Monday, 8 June 2009

Taken Over By Default

West Ham have been taken over by asset management company, CB Holdings, a subsidiary of its main creditor, the stricken investment bank Straumur-Burdaras, after Björgólfur Gudmundsson failed to find a buyer willing to meet the asking price required to satisfy his debts. CB Holdings — the CB standing for 'Claret and Blue' — is a special purpose vehicle, created specifically to take over the running of the club. It was set up by the creditors last week and is 70% owned by Straumur and 30% owned by three other Icelandic banks — NP, Byr and Landsbanki.

Jason Burt, writing in the Telegraph, insists the deal brings to an end the ill-fated ownership of Gudmundsson who has seen his fortune wiped out by the global recession. As Straumur has effectively been owning West Ham for the past year anyway, the change should bring much needed stability and secure the club’s financial future which has been the subject of much debate. Burt reports Straumur are planning a period of continuity during which West Ham will become a self-financing entity. The club will hope it also ends speculation over other owners being sought, for now.

A few months ago Straumur was itself declared "effectively insolvent" by the UK's Financial Services Authority as it took steps to protect the deposits of investors at its branch in London. Twenty-four hours later it was nationalised by the Icelandic government. Straumur provided the bulk of the finance for Gudmundsson when he bought the club in 2006 from its shareholders, led by the then chairman, Terry Brown, in an £85million deal. But since the collapse in the Icelandic economy and the meltdown of his investment vehicle, Hansa, last year, Gudmundsson's ability to maintain ownership had long been in serious doubt. In March Gudmundsson successfully secured a final moratorium on his debts that was due to expire tomorrow but during that time failed to find a buyer willing to pay a price that was acceptable to Straumur. Gudmundsson, who has lost around £500million in the global financial crisis, has therefore stepped down with Straumur's banking creditors seemingly taking advantage of covenants on the debt to allow for the club to be taken over.

As quoted in the Associated Press, Georg Andersen, Straumur’s head of corporate communications, insists West Ham would have gone into bankruptcy in the next 24 hours if the takeover had collapsed, confirming it was a 'complicated transaction' that didn't involve cash. "We decided to take over the club mainly to protect our interests and do the best thing for the club," he said. "The former owners of West Ham were going out of moratorium, which meant it was most likely they would go into bankruptcy, and under league rules the club would either be penalized with a points reduction or relegation. The value of the asset would have decreased enormously. As a bank, we would have preferred the owners to keep the club and had success with the whole thing, but that is not the case. We (had) to do something."

Andersen said that Straumur had much larger assets than West Ham and said finding a buyer for the club was not an option. "We don't believe it is advisable to sell the club in the current markets," he said. "So we decided to hold on and support them for the next two years at least and maybe longer depending how things develop. Speaking in the Mail, Anderson declared: "I am not going to bullshit anyone and say we are going to own the club forever. We honestly believe there is no buyer out there willing to pay the true value of the club at the moment. We are realistic enough to know that we will have to hold to the club for some time — a couple of years, maybe even more — to do so." Amazingly, two days ago the same paper was suggesting the chaos surrounding the club's ownership would be solved by a £70million American buyout brokered by football’s most prominent banker, Keith Harris, to be completed before the start of the season.

The Guardian reiterates that the club had been up for sale but had been unable to find a buyer and the move to Straumur, which was reported to have been owed £100m by the West Ham owner, should safeguard their near future. The new regime have moved swiftly to assure the Hammers manager Gianfranco Zola and his assistant Steve Clarke that their jobs are safe and that some funds will be made available for transfers. The chief executive Scott Duxbury will also remain at the club. The new owners have also appointed one of their senior directors Andrew Bernhardt as the new non-executive chairman. More directors will be named in the near future.

"I am delighted that an agreement has been reached and look forward to working with Scott Duxbury and his team in the coming years," Bernhardt said in a statement. "We have one of the best young management partnerships in Gianfranco Zola and Steve Clarke and the team has evolved with a great mix of experience and young players coming through from the academy. I can assure fans we will sanction investment in new players, but all within the parameters of sensible budgeting based on revenues generated by West Ham United. It will be my job to help facilitate this continued progress on the pitch, while ensuring the club's success is built on a strong financial footing. We have an initial two-year plan which includes improving the infrastructure at the club and we will be getting to work on this as soon as the new board is appointed. CB Holding has no intention of changing the executive management or direction of the club."

Bjorgolfur Gudmundsson bought the club for £85million, taking on the debt of around £22million, three years ago. Asgeir Fridgeirsson, the vice-chairman, has also left the club. "I want to thank everybody at Upton Park for unforgettable years," Gudmundsson said. "The players, fans, management and staff have all contributed immensely to a period of progress, a period where the club has sharpened its vision, strengthened the first team with young homegrown talents and laid a solid foundation for self-sustainable operations of West Ham as a strong Premier League club. As my fortunes have changed I now have to withdraw from the board of directors. I do that with a great regret but I am convinced that this change of ownership and control of West Ham United will advance the club in the present circumstances. I wish the new chairman and all involved at Upton Park all good fortunes and great success in future. I will remain forever a West Ham fan and hope I will have many returns to Upton Park."

Duxbury, the club’s chief executive, said that the transfer will bring stability to the club, which now has reported debts of around £45million. "I am delighted to say that West Ham United has been sold in an agreement that will secure the long-term future of this football club," he said. "Change is always unsettling, but I believe the new owners led by Andrew Bernhardt will bring stability to West Ham United and I hope all our staff and fans will join me in welcoming them to our club. At the same time, my best wishes and thanks go to Bjorgolfur Gudmundsson and Asgeir Fridgeirsson. This will allow us all to concentrate on next season and beyond, with Gianfranco Zola, technical director Gianluca Nani and I working to build on what we have achieved. We are all committed to a long-term vision. We are playing great football, have our academy at the heart of the club and are looking to the past to move forward in the right way. I can assure all fans that I will never lose sight of this. I am determined to bring success to West Ham United."

Writing in today's Times, Gary Jacob compares these developments to losing your home. The bank is going to sell the house, but they are not going to run it down, because it is in their interests to keep the value of the asset as high as they can. That is the situation West Ham are in with their creditors. They have said in the past they might look to sell the club after two years, he states, but if they got a good offer now they might take the money and run. We can go back to the mortgage comparison. If a bank repossesses your home, they can either keep it and rent it out, or wait and try to sell it on. These are the new owners' options. A lot of clubs are up for sale at the moment and everyone is struggling to find a buyer, reports Jacob. There has been some interest in West Ham, but the stumbling block is that the price offered didn't cover the sum that Gudmundsson owed. In the past, Straumur would have been told about interest from prospective buyers, but now it will be involved in the actual negotiations. Whether that will make a sale more likely remains to be seen.

In the meantime, the club will want to reduce the wage bill and that could make them more likely to accept offers for the highest earners at the club, players such as Dean Ashton and Matthew Upson thinks Jacob. He expects fringe players such as Luis Boa Morte, Julien Faubert and Calum Davenport to be allowed to move on, too, while funds around £10million could be available for team strengthening. Zola has picked out a young Chilean midfielder called Luis Jiménez at Inter Milan and is reportedly looking to bring in two strikers, one of whom could play in the hole, a right back and a reserve left back. Ultimately, West Ham want to move towards the Arsenal model over the next season or two whereby the club runs on a self-sufficient basis, states Jacob. That will entail them doing more to develop their own players rather than paying big transfer fees.

For his part, Upson has described the takeover of West Ham as a "positive sign". The England defender, speaking ahead of England's World Cup qualifying match with Andorra at Wembley, said: "I think it's a positive thing, from what I can gather. Any kind of financial investment into the team or club is great. We are at a really crucial period in terms of developing the team and I think it's a positive sign that the manager can maybe go out and strengthen the squad." Upson has been linked with a possible big-money move away from Upton Park, but the defender insisted he was happy where he was. "I wouldn't know about my future (following the takeover)," he added. "All I know is I'm very positive in that the club's got some good financial investment. As a player I want to improve and develop, so at the moment my future is there, I'm very happy and I'm enjoying my football. I'm enjoying working under Gianfranco Zola, so I think times are good. It's the most games I have ever played and it's the best season of my career to date. I feel I've improved and developed well, so I am very positive about next season."


Anonymous said...

I actually feel sorry for BG after all this, he hasn't done us as many wrongs as previous regimes and seemed to be a rare example of a foreign owner genuinely supporting their team.

The club was more to him than just an investment, just maybe?


Emlyn said...

great to have you back!

Trilby said...

Great to have you back too Emlyn. If it wasn't for you I'd hardly get any comments at all!


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