Thursday, 18 December 2008

Ten Count Draculas

West Ham United were already a questionable purchase in the short term, but the chances of concluding a takeover appeared more unlikely after their Icelandic owners formally valued the club at £250 million last night. It is more than double what they paid two years ago, writes Gary Jacobs in The Times. The owners, who put the value in papers lodged at the Reykjavik Municipal Court, appointed a bank several months ago to determine the extent of interest in the club, but their difficulty in attracting serious buyers was highlighted yesterday by their attempts to stoke up interest.

"The recent sale of Manchester City Football Club for £230 million could give reason to expect a higher price," Gudmundsson's lawyers said in court papers. "West Ham is thought to be a more valuable club when looking at its location in London, loyal fan base, more chance of linked real estate projects, proximity to the Olympic Village and the fact that West Ham owns its ground, which is not the case with Manchester City. The City sale therefore gives cause to expect that West Ham could be valued at more that £250 million."

Owner Bjorgolfur Gudmundsson has not yet made a final decision about selling up, but he has given permission for non-disclosure agreements to be signed with between "five and 10 parties" interested in buying the club. The agreements allow the interested parties to look at confidential financial information about West Ham on the condition they do not disclose it. However, the agreements fall short of due diligence – which would grant the potential buyers access to the club's books – but interested parties will be given detailed information on West Ham's finances, debts (around £40m) and liabilities, which are expected to include a commitment by Gudmundsson to cover the cost of the Tevez case. Several of those interested are understood to have put in opening (indicative) bids that have fallen short of what Gudmundsson would want, as revealed in the court documents filed by his holding company, Hansa, now known to be £250m. Market analysts suggest a more realistic figure to be £150m.

The 67-year-old Gudmundsson is now in talks with the Icelandic government and banks about how he can restructure his assets, including West Ham United, of which he is the sole owner. There have been suggestions he has been told to sell the club by March, but these have been denied by his advisers, who maintain he cannot be forced into such a move. Hansa, the holding company which has gone into voluntary liquidation and begun the process of administration and Gudmundsson, who has been affected by the Icelandic economic crisis, is reviewing his assets, including West Ham. However, Fridgeirsson admitted that the figure of £250 million was not necessarily an asking price.

"We are reviewing the asset, looking at what might be the value of the club," said Fridgeirsson. "Following such a review we will take a decision whether to sell or not. We don't have to sell. We are gathering options and information to see what is out there in terms of demand. We have signed confidentiality agreements with several parties, which means that we will provide them with financial information and they undertake not to divulge any of this information to a third party. So far we haven't received any concrete offers. There is nothing that says that the current market is willing to pay £250 million, nor that this is the figure we are looking for."

West Ham's ownership is somewhat complicated but, though Hansa are the holding company, there are also West Ham United Holdings Ltd and West Ham United plc within the structure. West Ham United plc are regarded as the member organisation by the Premier League and Fridgeirsson has described West Ham as "fire-walled".

Björgólfur Gudmundsson’s valuation of his club would even have been excessive eight months ago, before the full effects of the global economic crisis were known. But potential buyers are also concerned by the chance that the club could be relegated, debts approaching £50 million and unknown liabilities that may need to be paid to Sheffield United for the Carlos Tévez affair. Similar concerns have impacted on other owners trying to sell Barclays Premier League clubs. Newcastle United, Portsmouth and Everton have effectively been up for sale for some time, but none are close to a takeover. Global financial turmoil has made a dent in the pockets of potential investors, who fear that clubs are overvalued, even without the potential for reduced future income from sponsorship, advertising and ticketing revenue.

According to Jason Burt in The Independent, Bjorgolfur Gudmundsson is attempting to push ahead with the sale of the club after being advised that the compensation to be paid to Sheffield United over the Carlos Tevez affair is unlikely to be more than £10m – a fifth of the total which was, at one time, demanded. The Hammers are facing the prospect of paying heavy compensation for fielding Tevez during the 2006-07 season and later admitting that there were "irregularities" in the striker's ownership by private investors. Although fined £5.5m by the Premier League in 2007, the club has since had to fight potentially more damaging action from Sheffield United over the cost of the Yorkshire club being relegated. Both parties are due to meet an arbitration panel in March next year but it now appears that, with discussions already under way on the amount of compensation, they are moving towards an out-of-court settlement.

Sheffield United originally claimed £30m, then increased that figure to £42m, then £50m, but are understood to have since revised it down to £25m. West Ham, meanwhile, have maintained that the relegated club have failed to factor in the costs of being a Premier League club and that they were simply calculating on the basis of banking the full amount of television and other revenues for being in the top flight. The true value of losses suffered by Sheffield United is somewhere between £5m and £10m, West Ham say. If that proves accurate it would ease the pressure somewhat on a sale and make potential owners far less nervous about the future of the club, although West Ham could also benefit from pulling further away from the relegation places.

Gudmundsson's business empire has been devastated by recent events. Landsbanki, the Icelandic bank in which he was the biggest shareholder, went into receivership in October. Then Samson Holdings, the holding company for shares in Landsbanki, filed for bankruptcy last month. West Ham's then shirt sponsor, the travel company XL, had gone bust a month earlier and it later emerged that Gudmundsson had been the guarantor of a £163m loan given to the company.

Elsewhere, West Ham's former chairman Eggert Magnusson is reportedly suing club owner Bjorgolfur Gudmundsson for not honouring the terms and conditions of his contract when he left the club. Magnusson was relieved of his duties at Upton Park last year and according to his contract should have received three months pay, €1 million plus £200,000 - he claims he only saw £100,000 of this money. The Guardian states that the legal documents filed yesterday outline Magnusson's compensatory demands for 200 million krona (£1.1 million).

While Asgeir Fridgeirsson, the club’s vice-chairman, admitted for the first time that the club are seeking a buyer (“there is a great interest in the club and many interested parties are calling to show interest”) The Sun claimed blood curdling screams could be heard all over East London yesterday at the news. It insists the claret and blue hordes have good reason to be afraid — a takeover was largely responsible for getting them into this awful mess in the first place and unlike most horror tales, the mayhem has not been caused by just one dark, scary figure lurking in the shadows. Helpfully, the paper identifies the "ten Count Draculas who have each, in one way or another, driven a stake through West Ham’s once-vibrant heart". It proclaims: "Terry Brown, Eggert Magnusson, Bjorgolfur Gudmundsson, Scott Duxbury, Alan Curbishley, Carlos Tevez, Javier Mascherano, Freddie Ljungberg, Kia Joorabchian and XL — your West Ham have taken one hell of a beating!"

In reality, West Ham need to be sold by early January to ensure that transfer funds can be made available to Gianfranco Zola, to ensure their survival in the top flight this season. The club are only a point above the relegation zone, despite a hard-fought 1-1 draw away to Chelsea on Sunday. There is also much interest in several of the team's better players, with clubs circling like vultures for a prospective bargain.

Robert Green, Dean Ashton, Valon Behrami, Scott Parker, Matthew Upson and Craig Bellamy are all reportedly targets for other clubs, but Lucas Neill has said that he wants to sign a new contract before his deal expires this summer. The defender, 30, who earns £70,000 a week, asked for a rise last summer but he is likely to be offered less than half that sum. He turns 31 in March. “I want to finish my career here,” he said. “I know the [financial] situation at the club and the way things have gone. I love the club and the role they have for me. The players aren’t worried [about relegation]. No one is thinking or talking about leaving. I have had assurances from the manager that he wants me to stay. He likes what he has here and wants to build on that. He doesn’t want to remove the quality he has because it will affect his plans massively and what we are trying to achieve.” For his part, the ever self-aware Bellamy said there is little chance of Celtic signing him in January because they simply cannot match his £100,000-a-week wages. "When was the last time Celtic paid £7million for a player?" the 29-year-old said. "When was the last time Celtic went to the wages I am earning at West Ham?"

Despite it all, assistant manager Steve Clarke insists the Hammers are not a club in crisis. Clarke was adamant matters off the pitch would not impact on the squad's preparation for their fixture at home to Aston Villa on Saturday. He said: 'If you allow yourself to be distracted by other things that are going on that you can't control then you lose focus on what you're trying to do. I come into the club every day, my job is to work with the players, try and improve the team.'

Clarke said West Ham were not the only club facing financial uncertainties at the moment. 'I think in any football club there's uncertainty, especially in the current climate,' he noted. 'West Ham keep getting put forward as a club that's in crisis, but that's not the case. I think you'll find that there are a lot of football clubs that maybe have similar problems.'

Clarke would not be drawn on Zola's plans for the January transfer window but said West Ham's first team squad is 'too big'. The Hammers have 27 outfield players and three goalkeepers on their books, a number that could be cut down in January. Clarke admitted: 'If there's an opportunity to let one or two of the squad players go who want to go and play somewhere else, then we can do that.' But Clarke said the West Ham management team were not under pressure to sell, despite the club being up for sale.

1 comment:

Anonymous said...

Excellent post and very informative.Like most West Ham fans
( and I have been a fan for fifty five years ) all news is bad news the press seens to enjoy adding to our misery.
Its difficult to asertain the true facts.
The Tevez case was dealt with by the premier league heard the case,fined West Ham,appeal thrown out and also thrown out by the High Court.
Yet its gone against the club and we cannot appeal ?
Is it just the case that we broke the rules again,in which case we deserve to be fined.
And finally who owns Tevez,and who will receive the transfer fee when sold ?


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