�100m - Hammers count the cost of Eggy’s big splurge

BAD NEWS seems to be so synonymous with West Ham at the moment that you may have thought that Britain s current fall guy – prime minister Gordon Brown – had come out in support of the club, writes DAVE EVANS. Calum Davenport, Jack Collison s sad loss and

BAD NEWS seems to be so synonymous with West Ham at the moment that you may have thought that Britain's current fall guy - prime minister Gordon Brown - had come out in support of the club, writes DAVE EVANS.

Calum Davenport, Jack Collison's sad loss and the ugly scenes at Upton Park for the Carling Cup clash with Millwall have put West Ham on to the news pages of the tabloids as well as the sports pages.

And so it is no surprise that the club seemed to have stumbled into another crisis with the news that they lost a staggering �37.4m in the year ending 2008.

These accounts, published over a year late by West Ham, paint a grim picture of the financial state of the club, with finance director Nick Igoe describing the business strategy during the period leading up to May 2008 as "fundamentally flawed".

The situation is made worse by the fact that the collapse of shirt sponsor XL, which cost the club around �4m, and the out-of-court settlement with Sheffield United over the Carlos Tevez affair, which set West Ham back another �26m over five years, are not included on this set of accounts.

Debt may be the word of the moment, but West Ham seem to have more than their fair share.

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In the previous accounts, the debts were stated as �54m, but it seems that one year of decadence under former chairman Eggert Magnusson has plunged that nearer to �100m.

Igoe also revealed that West Ham broke banking rules over the repayment of their debt, and only the goodwill of the banks prevented them from more serious trouble.

"The scale of operating losses and wages caused the group to breach certain banking coven-ants in 2007-08," Igoe explained in the report.

"Although the group's banking syndicate waived these breaches, a business strategy which relies on the goodwill of the group's bankers to waive covenant breaches is fundamentally flawed."

It is unclear how common this sort of practise by the banks is when dealing with debt-ridden football clubs. West Ham's deficit of around �100m is chicken feed compared to some Premier League teams.

As of May 2008, Arsenal owed �416m, Fulham �197m, Manchester United �699m, Manchester City �147m and Liverpool around �300m.

All of those clubs, bar Fulham, have turnovers far in excess of that of West Ham as well as billionaire owners to make such debts managable.

When you look at some of the profligacy involved at West Ham during this period, it is clear to see that much of the fault lies with former owner Bjorgolfur Gudmundsson. He put Magnusson into the hot seat and allowed his fellow Icelander to go on a massive spending spree both in terms of transfers and wages.

Allegedly, Magnusson and chief executive Scott Duxbury would check with Gudmundsson as to whether they could afford to continue spending and the owner gave them the all clear, suggesting he was funding it with his own money, when in reality he was doing it via bank loans.

It is a small leap from that to work out how the current economic crisis in Iceland originated.

"It is clear with the benefit of hindsight that not all of the investment undertaken in the playing squad in the period under review was prudent," Igoe continued. "West Ham purchased three high-profile players in 2007-08 at a combined cost of �20m with total annual wages in excess of �12m. Those players made 36 starting appearances between them in the season."

The last part of that statement seems to be something of a red herring.

The players concerned were Freddie Ljungberg, Craig Bellamy and Kieron Dyer, and the fact that two of them were injured for most of that season is certainly not West Ham's fault - paying the transfer fees and the wages in the first place certainly is.

West Ham's increased salaries for players took their wage bill

to turnover rating to 78 per

cent, but when you compare it to other Premier League clubs, it is a figure that is not alarming, despite Igoe stating that it was "unsustainable".

In the same year, West Brom, managed 80 per cent, Wigan 89 per cent with Stoke City at a staggering 106 per cent so West Ham's figure does not seem so out of the ordinary.

Yet it is obvious that West Ham over-reached themselves in the days of Magnusson, and they are still paying for those mistakes today.

The sales of Bellamy, Anton Ferdinand, George McCartney, Bobby Zamora, Hayden Mullins, Matty Etherington, James Collins and Savio have helped to recoup some money and slash the wage bill, but at what cost to the first team?

And things are likely to get worse before they get better.

The accounts for the period up to May 2009 are already overdue, and West Ham fans must hope that there are

no more skeletons in the cupboard waiting to leap