West Ham are supposedly set to reveal losses of £100m when they release their accounts for 2024-25 in the next few days. But after a £57m profit the previous season, where has the deficit come from?
Since 2018, the Hammers have been one of only a handful of Premier League teams to release their financial report in late December or early January, with most waiting until the spring.
But whenever a club chooses to go live with its accounts, supporters have to do a fair bit of deduction and educated guesswork to figure out where their club is in real time.
For West Ham, who after last night’s defeat to Nottingham Forest are being forced to contemplate the very real possibility of relegation, the finances aren’t merely academic.
Imagine YOU have just taken over West Ham?
What is the very first thing you do?
If Nuno Espirito Santo – or, as is looking increasingly likely, whoever succeeds him in E20 – cannot steer the ship away from the rocks, it is not just pride on the line.
Falling out of the Premier League would see the club lose around £100m in revenue overnight, accounting for lost broadcast, commercial and matchday income. And that’s a best-case scenario.
So when London Stadium sources told Hammers News in the summer that the club was set to post nine-figure losses for 2024-25, alarms sounded everywhere within earshot of the Bow Bells.
Some finance experts were sceptical when that £100m claim resurfaced recently. How, after posting club-record turnover and profit in the last published financial year, has the club plunged so far into the red?
Here, Hammers News breaks down the likely causes of the fall-off.
The Declan Rice sale and why 2023-24 is a misleading benchmark
Clearly, when comparing the 2024-25 figures to their equivalent in 2023-24, the biggest discrepancy is the Declan Rice money.
Most readers are probably familiar with the concept of a ‘pure profit’ sale by now, especially as it relates to Profitability and Sustainability Rules (PSR).
Selling academy graduates typically generates more profit proportionately than a non-academy sale because homegrown players have a much lower amortised book value.
Amortisation is how clubs account for transfer and agent fees over the course of a player’s contract, with fees divided by their deal length and hitting bottom line each year rather than all in one go.
When a player is sold, his remaining book value is deducted from the sale price. Ergo, a player with little to no book value, like Rice, generates more profit, which in turn counts towards the bottom line.
To say the Rice sale was ‘pure profit’ isn’t strictly true. Rice did have a book value, albeit one derived from agents’ fees paid when negotiating his contracts in East London, rather than a transfer fee.
West Ham’s accounts for 2023-24 show that the club generated £96m in player sale profits that season, which also saw Gianluca Scamacca, Nikola Vlasic and Pablo Fornals leave the club for around £40m all in.
That £96m was a club record and turned a £31m loss into a £66m profit before tax and finance costs.
That underlying loss is the starting point for the 2024-25 figures.
West Ham’s costs increased significantly in 2024-25
The word ‘costs’ here is used for simplicity. Yes, amortisation and depreciation are non-cash expenses, separate from transfer instalments, but they contribute to the club’s bottom line and that £100m figure.
Amortisation was £83m in 2023-24, up by almost £20m on the previous season. After spending around £125m in 2024-25, that figure will have risen. True, it will have been marginally offset by sales in the last campaign, but none of the outgoing players had particularly weighty annual amortisation attached to them, so their departures will not have moved the needle too significantly.
Overall, amortisation is likely to have risen by in the region of £25-35m. Profit on player sales meanwhile will have been pretty negligible.
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Wages will probably have increased a little too from the £161m spent in 2023-24. The club had no Europa League bonuses to pay out, but new signings and year-on-year rises will have cancelled that saving out.
West Ham’s rental agreement for the London Stadium meanwhile means they are more insulated than many of their peers from recent years’ huge spike in services and utilities costs, but that expense line will have increased all the same. The London Stadium deal, at the last count, cost £4.4m for the year.
The Irons had the Premier League’s eighth highest costs in the ‘other expenses’ category in 2023-24 at £60m. That will likely have risen again in 2024-25, perhaps by £5m or so.
Hammers’ revenue has shrunk
The 2023-24 accounts included around £2m of prize money for winning the Europa Conference League final, which took place after the 2022-23 year end accounting date. Europa League prize money in 2023-24 meanwhile was worth in the region of £16.5m. That’s £18.5m the club didn’t have in 2024-25.
Premier League prize money too has shrunk. Each place in the table is worth £2-3m, depending on the value of the league-wide TV and commercial rights in that season. That means a 9th place finish in 2023-24 generated around £12.5m less than a 15th place finish last season, taking lost revenue beyond £30m.
On top of that, there were fewer matchdays at the London Stadium. The Hammers played seven times at home in the cup and European competitions in 2023-24, compared to just once in 2024-25.
Karren Brady and her enforcers attempted to offset that fall-off with ticket price rises, but they are unlikely to have made up for the shortfall entirely.
Retail and sponsorship income probably rose or at least remained steady.
Commercial income as a whole, however, includes hospitality on matchdays at the London Stadium. And with fewer big-ticket European games, it seems likely that any overall commercial growth will have been minimal.
The bottom line? £100m loss looks realistic for West Ham
£30m in lost prize money, a similar rise in amortisation and another increase in other expenses means that, after factoring in interest and other costs, West Ham’s £31m operating loss in 2023-24 looks like it could quite easily swing to an overall loss of around £100m in 2024-25.
There is quite a wide margin for error in these figures, but the soon-to-be-released accounts won’t make for comfortable reading regardless.
Where does sizable loss leave West Ham on PSR?
In its current form, which is set to be replaced by a new Squad Cost Ratio system from 2026-27, PSR limits Premier League clubs to maximum losses of £105m over a rolling three-year period.
To get the maximum allowance, the bulk of those losses needs to be underwritten by ‘secure funding’, which can come either from payments from the owners or loans from a reputable financial institution.
Until we see the 2024-25 accounts in full, we won’t know how much secure funding West Ham have received, but David Sullivan and co have been relatively miserly on this front in recent years.
However, since the 2023-24 accounts, the club has registered three charges with Barclays Bank and one with Rights and Media Funding, the latter of which is known to charge double-digit interest.
Whatever the merits and demerits of those facilities, they likely give West Ham the full £105m allowance up until the end of the current PSR window.
A £57m profit in 2023-24 and a £100m loss in 2024-25 would give the club the leeway to post a loss of about £62m this season before breaching the £105m threshold. And that is before allowable expenses such as academy, infrastructure, women’s team and community investment are added back.
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The club has lost HUNDREDS OF MILLIONS over the last two seasons…
All in all, the Irons should be fine on PSR this season and, as the captures of Pablo and Taty Castellanos indicate, have room to spend this January transfer window without any immediate regulatory anxieties.
That said, if West Ham are relegated at the end of the season, they will lose nine figures of revenue overnight and be forced to dramatically reassess their cost base. While the Premier League is moving away from PSR next season, the EFL is sticking with its similar system for now.
West Ham’s allowable loss in the Championship would be around £85m, which two consecutive seasons of heavy shortfalls in 2024-25 and 2025-26 would make awkward to achieve.
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