West Ham file paperwork on new £40m off-pitch deal that could fund Niclas Fullkrug signing. West Ham are continuing to buck the trend of what has been a quiet Premier League transfer window with their signing of Niclas Fullkrug from Borussia Dortmund.
Erlier today, the Hammers announced that the Germany international had signed a four-year deal after joining from Borussia Dortmund. A powerful, old-fashioned centre-forward, Fullkrug has become West Ham’s sixth signing of the window so far.
Max Kilman, Crysencio Summerville, Luis Guilherme have also arrived for big fees, while Guido Rodriguez and Wes Foderingham have signed as free agents.
Only Aston Villa have spent more than West Ham on a gross basis, while only Brighton’s net spend is higher.
Unlike many clubs in the Premier League for whom Profit and Sustainability Rules are now a daily concern, West Ham have almost broken even of the last two financial years.
This provides flex to spend under PSR, which currently allows clubs to lose £105m over a rolling three-year period – although the system is expected to move to a squad cost control model from 2025-26.
The caveat is that the bulk of those losses – £90m, to be precise – must be covered by the owners. David Sullivan and Karren Brady appear to want the Hammers to be self-sufficient and are unlikely to inject much equity themselves, however.
But the owners have found a way to finance new signings and other costs in the short term without impacting their own cash reserves.
West Ham extend £30m finance agreement, another £10m available. During the pandemic, West Ham took out a £120m loan facility with financial institution MSD Holdings to cover costs.
They used around £80m of the facility – which essentially functions as an overdraft – and paid back £25m over time, before finally settling the remaining £55m last summer. The club then entered into a new £30m arrangement with Barclays, potentially rising to £40m in certain months of the year.
That facility was secured on future Premier League broadcast income. Now, Companies House paperwork has signalled that the agreement has been extended.
While this does not mean West Ham have banked £30m in cash immediately, it does mean that they have the option to dip into the reserve if needed. That facility would in theory cover Fullkrug’s £25m upfront fee, with change left over to cover his salary.
For the purposes of PSR, Fullkrug‘s £25m fee will be amortised over the course of his four-year deal at £6.25m per year. That means their headroom under PSR will only be reduced by £6.25m this year.
That charge is not a cash expense but is added to their amortisation bill, which was £65m at the last count and is used to calculate their profit or loss in terms of PSR.
West Ham’s revenue is high, although some have suggested that their commercial income is less impressive than it could be in comparison to their peer group.
They may have spent big this year, but rising matchday and sponsorship income should absorb the expenses.
