Premier League soccer team West Ham United’s fiscal-year loss widened because of costs related to firing its former manager and a lower league position last season.
Parent company, WH Holdings Ltd., had a net loss of 20.6 million pounds ($33.5 million) for the year ended May 31, according to a filing published by Companies House. Sales year declined 6 percent to 71.7 million pounds. The team has 90.2 million pounds in accumulated losses in the past five years.
West Ham was taken over by David Gold and David Sullivan in January 2010. The east London-based club avoided relegation from the Premier League last season by one place. That cut its performance payments from the league by 6.4 million pounds from the previous season, when it finished 9th.
It fired Gianfranco Zola and his coaching team and hired Avram Grant. Costs associated with terminating those contracts were 3.4 million pounds. Under Grant, the Hammers are in the relegation zone, 19th out of 20 teams after 28 matches.
“In the event that we are relegated at the end of the season, contingency plans are already in place and we will act decisively to give the club the best possible chance of returning to the Premier League at the first attempt,” chairman Sullivan said in a statement in the accounts. “The club is financially secure regardless of its league status.”
Salary Ratio Cut
Gold and Sullivan have tried to stem costs. Wages fell by 9.7 million pounds, bringing the ratio of salaries to revenue to 70 percent from 79 percent. European soccer’s governing body, UEFA, says a 70 percent ratio is the maximum a club should spend. Operating expenses fell 16 percent to 75.1 million pounds.
The owners last year expended 24 million pounds on the team, using half to pay down borrowings. Net debt declined 40 percent to 33.5 million pounds. A 26.5 million pound loan that had matured has been refinanced until the end of 2013.
Gold and Sullivan now own about 60 percent of the team after buying a 50 percent stake in 2010 with Iceland’s Straumur-Burdaras Investment Bank hf. The bank took over in June 2009 after former owner Bjorgulfur Gudmundsson was unable to pay creditors. Efforts to sell a 40 percent stake in the team for 40 million pounds have failed. The Telegraph yesterday reported Gold and Sullivan are now looking to increase their stake to 82 percent.
The U.K. government yesterday backed West Ham’s selection as anchor tenant for London’s Olympic Stadium after the 2012 Games.