Post by Macmoish on Mar 3, 2011 8:36:15 GMT
The Guardian/The Digger - Matt Scott
West Ham clean up balance sheet
• Pre-tax loss rises but Hammers staff costs are cut
• Club renegotiates loans but £26m pumped in by shareholders
West Ham United are in a much better place than even one month ago. Winning the Olympic Stadium tenancy has coincided with only one defeat in their last six matches. But there has been a hidden and arguably far more important reason for the Hammers to be happy: their detritus-ridden balance sheet is at last being cleaned up.
The accounts to 31 May last year show a £20.6m pre-tax loss, which is £4.4m higher than that of the previous year. But the financial fundamentals of the club are far healthier than in recent seasons. Although a £6.2m fall in distributions from the Premier League shrunk cashflow – West Ham finished in 17th place compared with the ninth of the previous year – Davids Gold and Sullivan have been able to strip out £13m of staff costs (mostly from players). This has caused the club's wages-to-turnover ratio to fall to 70% from a completely unsustainable 79%.
A £10m debt owed to Straumur has been converted into shares and remaining loans have a smoother repayment profile. The club had been in breach of banking covenants on £38.5m of debt. This was dire straits: lenders could technically demand immediate repayment. But last month the loans were renegotiated. Now the £38.5m need be repaid only at the end of 2013.
There remain areas of concern. There is the relegation threat, the fact that the final instalment on their £21.5m compensation to Sheffield United will not be paid until 2013, that the healthy figures were only possible due to £26m of shareholder cash pumped in over the year and that £7.3m of next season's ticket income has been sold forward. But at least West Ham are still standing.
Vehicles to avoid
Whether Cardiff City's loan agreement with the Player Finance Fund, which was revealed here on Wednesday is the subject of a Football League inquiry, has broken any rules depends on the involvement or otherwise of Ray Ranson. The Coventry City owner manages the Sport Asset Capital hedge fund that Cardiff's parent company accounts say had been owed £3.5m by the club. When that debt was renegotiated, the Player Finance Fund loan was secured against Cardiff's player-transfer income. This mortgage might bring into play rules preventing interested parties from exercising third-party influence over another's administrative affairs. Perhaps, though, Ranson has nothing at all to do with the Fund. But it is impossible to tell, since the Fund is registered offshore in the Cayman Islands. The rules become pretty meaningless when influence can be exercised by impenetrably opaque offshore vehicles. An end to clubs and lenders being controlled by offshore entities (remember what happened to the Sven-era Notts County, Leeds United in 2007 and Portsmouth last year?) is imperative.
Gills under water?
According to Companies House, Gillingham's 2010 accounts are overdue. If what the high court heard this week is true – although according to the Watford Observer the judge did say the club's chairman, Paul Scally, was not "an open and candid witness at all times" – then there appears to be good reason not to lay bare the club's finances. For in a case brought by Jimmy Russo, a former Watford chairman, the judge was told that Gillingham are £13.5m in debt. That astonishing figure bears no relation to the sums owing to creditors listed in the club's most recent accounts, to 31 May 2009. These are put at less than £4.5m, so whence the other £9m of debt has apparently arisen is anybody's guess. Digger wanted to ask Scally but he did not return a call yesterday.
Lack of taste
William Hill has pushed the taste barrier to breaking point with its latest book. When will the next footballer come out as gay, it is asking punters: this season, during the close season, next season or beyond? Hill's spokesman, Graham Sharpe, told Digger that since the cricketer Steven Davies had joined the rugby player Gareth Thomas in coming out the subject is a talking point, making it legitimate to bet on. Perhaps this market was born of banter at the Hill's office about who would be the next footballer to come out. "Absolutely not," said Sharpe. "Absolutely not."
www.guardian.co.uk/sport/2011/mar/03/west-ham-balance-sheet
West Ham clean up balance sheet
• Pre-tax loss rises but Hammers staff costs are cut
• Club renegotiates loans but £26m pumped in by shareholders
West Ham United are in a much better place than even one month ago. Winning the Olympic Stadium tenancy has coincided with only one defeat in their last six matches. But there has been a hidden and arguably far more important reason for the Hammers to be happy: their detritus-ridden balance sheet is at last being cleaned up.
The accounts to 31 May last year show a £20.6m pre-tax loss, which is £4.4m higher than that of the previous year. But the financial fundamentals of the club are far healthier than in recent seasons. Although a £6.2m fall in distributions from the Premier League shrunk cashflow – West Ham finished in 17th place compared with the ninth of the previous year – Davids Gold and Sullivan have been able to strip out £13m of staff costs (mostly from players). This has caused the club's wages-to-turnover ratio to fall to 70% from a completely unsustainable 79%.
A £10m debt owed to Straumur has been converted into shares and remaining loans have a smoother repayment profile. The club had been in breach of banking covenants on £38.5m of debt. This was dire straits: lenders could technically demand immediate repayment. But last month the loans were renegotiated. Now the £38.5m need be repaid only at the end of 2013.
There remain areas of concern. There is the relegation threat, the fact that the final instalment on their £21.5m compensation to Sheffield United will not be paid until 2013, that the healthy figures were only possible due to £26m of shareholder cash pumped in over the year and that £7.3m of next season's ticket income has been sold forward. But at least West Ham are still standing.
Vehicles to avoid
Whether Cardiff City's loan agreement with the Player Finance Fund, which was revealed here on Wednesday is the subject of a Football League inquiry, has broken any rules depends on the involvement or otherwise of Ray Ranson. The Coventry City owner manages the Sport Asset Capital hedge fund that Cardiff's parent company accounts say had been owed £3.5m by the club. When that debt was renegotiated, the Player Finance Fund loan was secured against Cardiff's player-transfer income. This mortgage might bring into play rules preventing interested parties from exercising third-party influence over another's administrative affairs. Perhaps, though, Ranson has nothing at all to do with the Fund. But it is impossible to tell, since the Fund is registered offshore in the Cayman Islands. The rules become pretty meaningless when influence can be exercised by impenetrably opaque offshore vehicles. An end to clubs and lenders being controlled by offshore entities (remember what happened to the Sven-era Notts County, Leeds United in 2007 and Portsmouth last year?) is imperative.
Gills under water?
According to Companies House, Gillingham's 2010 accounts are overdue. If what the high court heard this week is true – although according to the Watford Observer the judge did say the club's chairman, Paul Scally, was not "an open and candid witness at all times" – then there appears to be good reason not to lay bare the club's finances. For in a case brought by Jimmy Russo, a former Watford chairman, the judge was told that Gillingham are £13.5m in debt. That astonishing figure bears no relation to the sums owing to creditors listed in the club's most recent accounts, to 31 May 2009. These are put at less than £4.5m, so whence the other £9m of debt has apparently arisen is anybody's guess. Digger wanted to ask Scally but he did not return a call yesterday.
Lack of taste
William Hill has pushed the taste barrier to breaking point with its latest book. When will the next footballer come out as gay, it is asking punters: this season, during the close season, next season or beyond? Hill's spokesman, Graham Sharpe, told Digger that since the cricketer Steven Davies had joined the rugby player Gareth Thomas in coming out the subject is a talking point, making it legitimate to bet on. Perhaps this market was born of banter at the Hill's office about who would be the next footballer to come out. "Absolutely not," said Sharpe. "Absolutely not."
www.guardian.co.uk/sport/2011/mar/03/west-ham-balance-sheet
