left to founder without new cash, get relegated, and end up in a post-administration fire sale.

Gold and Sullivan will also outline how their experience in the game can assist West Ham, where Gold was a junior player, and where the pair co-owned a 30 per cent stake in the 1980s before selling up and investing in Birmingham. They subsequently bought the Midlands club for just £1, and after 16 years' ownership sold it earlier this year to Carson Yeung for £82m.

Gianfranco Zola's team currently sit one point above the relegation zone and are in desperate need of reinforcements to the squad during the January transfer window.

£82m

The amount that David Gold and David Sullivan sold Birmingham City for this year, having bought the club for £1.

Have you tried new the Independent Digital Edition apps?
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones