Financial

Whatever happened to Financial Fair Play?

We hear very little about Financial Fair Play these days from the West Ham board for one very good reason.

Clubs have now been allowed to increased their wage bills by £7m per season – up £4m on the previous three-year scheme.

Last year Premier League clubs quietly voted to continue the self-governing Premier League FFP scheme which will run for a further three years including this season.

The Hammers published a total wage bill of £84.7m in their 2016 accounts for last season but this includes non-playing staff which aren’t included in the FFP cap. That was an increase of £12m on the 2015 wage bill of £72.7m which saw a £9m increase from 2014 when the wage bill was £63.8m

A financial source close to the club told us:

“For 2016-2017, we elected (along with the most other clubs) to take our actual (player wage) spend from 2015-2016 and add our annual allowance of £7.0m plus our Club Own Revenue Uplift (CORU) to give us the maximum amount we can spend on players plus NI. We remain well within this cap and will comply with the STCC rules. We did not go back to the 2013 base year as it was not in our interest to do so as we have generated CORU each year and if we went back to the base year it would limit our spend.”

“For next season, 2107-2018, we will again elect to take our actual (player wage) spend in 2016-2017, and add £7.0m, plus CORU, to give us our maximum spend. We will comply with the STCC limits as we have for the last four years.

“For 2018-2019, we will take our actual spend in 2017-2018, and add £7.0m plus CORU to give us our maximum spend.”

“Rest assured, we know our obligations and we know that the Premier League looks at this closely, and we would never risk breaking the rules.”

“We have complied every year and will continue to do so. Suffice to say we operate within the rules and have sufficient headroom when required.”

A source close to club said on FFP:

“Suffice to say we operate within the rules and have sufficient headroom when required”


Talking Point

The £140,000 London Stadium investigation

At the end of February, the Mayor of London quietly announced that accountancy firm Moore Stephens had been appointed to write a £140,000 report about the mistakes made in the London Stadium transformation and what lessons could be learnt.

The purpose of the investigation is listed by the Mayor’s office as:

• To provide a narrative explanation of the history of the London Stadium, including all relevant construction, financial and operational arrangements, with a particular focus on the stadium’s conversion into a multi-use arena and the subsequent negotiations and arrangements

• To confirm the key decision points and contractual commitments made, including the financial and operational projections that informed the significant investment of public money into transformation works and who was responsible for them

• To assess whether the work leading to the decisions and commitments made was sufficiently robust and subject to appropriate levels of due diligence and negotiation to ensure that value for money was achieved for the taxpayer after taking into account the legacy objectives and expected benefits

• To report on the stadium’s financial viability in terms of an assessment of the ongoing and future operating costs and income of the current working arrangements

• To identify any lessons that can be learnt

• To work with all relevant organisations to obtain evidence for this work, reporting any lack of co-operation to the Mayor’s office

• To produce a report for publication.

The investigation and its resulting report will cover three distinct phases in the genesis and life of the Stadium:

1. The Olympic bodies’ original decision making in determining the design and nature of the Stadium built for the Games and what thought was given to how the Stadium would be used post-Games

2. The decision making of LLDC and its forebears in the tendering for and delivery of the Stadium transformation in light of the original design and its legacy objectives

3. Decisions pertaining to the current operational arrangement for the Stadium, including those made by LLDC, LB Newham and E20 Stadium LLP, and those taken by Her Majesty’s Government and the GLA such as hosting the 2015 Rugby World Cup and the 2017 World Athletics.

Moore Stephen’s project plan is for a draft report to be presented to the GLA in June 2017. The report will then be finalised and a public report made available to the public later in the summer.

Whether £140,000 is a good use of taxpayers money to tell us what we already know is a valid question but Moore Stephens seems an odd choice as they have been regular auditors for the LLDC and were involved in the stadium transformation itself.

In 2013 they audited the LLDC for change control, project management and business cases in relation to the Queen Elizabeth Olympic Park and these reports are still in the public domain. In 2015 they were involved with the Mayor’s office to audit the London Stadium transformation project. They gave a green light to the project in
April 2015 in another public document which is still online.

It all seems rather strange but then again it is politics at the heart of this investigation.

The Stadium operators budget and business case has been shot to pieces, they under estimated the number of stewards, the cost of policing and extra security costs. The lack of a Stadium naming rights partner for the first season has cost them big also. Budget projections from the LLDC suggest they will lose £8.4m in operating costs in the stadium 2017/2018 with a loss of £5.4m in operating costs in 2018/2019. They are predicted to lose £35m this year.

Gone are the days of a business plan which suggested a £250,000 profit each year to the taxpayer. At the time there was an outcry it was only £250,000!

As a side note, the stadium owners are thought to be on the brink of announcing paying London Living Wage for all sub contractors working the London stadium which increase running costs yet again by at least another £250,000 per year.

We shall wait and see the outcome of the report but I could have saved them the money as I can almost guarantee what the report will say.


Talking Point

The Sound of Advantage - It's About 1/r²

Guest Post by Tony Edwards

As a musician, and having worked around recording studios and concert venues large and small since I was little more than a kid, you learn very quickly that in some environments you’re going to have a good night, and in others you’re going to face an uphill struggle.

Playing gigs in village halls was always likely to be tough – hard surfaces with the sound confused by multiple reflections, crowd hugging the walls. Low ceilinged clubs with soft furnishing and people right up to the stage were a sound man’s dream. But too, this is a rock musician’s best environment – because the sound of an audience itself has a massive psychological impact on how we as musicians perform.

What has this got to do with football you’re starting to ask? It’s the phenomenon of 1/r². Sound Pressure levels are inversely proportional to the square of the distance from the source. Sound pressure, compressions in the air, is how the human ear receives audio information.

In 2011, an experiment was carried out by the Press Association Sport into how loud football stadiums actually were. Seated in the stand they were given a device to measure the average Decibel level in the first 60 seconds after kickoff. West Ham scored a very respectable 81dB, 7th highest in the Premier League.

Let’s assume that the front seats at Upton Park were an average of 3m from the pitch. The pitch was 64 metres wide, which makes the shortest distance to the centre probably about 35 metres. At the London Stadium, that distance probably increases by about 15 metres, as the pitch is 4m wider and the closest seat to the centre circle (block 138) is about 10 metres further away than the closest West Stand seat at the Boleyn. But the gentle rake of the seating takes most people much further away than that – sight lines are good, but distances are way longer.

Suddenly we see how 1/r² reduces the sound pressure level (SPL) on the pitch, that SPL falls off very quickly as the distance increases – the graph of this looks like a ski slope. Doubling distance reduces Sound Pressure by 75%. But that cannot be the whole story – because accounting for increased numbers, the stadium shouldn’t exactly be quiet.

Frequency plays a part too. Low frequencies have long wavelengths and travel well, higher frequencies do not. Perception of ‘loudness’ is linked to ‘presence’ in the sound – a phenomena based in the higher frequency range. As those higher frequencies suffer more amplitude loss to the environment over distance than do low frequencies, the sound loses a perception of intensity as well as measured volume. Higher frequencies do reflect better, and at the Boleyn the roof helped to reflect them down towards the pitch. But the new stadium roof is higher, so the distances for reflected sound to travel are further and 1/r² comes into play yet again.

The psychology of this is based on expectations. As the home team, you’re expecting the roar of the crowd at your back. 50,000 people v 2,000, that’s your home advantage. When it seems subdued ( including the effect of ‘presence’ decay) it’s like something vital has been lost. Conversely, the away team expects that hostile environment, but when it isn’t there this acts as mental boost. Sound has been used as a psychological weapon in siege situations, to batter the enemy into submission. For musicians however, the noise of the crowd raises the adrenaline, heightens awareness and boosts energy levels, because that’s what our minds tell us we need, it’s how our psychology works. We are the ‘home team’ in this situation.

Even in the seats, does the LS sound as loud as the Boleyn? I don’t think so . You can see everyone is singing ‘Bubbles’, but the sound seems to disappear into the openness of the bowl as the early reflections don’t return because of the shape and size of the place. That in turn affects us too, further reducing our effectiveness due to a feeling that the ‘atmosphere’ is dampened. I’m told it’s a great venue for Rock Concerts, the sound is clear right around the stadium. That would make perfect sense because you don’t want sound reflection at a gig. That’s a nightmare for music, tuning it into garbled mush. However, because the crowd is also on the pitch, the musicians feel no detriment either – distance to the audience is reduced.

So the physics of sound and the psychology of expectations linked together show one way in which home advantage at the London Stadium is potentially lost. While this is no excuse for poor performances, it might go some way to explaining the slow starts to games, and why the London Stadium’s hugely increased capacity hasn’t generated a ‘fortress’ environment.

It’s all about proportionality – it’s about 1/r²


Talking Point

The West Ham Season Ticket Renewal Scenario

West Ham proudly announced had a record breaking day in the Ticket Office with over 9,360 supporters renewing their season tickets at the London Stadium for next season. That is a new record for the club and accounts for eighteen per cent of the current fifty-two thousand season ticket holders. A club insider said that previous renewals at the Boleyn Ground amounted to around three hundred on day one of the renewal window.

The announcement followed the confirmation that season ticket renews would be frozen in price but I am guessing that new season ticket will slightly rise when they become available as the club has made it clear the price freeze refers to renews only.

There is a little bit of marketing spin in these record figures. The 52,000 season ticket holders include up to 3,600 corporate Club London members all of which have signed up for three years so their automatic renewal was contractually obliged. Next was 3,000 band 5 season holders who paid two years up front when we increased from 54,000 to 57,000 capacity. They were renewed automatically too last Monday without lifting a finger.

Don’t get me wrong, the renewal of over 2,760 season ticket holders in one day was still an impressive feat considering that just a few hundred would renew on the day on before the move. Many of these early renewals are being driven by the promise of priority of relocation within the London Stadium on a first come, first served approach.

The logistics of how this mass migration will be completed is still unclear but it is potentially a logistical nightmare with thousands wanting to move seats.

On the financial side Interest-free credit for four months subject to a £30 admin fee and a low-interest loan at 6% over ten months (down from 19.9%) are also helping to spread the financial pain to supporters which is always welcome.

Reports that current away season tickets will not receive priority have been dismissed by the club as simply not true. I have been told that current away season ticket holders will receive priority if they sign up before the May deadline with the remaining allocation being sold on a first come, first served basis. However, the club do say the allocation of five hundred in the away scheme has never sold out in reality.

Season tickets holders will be able to both upgrade and downgrade bands in the relocation window subject to availability of seats elsewhere. You will first need to renew your season ticket at the current price and if you are successful with your band downgrade you will be credited back the money to you.

Upgrades from any of 10,000 junior season tickets to adult will be permitted but upgrades from junior to adult will not be allowed. The Under 16 season ticket holders will undergo an identity verification process before the beginning of September.

In twitter poll on social media of 400 season ticket holders 61% said they would renew their season ticket with 39% claiming they would not.

KUMB also ran a poll on their forums with nearly 300 voting. 41% said Yes 39% No with 18% Unsure

The London Stadium survey published yesterday had 4,392 supporters who claimed they were active season ticket holders.

2,546 fans say they will renew their season tickets which is around 58%, just 17% claim they won’t renew their season tickets which could account for as many as 8,840 seats if they really mean what they say! 1,082 were undecided which account for the remaining 25%; again history tells us many of them will bite the bullet and renew as the deadline gets closer so renewals could be as high as 83%. With a doubling of season ticket holders from 26,000 to 52,000 last season we were never going to get 100% renewals and not all of the reasons for non-renewal will be down to the London Stadium.

With the club claiming there are now 55,000 on the £10 waiting list for a season ticket holder we will soon see how many of those non-renewed season ticket seats are snapped up by the waiting list.

The club is keen to stress that this year the May deadline is the absolute deadline and you will lose your seat if you don’t renew in time. In previous years we have seen extensions for absent minded fans.

Key Dates

Friday 14 April Deadline for online Monthly Payment Plan applications. Applications can still be made before the renewal deadline but they must be made in person or by calling the Ticket Office.

Wednesday 31 May Renewal deadline. Make sure you renew by 5pm as, following this date, your seat will be made available to Season Ticket Holders wishing to relocate and offered to the 55,000-plus supporters on the Waiting List.

Thursday 1 June Priority relocation window opens. Seat relocations will be subject to seat availability at the end of the renewal window. Relocations will be prioritised by how early you renew your Season Ticket, and the priority window slots will be communicated to supporters nearer the time.

Thursday 15 June Priority relocation window closes.

Friday 16 June Season Tickets on sale to Waiting List.


Talking Point

In Slaven Bilic We (Still) Trust ... Don't We?

Sometimes we fans are a fickle lot. Lose three matches on the spin and the players are all rubbish. The manager must go. It’s verging on the ridiculous. We forget previous successes, we forget that much the same team (with one big and rather obvious exception) nearly qualified for the Champions League last season. We forget that moving to a new stadium was always going to make this season more difficult than it might otherwise have been. Heads are called for. The manager is incompetent and every player should be transferred out of the club as soon as practically possible.

What utter tosh.

Sometimes we should be careful what we wish for. Sometimes it really is worth sticking with nurse for fear of something worse, and this is one of those times. Look, I’m not stupid, I recognise that this season has seen some pretty inexplicable things happening at West Ham. We have a manager who was one of the best defenders ever to wear the claret & blue short, yet so far this season we have conceded 52 goals. In the whole of last season we conceded 51. We can’t just blame it on injuries and the fact that we have rarely played with the same back four. It goes deeper than that. In part it’s because we haven’t had a regular back four. Sam Byram has never really been given a chance. OK, he has been injured but when he’s fit why not play him so he gets a run in the team? He’s had one bad game and now we are told that he isn’t really rated and will be moved on in the summer. We’re now down to the bare bones in central defence with the injury to Winston Reid. So why did we loan out both the Reeces? Ask me another.

Do I lay that all at Bilic’s door? Well yes, I suppose I do, but even then, it’s not enough for me to want him gone. I want him to stay because I can see what he is trying to achieve. He buys into West Ham in a way that few other managers could. Do we seriously believe Roberto Mancini would see West Ham as anything other than a stepping stone to get back into managing a Champions League club? His awful defensive way of playing would make us all hanker after Sam Allardyce within a few weeks. And I’m not joking. Has he ever managed a club that didn’t have zillions of spondoolicks for him to waste? No. Could he relate to ‘the West Ham Way’? If you’re David Sullivan or Karren Brady and you’re reading this, rearrange these words into a sentence – touch with a don’t bargepole.

Are there any British managers who we’d be crying out to recruit? I can think of a few who might fancy their chances, and even do a decent job – Gary Monk being one – but what confidence would we have that they’d be any better than what we have got.

The truth is, even though the current team have been frustrating to watch this season, at times, they have played excellent football. The trouble is they haven’t managed it over a ninety minute period. Too often we’ve been brilliant for the first half an hour and then withered away (Watford home, for example). Too often we’ve been useless for the first half and then only sparked into life in the second half (cf Leicester home). We’ve been consistently inconsistent.

Given that we were at one point firmly anchored in the bottom three, we now hover between 9th and 12th. It could have been oh so different.

It’s not that we’re not scoring goals. We are. We’ve scored 40 in 29, a more than acceptable return in some ways. Our attacking play has sometimes been scintillating, but we didn’t get that 20 goal a striker we were promised in the summer. No it is not. Yes, some of his signings have been ropey – Zaza and Tore are the two most blatant examples, but the fact is they were loan signings. But there’s plenty on the other side of the balance sheet. Obiang. Lanzini. Antonio. Just for starters. All managers buy duds as well as the odd jewel and Bilic is no different.

Who could have foreseen what would happen with Payet. We were all taken in by him. When the situation became intolerable Bilic fronted up and told us exactly what had happened. I don’t think a single one of us blamed anyone other than Payet. So far as I am concerned Bilic did the only thing he could. He didn’t bullshit us, even though he so easily could have.

We’re told that Bilic needs to finish 8th or 9th to get an extension to his contract, and he needs to finish tenth to avoid the sack. Well that’s just plain ridiculous. Given our trials and tribulations I regard anything above 14th as a decent season. My guess is that we’ll finish between 10th and 12th.

In some ways it’s up to the players. If we get to 40 points in the next few games there is a real possibility that they will switch off and mentally go on holiday. For Bilic that could be fatal. So in the end they have got to decide: do we want Slaven as our manager next season, or do we not? We will soon get our answer.

Given our injuries, if I were Slaven I’d change the team around a bit. The first thing I would do is tell Edimilson Fernandes that we had a first team start for every game for the rest of the season. He’s brilliant in every game he’s played. He has an eye for goal, he can beat players, he’s quick, he’s strong and he can tackle. Yes, he has the odd rush to the head, but he’s young and fairly inexperienced. He may be one for the future but he’s also one for the present. If Slaven gives Fernandes a chance he’ll play his guts out for him.

Well that’s the case for the defence, even if I have gone out of my way to point out some of Bilic’s weaknesses. I have every confidence that he will succeed and that if we recruit three or four top class players in the summer and get rid of some of the dead wood we can have a really good season next time around.

It’s the hope that kills you, eh?


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