Official £57m update exposes truth about West Ham selling Mohammed Kudus after Julen Lopetegui pay-off

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Amid the inquiry into who in David Sullivan’s regime is to blame for the club’s ills under now ex-boss Julen Lopetegui, the potential exit of Mohammed Kudus is a problem West Ham could do without.

West Ham lost 4-1 to Manchester City last Saturday, a drubbing which added to the malaise in East London and ultimately proved to be Lopetegui’s last match in charge.

The Irons are expected to soon confirm the news that TBR Football broke yesterday, with Lopetegui to be dismissed after a little over seven months at the London Stadium.

West Ham are now in talks with Graham Potter, the former Brighton and Chelsea boss who TBR understand is one of three candidates to have been interviewed by David Sullivan.

Whoever is appointed, they will be expected to arrest the insipid performances and decline in results that have characterised the post-David Moyes era.

Few in E20 were expecting major fireworks in Lopetegui’s first – and ultimately only – season in charge, but a top-half Premier League finish was widely seen as realistic.

Instead, the new manager in waiting will inherit a side 14th in the table despite spending almost £120m over the summer, with only four teams having invested more in the market on a net basis.

Where West Ham sit in the 2024-25 Premier League net spend table

A top-10 finish is still achievable. After all, West Ham are only five points behind 10th-place Brighton as it stands.

But talk a rift between factions led by Lopetegui and technical director Tim Steidten did not inspire optimism about deeper behind-the-scenes issues at West Ham before the Spaniard’s departure.

And heading into a new chapter, the mood music from Irons HQ doesn’t suggest that simply changing the main man in the dugout will be enough to stop the rot.

Though he has outlasted Lopetegui, Steidten – who oversees the Hammers’ recruitment and scouting strategy – is still under cranium-crushing pressure at the London Stadium after 18 months in his post.

Whether the former Bayer Leverkusen operator will be allowed to directly oversee the process of recruiting a new manager and the club’s activity in the January transfer market remains to be seen.

One of the biggest issues at play before the window shuts on 3 February is the future of Mohammed Kudus, a prize asset to whom the club have reportedly attached a huge price tag.

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West Ham’s stance on selling Mohammed Kudus

FFP – or Profit and Sustainability Rules (PSR), to give the system its official name – has been cited as an explanation for why Lopetegui lasted longer than expected despite poor results.

The narrative being spun by Sullivan, Karen Brady and their enforcers at the London Stadium is certainly one of strain under the Premier League’s spending rules.

As bedrock fans are well aware, club representatives have talked in vague terms about PSR as a catalyst for increasing ticket prices and a highly controversial concessionary strategy.

And TBR understands that West Ham are also briefing that they are up against it in the transfer market because of spending rules.

That is why they would entertain offers for Kudus, who is coveted by Arsenal and Newcastle United – to raise funds for more flexibility this January.

That is the party line, in any case…

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West Ham’s FFP smokescreen and what it means for Kudus’ future

To get to grips with Kudus the situation and why the club’s rationale doesn’t hold water, it helps to look at it in the context of the Hammers’ wider finances.

With the second-highest average attendance in the Premier League last season, West Ham are looking to maximise matchday income with the ostensible aim of carving out more PSR wriggle room.

Granted, there is an ocean between themselves and the so-called Big Six in this metric. It is also true that, relative to capacity, West Ham currently earn far, far less than their peer group.

And with Everton having built a new stadium and Newcastle and Aston Villa working on redevelopment projects, the club feel they cannot afford to rest on their laurels as far as matchday income is concerned.

West Ham also have more season ticket holders – who are less lucrative on a game-by-game basis than day-trippers – than anyone else in English football.

But the club’s methods have left many supporter feeling priced out, especially given that the move to the London Stadium in 2016 was sold to them on the proviso that tickets would remain affordable.

The row over prices is the main agenda item at Fan Advisory Board meetings and supporters have led the way in the Stop Exploiting Loyalty and visually striking ‘black balloons’ campaigns.

But how badly do they really need to hike prices?

It had been reported that the board may have given Lopetegui a stay of execution because they couldn’t afford his pay-off, which would be deducted from their PSR calculation.

That has now proved manifestly untrue – and the same goes for their stance on selling Kudus.

The universal consensus among those consulted by TBR in the world of football finance is that West Ham have ample headroom under the Premier League’s financial rules.

It is a view that is borne out by even the most cursory look at the club’s annual accounts, with their 2023-24 financials released last week officially announcing a £57m profit.

They lost a modest £18m in 2022-23, but a huge chunk of that will have been offset by PSR-deductible expenses such as youth and infrastructure investment, as well as spending on the women’s team.

Granted, they spent heavily in the summer. But, because of the accounting practice of amortisation, only one-fifth of their expenditure will count towards their profit-and-loss account for 2024-25.

Liverpool University football finance lecturer and host of the Price of Football podcast Kieran Maguire echoes this analysis, as does the world-renowned finance writer Swiss Ramble.

“West Ham have no problems at all with the Premier League's Profitability and Sustainability rules,” Swiss Ramble wrote in relation to their status in the most recently-completed PSR assessment window.

There would have to be a gargantuan swing from a £51m profit over the three years in the previous monitoring period to a £105m loss in 2024-25 for them to be in any danger of a breach.

That will not happen.

There are myriad financial and strategic reasons – such as cash flow, player trading principles, or raising funds for other targets, for example – that might make West Ham consider selling Kudus.

But PSR is indisputably not one of them.

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PSR and David Sullivan’s transfer ambitions: Will the new West Ham manager have funds to spend this window?

PSR was not a limiting factor in Lopetegui’s pay-off, nor will it be in the appointment of a new manager, or the future of Kudus.

But what about West Ham’s recruitment strategy in the current transfer window given that the club will likely post a loss in the current financial year?

In reality, their ambitions are limited by how much David Sullivan, Daniel Kretinsky and the rest of the ownership are willing to bankroll financial losses this season as opposed to by PSR

They had a cash balance of £33m at the last count (per public documentation), and any investment beyond that would need to be funded either from the owners’ personal wealth or loans or credit facilities.

The club of course would need to pay interest on any debt they take on, even if it is a loan from the owners themselves.

Unlike most Premier League club owners who have funded their clubs through equity or soft loans (interest-free loans from shareholders), Sullivan charges interest on the money he lends to the club.

As documented by Swiss Ramble, the owners have banked £23.3m in interest direct from the club purse during their premiership.

The approach taken by the owners going forward is therefore a far more immediate concern than PSR.