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Wage Bill Inhibits West Ham in Search for Reinforcements

Fair Play compliance means big wage bill is a problem of the Davids’ own creation

Fulham v West Ham United - Premier League Photo by Clive Rose/Getty Images

It’s January 31, and yet another mid-season transfer window under David Sullivan limps to a sorry close.

Regardless of whether or not we are able to bring in necessary reinforcements over the next few hours, this has been another January of speculation, inaction and disappointment. If you’ve been watching Gold, Sullivan and the board closely enough over the last few years, you’ll know not to have expected much activity in the transfer market over the last month. Yet the current state of our squad, with the inevitable injury crisis having duly hit, means that yet again serious questions have to be asked of our transfer policy and squad planning, both in the short and long term.

I won’t go into too much detail about Sullivan’s failings here. West Ham blogger The H List has already gone into the necessary depth. If you haven’t read his blog from earlier this week, it will tell you everything you need to know about the reasons fans are so disgruntled with the owners’ lack of clear direction and leadership, especially in terms of recruitment, and does a great job at holding them accountable for their failings.

All I would really add is that it’s possible to be upset with the failures of the board without outright wanting them to sell up. Sullivan has clearly fancied himself as a Director of Football for a long time now, and the more hands-on the board is with transfers, the less progress we seem to make. Each January it’s the same; each summer it’s the same. Our squad needs a better balance, younger players and a clearer objective of the type of football we want to play and the type of player we need for it.

None of this is new. I just feel that, after another disappointing and predictably inept transfer window, it’s about time Gold and Sullivan put their egos to one side and recruited a team of people who can take control of transfer policy and make more sensible decisions about football for the benefit of the club. That is the ideal scenario here.

But still something doesn’t add up as to quite why West Ham weren’t able to spend the necessary money this month. I’m not asking for a £30 million blockbuster, but when a squad has 22 registered senior players (the lowest in the league even when including Moses Makasi and Doneil Henry), half of whom are out of action, the need for reinforcement is severe.

Indeed, the latest figures have West Ham comfortably in Europe’s top 20 clubs in terms of revenue generated for the 2016/17 season. According to an excellent recent summary by football finance blogger Swiss Ramble, Only 16 clubs generated greater revenue than West Ham last season. Of English clubs, it was only the ‘Big Five plus Spurs’ and Leicester, who benefited from the prize money of winning the league plus TV and prize money from the Champions League. We should at least be competing. Why can’t we spend even a penny this month?

A big part of the problem is the wage bill, and the knock on effects this has with the club’s fair play compliance. Taking last season’s figures as a starting point, in order to adhere to the Premier League’s rules regarding expenditure, West Ham’s August transfer business, specifically the signings of Joe Hart and Javier Hernandez, leaves them in a bit of a sticky spot regarding payroll.

Unless I am mistaken, current rules (or at least as of last year) mean that either:

  • Option 1: West Ham are not permitted to increase player wage bills by more than £7 million compared to the previous year unless a club can demonstrate that any excess is due to own revenue increase (with revenue increase excluding TV money)

or

  • Option 2: Cannot increase by more than £19 million compared to the 2012/13 season, again unless a club can demonstrate that they have generated their own revenue to justify it.

Taking Option 1 as an example, Hart and Hernandez’s wages alone supposedly account for around £12 million per year, and taking into account new transfers Marko Arnautovic and Pablo Zabaleta takes the total wage bill addition this season to approximately £21 million, with Hart, Hernandez and Arnautovic supposedly the three highest-paid players at the club. Dumping the contracts of Feghouli, Snodgrass, Nordtveit, Sakho, Tore, Randolph, Fletcher and Calleri is said to have saved the club around £11 million off the total bill.

Wigan Athletic v West Ham United - The Emirates FA Cup Fourth Round
Hart and Hernandez have done little to justify their massive salaries so far this season
Photo by Robbie Jay Barratt - AMA/Getty Images

This would mean that currently West Ham’s wage bill is said to have increased by around £10 million this season compared to last, while wage expenditure is said to have increased by at least £20 million since 2013.

Both are already in excess of the permitted increase. When you then factor in that West Ham’s revenue increase this season is a reported £21 million, it shows that there could potentially be some money left in reserve. But you have to ask two questions: how much of this is made up of the TV revenue which is excluded from the allowance (which reportedly made up a whopping 65% of West Ham’s total revenue last year) - and how much of any residual would even be used for transfers anyway? I would suggest that very little is left over, as the club made only 16% of its revenue from match days last year.

In a nutshell, the Davids are at least right when they say that the wage bill and fair play compliance is a significant hindrance to making new signings. But what they do not admit is that it’s their own fault.

Needless to say, this is a lame excuse for a lack of progress and they must surely realise that this is a sign that they have invested their money in the wrong places and caused their own problems. Not least because we pay at least £220,000 a week in wages for two players who have largely been benchwarmers under David Moyes.

Would it really have been the worst idea in the world this month to send Hart back to Manchester, get a cheap, temporary deal for a reserve keeper, and then have made it a January priority to grant Hernandez his reported wish of a way out? This alone could have freed up the funds for four of five very good players. Instead we have old, ill-fitting players, not to mention Carroll and his massively disproportionate remuneration, clogging up our accounts and preventing us from signing players who are actually any good.

This is a massive fault of the board. We are overspending enormously in wages, with the 13th highest wage bill in Europe (and nowhere near the squad to match). They should have seen it coming that the limit would eventually be reached. Rather than blaming the regulations for tying their hands, they should realise that they have created their own mess.

I admit again that I am no expert in football finance and will stand corrected on any of the figures involved. But if you look at the numbers, West Ham have indeed been inhibited by their own wage bill in the search for necessary reinforcements this month. But it is a problem entirely of their own creation.

Sources:

@SwissRamble swissramble.blogspot.com

www.totalsportek.com

www.spotrak.com

www.financialfairplay.co.uk