Blind Hammer looks at financial evidence to guide expectations.
The chastening result against Manchester City in Iceland and the leaky defensive record of our pre-season games has at least operated to manage expectations for this season. This of course begs the question of what should reasonably be our expectations.
Last year in a post entitle “Mind the Gap” I looked at the Turnover Tables for the Premier League. I concluded that financially there remained a massive gap between West Ham and the traditional top six sides. At that time West Ham sat 9th in the Turnover Table.
In the event West Ham failed to achieve results in line with this money Table. , despite being 9th in the 2014-2015 Turnover table us only finished 11th in the real final 2016-2017 Table. I decided to look at how things have changed and what we should expect this season.
Part of the difficulty with these analyses is that we only have financial data a year before the last season. So the latest financial figures available are for 2015-2016. In other words, they relate to the last Season at the Boleyn Ground, and not the most recent season at the London Stadium.
Despite this delayed financial reporting both the turnover and Wages Table are of interest.
The most recent turnover table showed West Ham growing, even before they moved to the London Stadium. West Ham sits in 7th place in this Table. They have an income of £142 million. They therefore climbed up 2 places from 9th. They sit comfortably ahead of Leicester.
Yet in spite of this growth the aforementioned massive gap remains. Spurs, in 6th place exceed West Ham’s turnover by a whopping 50% at £210 million. There is a further enormous gap between Spurs and Liverpool at £302 million. It is sobering to think Liverpool who has struggled to reach the top 4, have resources over twice that of West Ham. As we move up the turnover table the inequality between the top 6 and the rest becomes even more extreme, Manchester United at 515million representing income about 3 and half times that of West Ham and over twice that available to spurs. The gap between the top six and the rest remains with a vengeance.
If we are to look at the Turnover table clubs do sit pretty much in the ball park areas that we would reasonably expect them to be in the real table. A case could be made then that a judicious expectation for West Ham is that we should be at the head of the pack chasing the top elite clubs. In other words we should expect to chase 7th spot.
The full turnover table is provided below.
Turnover Table for Season 2015-16.
1 Manchester United £515m
2 Manchester City £392m
3 Arsenal £354m
4 Chelsea £335m
5 Liverpool £302m
6 Tottenham £210m
7 West Ham United £142m
8 Leicester City £129m
9 Newcastle £126m
10 Southampton £124m
11 Everton £122m
12 Aston Villa £109m
13 Sunderland £108m
14 Stoke City £104m
15 Crystal Palace £102m
16 West Bromwich Albion £98m
16 Norwich £98m
18 Swansea £97m
19 Watford £94m
20 Bournemouth £88m
Of course turnover, aggregating all income accrued by a club only forms part of the picture. Turnover is the resource available for a club to invest in their team. In reality each club may or may not decide to invest in the competitiveness of their team. A more accurate picture of expectations is formed by looking at the wages that each club is prepared to invest.
Looking at the Wages table there are similarities to the Turnover table but also some significant differences.
What is immediately striking is the failed over investment by Aston Villa, who despite having a smaller turnover than West Ham significantly out spent them in Wages. Villa despite dislodging West Ham from 7th spot down to 8th suffered disastrous relegation notwithstanding being the 7th highest wage payers in the league.
In contrast, the opposite case was formed by Newcastle who significantly under-invested in wages compared to competing PL clubs. It was probably this gamble under investment by Ashleigh, who clearly wanted some of his money back, which underlined Newcastle’s tumbling down the table and eventual relegation.
So in the Wages Table, despite Villa’s bizarre over investment, West Ham also led a pack of clubs. We are in a ball park area of competing most directly with Southampton, Everton, Crystal Palace, Swansea Stoke and Leicester for the positions outside the top six.
In addition we should look at the sustainability of wages and transfer recruitment. The average proportion of turnover expended in wages for the Premier League as a whole is 61%.
West Ham’s percentage is broadly in line with this, with a wages ratio of 60%. However some of our competing clubs are investing significantly greater proportions. Both Everton and Southampton are investing 69% in wages. The picture becomes even more extreme when we look at our other competitors.
Swansea is investing a massive 85% of turnover in wages. Stoke City and Crystal Palace is also significantly higher at 79%.
Only Leicester City at 62% approaches the Premier League average.
In general you can say that, for the foreseeable future, Stoke, Crystal Palace, Swansea and to a lesser extent Everton and Southampton will have less turnover resources available to finance transfer fees when compared to West Ham. These clubs can offset this disadvantage either by attracting extra investment, as Everton have done, or by selling existing star players for a profit, as Southampton and Everton have also done. However sustaining recruitment by identifying cheaper replacements for proven performers carries risk over the longer term.
So if we are to consider the Wages Table West Ham appears to have a structural advantage over most of their competitors, when resourced are released into the transfer market. We should reasonably be expected to compete for 8th position.
The full table is below.
Wages Table Premier League 2015-16
1 Manchester United £232m, 45% of turnover
2 Chelsea £224m 67% of turnover
3 Liverpool £208m, 69% of turnover
4 Manchester City £198m, 51% of turnover
5 Arsenal £195m, 55% of turnover
6 Tottenham £100m 48% of turnover
7 Aston Villa £93m, 85% of turnover
8 West Ham United £85m 60% of turnover
8 Southampton £85m, 69% of turnover
10 Everton £84m 69% of turnover
10 Sunderland £84m, 78% of turnover
12 Swansea £82m 85% of turnover
12 Stoke City £82m 79% of turnover
14 Crystal Palace £81m, 79% of turnover
15 Leicester City £80m, 62% of turnover
16 Newcastle £75m, 60% of turnover
17 West Bromwich Albion £74m 76% of turnover
18 Norwich £67m, 68% of turnover
19 Bournemouth £60m68% of turnover
20 Watford £58m 62% of turnover
Now there are developments which can affect these financial profiles. Everton have been promised extra external investment. However West Ham also expect, from their so called “deal of the century” stadium arrangement, to grow turnover from £142 million to something like £250 million for the most recent season.
In the context of these financial resources the owner’s expectations for at least a top 10 finish do not look unreasonable. Even 10th would appear to be slightly under par, 8th would be perfectly acceptable whilst anything above 8th would probably be punching above our financial weight.
The reality now is that the image of West Ham as the poor East London relations of the Premier League is long gone. We are now amongst Europe’s richest clubs, notwithstanding our debt held by the owners, and over time expectations will inevitably rise.
Of course luck and injuries will play their part. Anything can happen in any particular game, but over time money normally tells and pulls its weight in football. Club buy their success as much as they coach and inspire it. Slaven Bilic will have the hidden measure of the Turnover and Wages Table hovering in the background as the yardstick by which his performance in the longer term will be judge.
COYI
David Griffith