Talking Point

Leyton Orient's Judicial Review Explained

Today Barry Hearn and Leyton Orient will be returning to the High Court to seek a Judicial Review of the LLDC tender process for the Olympic stadium.

It is the second time that Orient have been involved in judicial review proceedings in relation to the Olympic Stadium. Their first legal challenge in 2011 initiated a series of events which ultimately led to the process being abandoned, and a new tender process commencing.

The new judicial review application is a claim relating to that new bid process.

In April this year Leyton Orient submitted a written application for a judicial review to the high court into the bid process but was rejected.

This time Barry hopes a oral hearing debating the issues surrounding the Stadium will allow the review to be granted

The Background to the challenge

All bidders were required to consent to ‘teaming’ when submitting their bids as the LLDC planned to team as many bidders as the event calendars would allow. The purpose of this requirement was to ensure maximum use of the stadium and return to the tax payer.

West Ham agreed to this teaming clause in their bid.

Leyton Orient claim that the LLDC’s decision has left West Ham as the only potential tenant and should of considered teaming with Leyton Orient.

What is a Judicial Review?

A Judicial review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body.
In other words, judicial reviews are a challenge to the way in which a decision has been made, rather than the rights and wrongs of the conclusion reached.

It is not concerned with the conclusions of that process and whether those were ‘right’, as long as the right procedures have been followed. The court will not substitute what it thinks is the ‘correct’ decision.

This may mean that the public body will be able to make the same decision again, so long as it does so in a lawful way.

So the judge could make the LLDC review its decision process again but it cannot force the LLDC to make West Ham and Leyton Orient share the stadium.

I have no problem with Leyton Orient as a club and even less problem with the Leyton Orient fans who support their local team through thick and thin but I do have a problem with Barry Hearn. He is like a bad loser who refuses to give in gracefully. I also think it is insulting to suggest Orient fans will switch alliances to West Ham just because we move into the Olympic stadium.

My own personal view is this latest attempt for a judicial review will also be rejected as was the case with the written submission in April but I am sure that is not the last we have heard of Barry.

In what appears to be separate orchestrated campaign, a group of Leyton Orient fans have launched their own bid to prevent West Ham moving into the Olympic Stadium.
The supporters make the claim the move breaks league rules blocking one club moving too close to another. They have contacted football clubs up and down the country in an attempt to get as many supporters as possible behind a campaign.

They have created an online petition which has been signed by over 500 people.

Their Group leader, Mat Roper, an Orient fan for 35 years, says: “We want to highlight how unfair this whole affair is”

I understand that Matt Roper is the brother of Daniel Roper who is the official Leyton Orient club mascot but I am sure that is just a coincidence.

4pm UPDATE

Leyton Orient lose right to Judicial review. At the High Court, Mr Justice Lewis said the LLDC was entitled to make the decision which was not “irrational”.

LLDC statement:

“We welcome the ruling and are pleased that Mr Justice Lewis agrees that we ran a fair, open and transparent competition to appoint concessionaires for the stadium.We believe the agreement we have with West Ham United Football Club and UK Athletics will deliver a fantastic sporting and community legacy in east London and represents the best deal for the taxpayer.”

WHUFC.com Statement:

“West Ham United welcome the decision to not grant permission for a judicial review into the LLDC’s process that awarded the Club the opportunity to make the Olympic Stadium its home in 2016.Although the application for a judicial review would not have had any impact on West Ham United’s move to the Queen Elizabeth Olympic Park, the Club have always believed the process was robust, fair and transparent. The Club and other key stakeholders in the Queen Elizabeth Olympic Park can now focus fully on progressing their groundbreaking plans to create a stunning venue of which the whole country can be proud, alongside a long-lasting and tangible Olympic legacy with a real community club at its core.”

Leyton Orient Statement:

Karren Brady told the House of Lords only a few weeks ago that West Ham United had no objection to a ground share with Leyton Orient, but West Ham United’s barrister today claimed that to ground share would adversely affect the club because the Olympic Stadium is “part of the brand”.

Our real concern is the lack of transparency that has been shown throughout the process by a public body. It is deeply disappointing that both the Court and the LLDC have made decisions based only on financial considerations, when the purpose of the Stadium’s legacy was regeneration of the area with a community focus.

We believe that the LLDC exercised its discretion to favour West Ham United, no doubt under pressure from West Ham United to make them sole football tenants for the benefit of their “brand”. Delivering a new brand to West Ham United was not the intended purpose of the Olympic Stadium, and we now have to look to the House of Lords to find a common sense solution for Olympic legacy and local community.

Sky Sports News Report on the judgement

If you haven’t seen it yet here is Karren Brady and Barry Hearn in front of the House of Lords select committee in July. I am sure we can expect more pantomime from Barry at the high court today.


Barry Hearn at the Select Committee


Karren Brady at the select committee


Talking Point

What West Ham pay Football Agents

Back in 2008 the premier league agreed to publish fees paid to football agents by clubs. This is now published on 30th November each year.

In the past three years West ham have paid £13.2 million to football agents.

In our season in the Championship we may have finished 3rd in the league but we topped the agent fees we paid in the league by a mile! We outspent everyone else in the division with regards to agent fees paid out clocking up £4,314,270 on 69 deals. The closest club to us was Leicester who spent £1,812,371 on 78 deals. Barnsley by comparison spent the least with £124,888 outbound to agents.

In 2009/2010 West Ham spent £3,419,089.99 in agent fees

In 2008/2009 West Ham spent £5,527,548 in agent fees

Mark Curtis

In August last year David Sullivan told the Daily Mail he had no concerns about the continuing close links between manager Sam Allardyce and controversial agent Mark Curtis. Mark Curtis is agent for Sam Allardyce, Kevin Nolan, James Tomkins, Jack Collison, Matt Jarvis and Andy Carroll. Mark Curtis was warned as to his future conduct by the FA in 2008 over his Luton transfer dealings gained fame for the number of deals he did at Bolton while Sam was in charge.

Willie McKay

In the same interview Sullivan confirmed Willie McKay received more in agency fees than Mark Curtis in the summer of 2012. He revealed ‘Mark [Curtis] receives five per cent of the player’s wages over five years, which is a lot of money but the standard rate’. Willie McKay was investigated by Lord Stevens into allegations of bungs in football but was later cleared. He was also arrested in 2007 by City of London police alongside former West Ham manager Harry Redknapp & Peter Storrie but again he was never formally charged and the case was later dropped. Last year he was stopped driving while disqualified with a bag of cocaine in his car.

Barry Silkman

The third agent often involved with West Ham dealings is Barry Silkman who was involved in Demba Ba & Thomas Hitzlsperger arriving at West Ham. He was also instrumental in bringing Ravel Morrison to West Ham from Manchester. More recently he has been involved in the attempt to bring Carlton Cole back to West Ham. Barry Silkman was also named in Quest’s final report into alleged Premier League “bungs”, At the time he said he will not cooperate with the further inquiries being pursued by the Football Association’s compliance unit because he believed they were unreasonable.

In 2011 former agent Peter Harrison admitted to the Daily Mail he freely took advantage of the naivety of the then West Ham chairman Eggert Magnusson to pocket £900,000 in commission in the deal to sign Lucas Neill. He claimed that when he took Lucas Neill to West Ham instead of Liverpool he earned £900,000 and we put Neill on £72,000 a week. He said ‘He was going to Liverpool but West Ham wouldn’t take no for an answer. It was incredible. At the time I thought it was just business – I had bills to pay, office, telephone, travel – but when I look back on it now I’m embarrassed. Harrison was Andy Carroll’s former agent who fell out with Mark Curtis over Carroll’s £35M transfer to Liverpool.

Earlier this year just after the January transfer window ended, David Sullivan called for the FA to look into agents’ conduct and cap fees. He said “I can see it spilling over into violence in the future, unless there is legislation from the FA. I had an agent threaten me and one of our players with physical violence, because he thought he was being cut out of a deal.”

Sullivan claimed the financial demands by agents had got out of control adding: "We are talking millions of pounds here around a transfer and not enough deals to go around. There are too many agents and not enough transfers to feed them. Agents who would once demand £50,000 for their part in a transfer now want £500,000 to £1m to either bring a player or keep a player. It is quite outrageous and the FA should cap the amount paid to agents for their work”

I agree with David and think it is staggering how much we pay in agent fees and the power they appear to now have on the game. I would like to see much more transparency with individual transactions published each year. The latest figures will be published on 30th November and with the arrival of Joe Cole, Stewart Downing and Andy Carroll I am sure they will make interesting reading with regards to West Ham’s most recent dealings with these football agents.


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!


Financial

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 WHUFC.com 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 WHUFC.com 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


Financial

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 WHUFC.com 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 www.financialfairplay.co.uk 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 www.financialfairplay.co.uk


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