West Ham will be in a dire financial situation if they get relegated from the Premier League, Hammers News has learned.
After West Ham lost 2-1 to Nottingham Forest on Tuesday, they are seven points adrift of safety and are expected to go down.
Nuno Espirito Santo’s future also hangs in the balance, but his job remains safe, as things stand.
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West Ham will have £170m problem to deal with in event of relegation
Adam Williams, GRV Media’s Head of Football Finance and Governance Content, has reacted to the recent development surrounding the Irons’ finances.
West Ham are expected to suffer losses north of £100m for last year, with the accounts to be released in the coming weeks.
Williams believes that with relegation on the cards, they would continue losing a lot of money and could be in the red for their PSR calculations by a colossal £170m.
This is shocking! 😰 Relegation is going to be dire for West Ham…
What would YOU do to avoid this mess?
He told Hammers News exclusively: “If West Ham are set to lose £100m for 2024-25, you would have to anticipate something not too dissimilar in 2025-26.
“They have booked bigger player sale profits which will help in the short term, true, but they have spent heavily on a net basis again, so amortisation is going to have risen quite significantly for two years in a row. Wages are probably up a little bit too. Commercial growth will be limited, as will matchday.
“So, while it might be a bit of a finger-in-the-air number, let’s say they lose £70m in 2025-26 and are relegated. They would be in the red by £170m going into the third year of the three-year PSR assessment period in the Championship, where their loss limit would be set at about £85m. That’s a huge gap to make up.“
West Ham may be compelled to cash in on star names
It is going to require a serious adjustment to the way West Ham operate if they are to get within the permitted £85m cap.
This would compel them to cash in on star players in order to rake in decent transfer fees and also get them off the payroll.
They would want to avoid PSR mistakes that Leicester City made, as that would have long-term ramifications.
Williams added: “Clearly, they would make significant player sales and the wage bill would plunge as step-down clauses kick in. But even when you add back allowable spending on the academy, women’s team, charity and so on, there is going to be a pretty brutal adjustment to get within that £85m cap.
“We’ve seen Leicester City fall into this trap in the past and suffer with PSR. Leeds United, too, albeit they didn’t breach.
“The Premier League is moving to a new Squad Cost Ratio system based on spending as a percentage of turnover but the Championship doesn’t look like it’s about to mirror that approach – not in time for next season, at least.
“Under the existing PSR system, West Ham would then also have a lower limit than the £105m cap if they were re-promoted at the first time of asking.
“We don’t know how the Premier League and EFL are going to align their systems for teams moving between the two divisions yet, but if it’s something akin to the old system, then it would potentially be a problem for West Ham beyond 2026-27 too.”
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