Talking Point

How many jobs does Karren Brady want?

I read in a paper this week that Karren Brady will give a speech at the Conservative Party Conference in Manchester later this month. Doesn’t this lady have enough to do with her day! We are continually told what a challenging job it is to tackle West ham’s debt, build up West Ham as a global brand and negotiate a move to the Olympic Stadium. How does she find the time among her numerous other jobs?

As well as Vice Chairman of West Ham she is a director for Mothercare, Sport England, Arcadia and Simon Cowell’s company Syco. She has her TV role on BBC Apprentice, an author of books , magazines and paper columns including her Football Diary in the Sun, she is a motivational speaker and an ambassador for several charities including Wellbeing of women, Well child, The Strike Association, Mothercare Foundation and the Teenage Cancer Trust.

She is also chairman of Kerrang! Bet you didn’t know that!

All very commendable but now it seems she is ready to dabble in politics as a wannabe politician and has even been tipped as a possible future leader of the Conservative Party. I know women can multi-task better than men but there has to be a point where it is impossible to concentrate and focus on the most important job she has and that is with us at West Ham.

In the latest company accounts West Ham paid £427,000 to the highest paid director, widely thought to be Karren, so it is hardly a part time salary.

In June this year she revealed that she wants to get involved in politics but said “I would never accept a safe seat. I would always want a difficult seat. Being fast-tracked is not something that appeals to me.I love politics. I love Britain. I want to get involved.”

I have the greatest respect for Karren as a businesswoman but I wish she would decide whether she wants to be a business women, TV personality or a politician!


Why Financial Fair Play Doesn't Add Up

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In April this year before the season had finished Sam Allardyce was briefing the press how new financial fair play rules in the premier league could wreck West Ham’s chances of signing Andy Carroll in the summer transfer window.

I never worked this one out as we were already paying the majority of his wages on loan from Liverpool last season so what was the difference?

This started a media campaign by West ham to mention Financial Fair Play in almost every interview since then. Gold & Sullivan got in on the act explaining how they had one arm tied behind their back because of the new financial fair play rules bought in by the premier league which they voted for.

What has frustrated and puzzled many West ham fans is why no other premier league clubs bothered giving FFP a mention. What makes West ham so special with regards to FFP?

In a recent interview Sullivan was quoted as saying the cost of players wages including national insurance was £847,000 per week. A quick calculation brings the annual total to just over £44M pounds per year way below the £52M limit allowed.

In a West ham statement on on 26th August they stated that new rules state that “whatever a Club spent on wages last season, they are allowed to do so again, with an allowance for an extra £4m on top. If they did not spend £48m on wages last year, as was the case with West Ham United, they are allowed to go up to a new £52m limit.”

The suggestion from that statement was we spent under £48M last season but we are now very close to £52 million this season.

The last published accounts for WH Holding Ltd year ending 31st May 2012 show a total wage bill of £44.6M which includes non playing staff and was our season in the Championship.

The previous year ending 31st May 2011 we spent £55.7M on wages, the year we got relegated from the Premier league.

In the middle of the Icelandic ownership in the 2007/2008 season our annual wage bill soared to £63.6M from £42.4M the previous 2006/2007 season and just £20.2M in the 2004/2005 season.

At the end of last season:

We released Carlton Cole believed to have been on £30K per week and Gary O’Neil believed to have been on £25K per week.

The loans of Chamakh, Pogatetz and Paulista all ended releasing an estimated extra £1.5M from the wage bill.

If these estimates are correct we managed to trim £4.36M off the players wage bill at the end of the season.

In the summer transfer window we added Andy Carroll permanently to the club on a weekly wage believed to be £80k per week but I understand we were paying him at least £75k per week to loan him from Liverpool so maybe a net increase of £5k per week. Stewart Downing is said to have joined on £60K per week, Razvan Rat is said to be on £25k per week and Adrian is said to be on £17K per week. That makes the total increase just over £100k per week or £5.3M per year.

I know these are just estimates but I only see an overall net increase of just over £1 million to the wage bill.

Personally it does not add up to me. The statement said under £48 million so the gap could be even larger.

I remain open minded but I also find it amazing our wage bill was under £48 million last season in our first year back in the Premier League. I guess it is all just speculation until the financial accounts are released next year for the year ending 31st May 2013.

Even when the financial accounts are released we will only know the total wage bill of all employees. In the financial year ending 2012 West Ham employed 802 people. The senior players will be the minority of these employee numbers but make up the vast majority of the wage bill. They will be some exceptions such as the manager who is believed to earn between £2M & £3M per year including bonuses and the highest paid director believed to be Karren Brady who was paid £427,000 in the year ending 2012. These salaries will not need to be included in our FFP declaration to the Premier league.

Moving on to Financial Fair Play in general

The words ‘Financial Fair Play’ is a term never used by the Premier league. The premier league handbook which was published last month introduces a couple of new important rules.The Premier league have published a new form that premier league clubs will need to declare the total cost of players wages including any bonuses, image rights, additional payments, employer national insurance contributions and any pension payments.

In published 2012 financial accounts other Premier league wage bills included Man City £202M Chelsea £173M Manchester United £163M Arsenal £143M Liverpool £119M & Spurs £90M. These clubs could also easily generate extra income from sponsorship or commercial activities to get around these restrictions on top of their already massive wage bills. As an example earlier this year AON sponsored Manchester United training ground at a cost of £160m over eight years giving them £20M per year of extra income which could be spent on wages. The chances of West Ham getting a sponsor for Chadwell Heath seems somewhat unlikely although I guess they there is nothing to stop one of chairman’s companies from sponsoring the training ground. The Ann Summers training ground at Chadwell Heath perhaps?

Perhaps the reason the Premier league doesn’t use the term financial fair play because it is not fair. The richest clubs stay rich while keeping the poorer clubs in their place. It means it would be difficult for other premier league clubs to match the wage bills without significant commercial income to make up the difference.

The other rule is about losses over 3 years starting this season.

The maximum permitted loss over 3 seasons starting this season is £105M, However the maximum loss if an owner does not inject equity is just £15M over 3 years so just £5M per year.

Sullivan & Gold have injected equity in the form of £35M of loans in 2011 & 2012 and Sullivan purchased a further 25% in a debt restructuring exercise last month.

West Ham’s loss in 2012 was revealed at £25.4M when revaluation of property is excluded, In 2011 the loss stood at £18.5M and in 2010 £20.6M, so as a comparison the total loss was £64.5M over the last 3 years and well within the £105M limit if we continue or better that trend, However the owners will have to continue to inject equity each year at these levels.

A good explanation about Premier League Cost Control and Sustainability Provisions can be found from Daniel Geey at his website

David Gold on Sky Sports Transfer Centre before the window ended speaking about FFP


Who Owns West Ham?

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In January 2010 David Sullivan purchased a 50% controlling share in West ham United for £52.5 million with CB Holdings representing the Icelandic banks including Straumur retaining the remaining 50%. David Sullivan later split his share holding on a 50/50 with his long term business partner David Gold.

In May 2010 the two Davids increased their share holding to 60% investing an addition £8 million. £4 million of that investment is said to have gone straight to CB Holdings with the remaining £4 million being fed back into the club.

Terry Brown

In August 2010 released a statement saying they had found new investors in the shape of John Harris CBE and Daniel Harris founders of Alba group who are lifelong West Ham fans. Also included in this group is the infamous Terence Brown, former Chairman of the club. Daniel Harris joined the West Ham board as a non executive director to represent these new investors and Terence Brown was made Honorary Life President of the club following his investment.

John Harris

Their investment of £4 million was believed to be in return for 3.8% of the shares owned by CB Holdings. At the same time the two Davids increased their share holding to 30.6% each (an increase of 1.2% of the shares between them).

It is known that Terry Brown made £33.4 million from his original sale of West Ham shares to the Icelandic’s and received over a £1 million salary in his final year as West Ham chairman. His original investment into West Ham in the nineties is thought to have been in the region of just £2 million when he took over from the Cearns family. As a twist of fate the two Davids also originally owned 27% of West Ham which they purchased from Jack Petchey in the late eighties. The two Davids later sold their shares to Terry Brown but David Sullivan retained 4% right up to their compulsory sale when the Icelandic’s took over in 2006.

Daniel Harris

The Harris family owned the Alba group, a consumer electronics company with well known brand names including Alba, Bush, Grundig & Goodmans. Their net worth today is said to be over £150 million.

Bringing the story up to date, David Sullivan recently acquired a further 25% of shares in West Ham this July as part of a £25.5m restructuring of the club’s debt. The deal is thought to involve a swap of debt for equity after David Sullivan & David Gold lent West Ham £35 million in the form of personal loans with £1 million per annum of roll over interest as disclosed in the 2012 financial accounts.

The share holdings now stand at:

1. David Sullivan: 55.6%
2. David Gold: 30.6%
3. CB Holdings representing Straumur & other Icelandic banks 10%
4. John Harris, Daniel Harris and Terence Brown: 3.8%

Karen Brady claimed in an interview with the Times in 2012 she also has a ‘small shareholding’ in West ham but it is not clear whether that is included within the two Davids combined 86.2% share or as part of the 3.8% owned by the other investors.

Bob Ellis

During the recent purchase of extra shares non executive director Bob Ellis resigned from the board. Bob is a management consultant who describes himself as a restructuring specialist on his Linkedin profile. It was likely he represented the interests of CB Holdings until recently.

Andrew Bernhardt

A new non Executive director was appointed to the West Ham board in July. He is the former Non Executive West Ham chairman Andrew Bernhardt who now represents CB Holding remaining 10% share holding in the club.

Some have questioned the timing of the recent purchase of extra shares. In a recent interview with KUMB David Sullivan explained there was a deadline to purchase a further 25% of shares but after speaking with Financial Fair Play expert Ed Thompson of I believe the actions could also be related with a desire to comply with UEFA Financial Fair Play rules which if nothing else shows ambition that the board believe we could qualify for Europe via one route or another this season.

UEFA’s rules require our losses to be below 45 million Euros over the 2011/12 and 2012/13 season combined. Any loss above 5 million Euros for the two seasons combined has to be covered by an injection of equity.

Before the latest injection of equity by David Sullivan it is likely West ham did not comply with UEFA FFP rules.

David Gold  Karren Brady David Sullivan

If West Ham did not comply with these rules then we would be not be eligible to play in UEFA competitions next season. We have to apply to UEFA in advance. If you wait until you qualify it would be too late.

So maybe a top five or six position is a bit too ambitious this season but a good cup to be crowned as League cup winners or even FA Cup winners or runners up might be more within our grasp for an unlikely UEFA place next season!

Further information on UEFA Financial Fair Play can be found at


West Ham's Pay Day Loans with Vibrac Corporation

On Wednesday the Sun carried a small story that was probably missed by most football fans. The unassuming piece explained that West Ham had cleared its existing loan with the mysterious Vibrac Corporation and then immediately took out a new loan which they claimed could be as much as £70 million.

In March this year, Nick Harris from the Daily Mail wrote a story how West Ham had reached an agreement with this offshore lending company in the British Virgin Islands to borrow all £60million of our current season’s Premier League television money in advance.Nick claimed at the time that the revelation that West Ham set up this facility in September last year underlined why West Ham’s owners were at the forefront of campaigners within the League’s 20 clubs to bring in Financial Fair Play spending restrictions on wages this season.

Stories about the Vibrac Corporation are nothing new. Everton borrowed £13 million back in 2011 at a rate of 10% interest and have renewed that facility every year since.
A copy of the Everton mortgage documentation for that transaction filed with companies house can be found here

It is not known who owns the Vibrac corporation but they are based in the same building as BCR Sports, the company through which Robert Earl controls his stake in Everton FC.

In April 2012, a facility was also provided to Southampton by the Vibrac Corporation. Saints fans called for transparency over a mysterious financial document lodged by the club at Companies House at the time.

In April this year, a similar facility was also provided to Fulham to enable the club to borrow against future guaranteed income. However it is claimed this facility was settled early when Shahid Khan purchased Fulham last month.In the Fulham transaction they authorised the Premier League to pay £16million into Vibrac’s account with Barclays. Fulham put up Craven Cottage itself as security for the loan. In the draft mortgage document submitted to Companies House, an accountant named Robert Heppel is named as a witness to Vibrac’s side of the agreement.

So if the Daily Mail & Sun stories about West Ham’s dealings with Vibrac are taken at face value we could have borrowed up to £130 million as ‘pay day loans’ from Vibrac Corporation over 2 years and we could be paying as much as £13 million in interest if the 10% fee from Everton 2011 loan is anything to go by.

If the interest paid by West Ham is anything close to £13 million I see many questions being asked of our board of directors .

All should be made clear soon as WH Holding Ltd will need to submit their financial accounts year ending 31st May 2013. The first loan and any interest paid will need to be declared in those accounts.

Last year’s accounts weren’t published on the companies house website until 28th Feb this year so we have some time to wait before we know the true extent and scale of our mysterious dealing with Vibrac Corporation.

Note from Iain: I’d like to welcome Sean to the site. He will be posting regular articles on the finances of West Ham.

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