West Ham endured a disappointing season on the pitch, a new Olympic pitch, finishing 11th in the Premier League after being in a relegation battle for much of the season. The season started full of hope with the new 66,000 seater stadium, this was extinguished immediately after a surprise loss in the play-offs round of the Europa League which undid all the hardworking put in the previous season.

The club invested heavily in players without any success, also having a poor season in the FA Cup and Carabao Cup, with 3rd and 5th round exits respectively.

Off the pitch however the club soared to record profit levels, recording a profit of £43m, which fans would expect to be pumped back into transfers this year – however there has been little indication that would be the case.

Revenues reached record levels, as did expenses however revenue growth outshone the expenses growth in order to reach these record profit levels.

This article will analyse the financial performance of West Ham for the 2016/17 season.

Revenue Analysis

Revenue continues to grow year on year for West Ham, reaching new record levels of £183.3m, a 29% increase on last year’s revenue of £142m.

Revenue compromises income from matchdays and gate receipts, TV broadcasting revenue based on televised games and competition finishes and commercial revenue from merchandise and sponsorship’s.

Revenue grew on all these fronts with broadcasting bringing in the biggest boost on the back of the new Premier League TV deal.

Broadcasting revenue grew 27.3%, increasing from £86.7m to £119.3m despite finishing 4 places lower than the previous season. As for many mid-table Premier League teams, broadcasting revenue is vital to the club’s survival as broadcasting revenue makes up 65% of West Ham’s revenue, making relegation unthinkable at this stage despite its very real possibility.

Matchday revenue surprisingly rose timidly, increasing from £26.9m to £28.6m (6%) despite their new stadium increasing average attendance by over 20,000. Lower pricing and less spend at games are the only explanations for a lack of a significant revenue boost, the West Ham owners will be hoping for a larger rise in the coming season to lessen their reliance on broadcasting revenue.

Commercial revenue grew significantly on the back of West Ham’s Olympic Stadium move, growing 19.8% to £35.4m. West Ham enjoy the ‘London premium’ with London Premier League outside the top 6 usually bringing in larger revenue from commercial sponsorship’s due to their London homes.

We expect West Ham to have largely stagnant revenue next year, poor cup performances yet again mean there will be a lack of revenue from here, while another poor season in the Premier League looks destined meaning less revenue from this source with the current TV deal already reflected this year.

West Ham will require matchday and commercial activities to see any significant rise in revenue next season.

Expense Analysis

Operating expenses also continued it’s year on year growth for West Ham, increasing to £165.4m from last year’s £146.7m (12.7%).

Expenses grew largely to three factors – Amortisation costs, wages and their new stadium rental costs.

Amortisation costs rose 32% to £45.4m due to the huge influx in players joining the club last season and minimal outgoings. 13 players joined the club with only 3 players leaving, this will be discussed in the next section.

Wages growth was less significant however still rose 14.5% to £95m. Wages grew by roughly £200k a week despite the departure of the club’s highest earner, Dimitri Payet.

Leasing costs for their new Olympic Stadium also boosted this expense figure at a cost of £2.4m, which still seems a huge bargain compared to the costs of maintaining Upton Park (Boleyn Ground).

Net interest expense fell this year by 16.7%, with the club paying off a significant chunk of debt after selling their old stadium which will be discussed in the final section.

West Ham paid a tax bill of £0.4m, which works out at a tax rate of just under 1% compared to the current 19% rate in effect. This is due to the use of previous losses made that can be used to offset profits.

Transfers Analysis

West Ham had a busy season in the transfer market, signing 13 players for a combined fee of £75.2m while seeing their star player Dimitri Payet leaving after a tug of war battle between West Ham and his new club Marseille.

West Ham signed Ayew (£21.7m), Snodgrass (£10.8m), Lanzini (£10.8m), `Fonte (£8.3m), Masuaku (£6.4m), Fernandes (£5.8m) on permanent deals.

Zaza (£4.5m), Calleri (£4.2m) and Tore (£2.7m) all joined for significant loan fees.

Arbeloa, Ashley Fletcher, Feghouli and Nordtveit all joined on free transfers, adding significant costs to West Ham’s wage bill.

The players signed overall can be claim be failures with 11 of the players no longer being at the club saying it all, only Lanzini and Masuaku remain from last year’s spending spree.

The sheer volume of players joining led to the work done last year being undone as they all needed to settle in front of a demanding fan base, something they couldn’t manage and was the primary reason for such a disappointing season.

Leaving the club were Payet (£26.7m), Tomkins (£10.5m) and Elliot Lee (Free) for a combined (£36.9m), with the disruption of Payet’s transfer causing a poor dressing room atmosphere as he pushed for a move to his homeland.

This led to a net spend of £36.9m a figure that has been steadily been increasing in recent years, something West Ham fans were hoping would continue into the current season, however this hasn’t been the case and fans have been letting the owners know their feelings about this of late.

Adding to their profit figure for the season was a large profit on player disposals of £28.4m compared to last year’s £4.1m profit, an increase of 593%! This is due to Payet being signed for a bargain £13.5m and Tomkins having minimal value in the accounts. For more information on how this is calculated click here.

Asset and Liabilities Analysis

West Ham went some way to making the club more sustainable, using the additional profit made this season to pay off some of their debts.

The club saw cash in the bank rise 8.3% to £30m, given the club money to spend on players, something they are yet to do however.

Debt fell significantly by 20% to £75m from £94m after they repaid £6.4m off debt owed to their owners – who looked to take out some cash while the club was profitable.

After selling their old stadium for a modest £8.7m they used this money and some more to pay off £14.8m in bank debt.

They also took out new loans of £55m which was secured against guaranteed revenue from the Premier League TV deal which they received in July.

With all of this, net debt fell 32.1% to £45m from £66.3m as the club look to become more sustainable and meet Financial Fair Play rules.

The club may have further outgoings based on a HMRC enquiry into dodgy agent fees (we’ve been here before haven’t we) with a possibility of a £2.3m payout to the Government.

Interestingly during the year, West Ham owners  also sold a 10% stake in the club to Blackstone CEO Albert Smith, selling the shares through a company called WHU LLC.

Albert Smith also put in £9.5m into this company which is repayable by West Ham in the event of a change of ownership, suggesting the Blackstone chief hopes to increase his stake in the future, especially if current fan unrest continues.

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