Křetínský paid 5 billion for a stake in West Ham. The club is not doing well
Huge summer investment in new reinforcements, great expectations, but instead a failure and a drop in the table. To Czech sports fans, it may remind them of Sparta in football, but they are now also going through a similar scenario in East London, where West Ham United FC plays its matches in the top English competition. Nevertheless, we find a common denominator in both. He is Daniel Křetínský, the majority owner of Sparta and, since last year, also a significant shareholder of West Ham. He doesn’t have as important a say there as he does in Prague, but he certainly watches the performances of the Hammers, as West Ham is nicknamed, with displeasure. After all, he paid five billion crowns for more than a quarter share in the club.
When the news appeared in November 2021 that one of the richest Czechs and successful businessman Daniel Křetínský invests in an English football club, after eleven rounds of the Premier League, West Ham was in third place, followed by teams such as Liverpool, Arsenal and Manchester United. While he was able to win seven times in the first matches, his form subsequently showed that he only won nine times in eleven of the remaining twenty-seven matches, eventually finishing in seventh place. But it was still one of the Hammers’ best ever finishes in the Premier League.
The year before, the London club with the hammers in their emblem even finished sixth, in addition, they reached six of the Europa League, so this summer they started a big race for a new player. The most expensive signings were Lucas Paquetá from Olympique Lyon and Gianluca Scamacca from Sassuola, who added to the team, among others, two Czech representatives Tomáš Souček and Vladimír Coufal. West Ham spent around 180 million euros (roughly 4.3 billion crowns), with only two clubs in Europe buying reinforcements for more money this summer. Expectations were high, but they did not meet reality at all.
Unlike Sparta, West Ham are in profit
West Ham lost for the fifth time in a row in yesterday’s league match against Brentford, are crouching at the bottom of the table and are in real danger of fighting to stay in the top competition. Logically, the new co-owner from the Czech Republic cannot be too satisfied, being alone with the head of the energy industrial holding, from which the largest part of his wealth originates, he does not publicly comment on his activities. This week, West Ham United FC also published the financial results for the previous financial year, which ended in May 2022. In it, among other things, the amount for which Křetínský joined the club was officially confirmed.
He paid 125 million pounds for a fifth share in the form of newly issued shares. This is roughly 3.7 billion crowns at the exchange rate of November 10, 2021, when the transaction was closed. He then bought another seven percent from some existing shareholders. If we calculate that he bought them at the same price as he bought the newly issued shares, we arrive at a figure of £43.75 million – and therefore a total sum for the purchase of a 27 percent stake in the London football club of £168.75 million. Converted to the exchange rate at the time, this is almost five billion crowns.
West Ham United FC play their matches at the London Stadium
The largest, although no longer the majority, shareholder of West Ham remains the Welshman David Sullivan, who holds 38.8 percent. Daniel Křetínský with 27 percent, Briton David Gold with 25.1 percent and eight percent is held by American billionaire J. Albert Smith. Slightly over one percent is shared by small shareholders. An interesting fact is that the reward of one million pounds (roughly 27 million crowns) for bringing a new shareholder to the club was awarded to the vice-chairwoman of the board of directors, Karren Brady. After all, West Ham praises the arrival of a new shareholder when commenting on the financial results.
“The acquisition of a new investor has added further strength and expertise to the club’s capital structure to channel the funds raised through continued revenue growth across all major revenue streams into key areas, building on the positive progress West Ham United has made in recent years.” reads the club’s statement. Křetínský’s investment of 125 million pounds is the main reason why the club’s net debt could be reduced by 130 million pounds (3.5 billion crowns). It currently amounts to 89 million pounds (2.4 billion crowns).
West Ham United FC reported a net profit before tax of £12.3 million (over 330 million crowns), compared to a loss of over 26 million (710 million crowns) in the previous year. The club returned to profit after three years, in which it lost a total of more than 100 million pounds (over 2.7 billion crowns). After Křetínský’s investment, all loans given to the club by co-owners David Sullivan and David Gold were repaid at the same time. Sales are also due to the end of anti-pandemic measures and participation in European competitions increased by 60 million to a record 252.7 million pounds (6.9 crowns).
Although David Sullivan called the 2021/22 season certainly one of the most successful in West Ham United’s 127-year history, as the club finished in the top seven in the Premier League for the first time twice in a row and made it to six major European competitions, the following year will already have such an assessment can’t stand it If the results of the team coached by David Moyes do not improve, the Hammers will fight to stay in the top flight. And the club also addressed this possible scenario in its annual report.
The existing shareholders are said to have committed to this, that even if the club moves to a lower competition, they are ready to provide the necessary financial support so that West Ham can continue to operate without problems. The last time the Hammers said goodbye to the Premier League was in 2011, only to return to it the following year. It remains to be seen whether this scenario threatens this year as well, as the top English competition is not even half over yet. Shortly after his investment, Daniel Křetínský to West Ham fans he promised a better scenario than in Spartawhich he has been managing since 2004, but so far it is not working out very well on the pitch.
Křetínský waits for sporting success in vain even at Letná, where AC Sparta Praha plays its matches. As the historically most successful domestic football club under its majority owner, it has been struggling for almost twenty years. She won just four championships. It had a worse period only in the 1970s, when it was even relegated to the second league for the first time and so far the last time. He is currently third in the table about halfway through the competition. West Ham, on the other hand, comes out better from the financial side of the possible comparison. While he managed to report the aforementioned profit, Sparta realized a loss of 407.1 million crowns in 2021/2022. At the same time, the Prague club has been losing money under the current owner for a long time.
Having two clubs can be a problem
Sparta as well as West Ham United own Daniel Křetínský with his Slovak companion Patrik Tkáč through the holding company of the 80s. She is the majority owner of Sparta, in which she holds 99.9 percent, and she already owns the aforementioned 27 percent in the London club, specifically in the company WH Holding Limited. A total of 56 percent and one share in holding 1980 is held by Daniel Křetínský – who is also the chairman of Sparta’s board of directors – together with managers from the EPH group, within the EP Sport Holdings company. The remaining stake of 44 percent minus one share is controlled by Patrik Tkáč and the J&T Private Equity Group.
Already after the entry of Czech-Slovak businessmen into West Ham, there is talk that in the future they could buy another percentage and theoretically take control of the club. However, the main governing body of European football, UEFA, does not allow two clubs to have the same majority owner – at least in that case they could not play in the same European competition including the Champions League or the Europa League. since Křetínský and Tkáč hold a majority stake in Sparta, they cannot acquire it in West Ham according to the aforementioned rules.
According to a British magazine Football Insider Krétínský current plans to increase his share doesn’t haveeven because in Great Britain devoted to a possible takeover of the British post office. According to the diary Guardian however, the fourth richest in Bohemia, whose fortune the Czech magazine Forbes last calculated almost 119 billion crowns, closed with the existing shareholders of the agreement, in the framework of which he could buy back their shares under predetermined conditions. However, it is not clear how long this limited offer lasts or if it will be filled at all. If, until recently, the largest shareholders of West Ham United, David Sullivan and Gold, were to consider the sale of the club, everything should start perhaps after March next year.
That is when the concessionaire contract that the club concluded with the administrators of the Olympic London Stadium, with which it has played its home matches since 2016, will expire. The British government, which financed the construction of the stadium, wanted to ensure that the owners of the club would not sell shortly after signing the 99-year lease, so they set the following tax rules until 2023 – if they sell the club for less than ten years after signing the lease in 2013 than £125m will pay no tax. For an amount between 125 and 150 million, they pay 7.5 percent, for an amount between 150 and 200 million, the tax increases to 10 percent, and for sales for 200 and 300 million to 12.5 percent. Above £300m it would be 20 per cent. After the Krétín club’s investment last year, he paid 2.6 million pounds to the trustees.