west ham & transfer related madness

the ever readable david conn appeared in the guardian today to talk about football finances, his usual area of expertise. to absolutely no one's surprise, the article - regarding the necessity of football to be realistic about the recession - focused on two of the most notorious examples around, west ham and newcastle.

newcastle, which was previously quite publicly for sale after owner mike ashley appeared to throw a tantrum after the impact of the kevin keegan debacle compounded a rather delayed realisation that it costs quite a lot of money to run a competitive football club, has recently been taken off the market, the takeover bids that "caretaker" manager joe kinnear promised in his first press conference having failed to actually materialise. despite their owner's rumoured losses during the virtual-collapse of HBOS, at least they remain solvent; west ham are faced with much bigger problems, with their owner nearing bankruptcy and only months to find a buyer. clearly, neither club proved to be the cash cow their owners anticipated, and the combination of the economic climate along with the failure of both to realise the supposed commercial potential of the clubs - admittedly due to a variety of factors - may well be a significant development in the previously fevered sell off of the premier league.

perhaps the most outrageous thing about the whole affair, the nugget of information that symbolises both the ridiculous inflation and lack of perspective that had bedevilled english football, as well as the crisis currently engulfing it, is bjorgolfur gudmundsson's valuation of his club. this is the club he bought for £85m, provided with a squad full of horrible mercenaries on ridiculous contracts and added nothing of value, yet the valuation is £250m. £250m. martin samuel wrote an excellent article in the times tearing this to pieces - google it - and i shan't bother to repeat his points. it will merely suffice to say that this is self-evidently preposterous.

obviously, no one has deigned west ham worthy of such a lavish sum. perhaps this might have something to do with the fact that west ham remain the largest asset of a man who will be declared bankrupt in the spring, whose holding company is £110m in debt and who now holds absolutely no leverage over potential buyers? surely, as kevin mccarra observed in monday's guardian unlimited podcast, for anyone with even a remote interest in buying the club the best decision would be to wait for gudmundsson to go bankrupt, or get even more desperate, and pick up west ham for a bargain? on that basis alone, it will be the surprise of the season if anyone even bids for the club before the spring.

from this parlous financial position, it would also follow that gudmundsson would want to sell as many of the company's assets as possible during what is potentially his only window in order to maximise the income. not only does this provide enough cash to keep the club afloat, it also reduces its liabilities in terms of weekly and yearly salary, making it more tempting for potential buyers, who probably don't wish to be lumbered with a bloated, overpaid squad on receipt of their new football club - especially when the country is in such a difficult economic situation.

as such, there has been much interest in the more respected members of the first team squad. craig bellamy was an early target for spurs, before they settled on jermain defoe, and it appears he may still be of interest to a few other clubs; scott parker seems to be on his way to man city; matthew upson has allegedly been subject of a bid from aston villa; calum davenport may be going to bolton; and presumably if the first three leave you would assume rob green, who has voiced his frustration at the club previously, would also ask to go.

west ham's problem is therefore not a lack of interest but a lack of intelligence. for matthew upson, an adequate if limited central defender on the verge of the england team but also on the verge of entering his thirties (he is 29) the asking price is apparently £16m. that would be sixteen millions of pounds. upson is a good player, but that is ludicrous: his talent certainly doesn't warrant that price tag, regardless of whether he is being picked for england whilst other players are injured. scott parker, meanwhile, is valued at £12m, which again beggars belief for such a limited player - man city are reported to have offered £4m plus michael johnson, who has the ability to not only be a lot better than parker but also add some much needed craft to the woeful west ham midfield - especially when he was purchased for £7m by the hammers and has done absolutely nothing since to suggest any sort of development. similarly, bellamy - who 18 months ago was worth £7.5m - has apparently nearly doubled in value despite scoring a mere 5 goals in the intervening period and turning 29 himself.

it, of course, is ludicrous. west ham have a genuinely poor side and desperately need some reinforcements. surely rather than holding out for ridiculous money they would they be better off sacrificing bellamy, parker and upson for a combined total of something in the region of £24m, plus michael johnson, and purchasing cheaper, younger players, probably outside of the premier league?

perhaps what is holding them back is the current insanity within the english transfer market. when portsmouth can successfully demand £15m for jermain defoe - and regardless of the intricacies of the fee and whether spurs are writing off other debts as part of the overall sum, he will still be purchased with a package worth that amount - having owned him for a year and paid only £9m for him, something is drastically wrong. that spurs would pay it is even more unbelievable, especially given the fact that at 26 he has played enough football, both for club and country, to demonstrate his game will probably develop little further than the "shoot so many times i'm bound to score sooner or later" principle he currently operates on. the same applies to stewart downing, thoroughly mediocre but with a left foot, being valued at £15m. this can be blamed on the idiocy of harry redknapp; perhaps most damaging is manchester city's insistence on spending £12m on a part-time footballer, 28 years old, and making him the highest paid full-back in the world. this creates a worrying illusion of fiscal health, and distorts the market to the extent that whenever manchester city are rumoured to be interested clubs seem to feel confident in raising their prices to ridiculous levels. in such a depressed economic climate, this could lead to even greater financial peril and disparity in the market.

now even ambramovich, the original sugar daddy, has radically scaled back his spending, blaming the current economic situation. the reality that many seem to be waking up to is that football is generally not a good way to make money - it often requiries quite a lot of money, and even then your options are either long-term, building the club up in order to reach a united-like level of global recognition (difficult) or limiting your outlay, operating on a sound fiscal basis, improving the state of the club and finally selling on for a tidy profit. the former is a very long-term strategy, and the attempts by ambramovich to telescope this gap shows the investment needed to make the jump in the short-term. the latter, although almost certainly less romantic, is probably the sounder path; it is the one currently trodden by randy lerner, the aston villa owner who has provided the most effective blueprint for successful ownership yet.

lerner bought villa for a small sum, £62.6m, and made a wise choice: a large, loyal fanbase, coupled with a good sized stadium meant the club would never really struggle to keep their heads above water, and a very good youth development system meant there were a few youngsters of extreme promise emerging. this was bolstered by adequate, if never outrageous, funding for the talented, proven manager to invest. not all of the investments worked out - the purchase of stilian petrov will never be justified, nicky shorey looks like he might soon be leaving, james milner will probably struggle to ever match his £12m fee and marlon harewood isn't a premiership player. but o'neill paid what now looks like big money - £8m a piece for curtis davies and nigel reo-coker, a fee rising to £10m for ashley young - but blended them wisely with a few effective veterans (bouma, before the injury, carew, friedel), the existing quality in the squad (barry, young) as well as gabriel agbonlahor to create a side that may even sneak into the champions league, at a reasonable cost. what this means for lerner is that he can walk away in the medium-term - maybe less than 5 years from now - selling the club at a very healthy profit for himself.

the biggest irony is of course that of every side in the premier league, man city were maybe the most comparable when most recently taken over - a decent fanbase, a big (if unloved) stadium, a handful of very good young players from a very good youth system, a collection of good veteran talent and a proven manager. it is almost certain that they won't tread the same path, however; it will be interesting to see if it is at the city of manchester stadium where the trend of foreign ownership, in its most common incarnation, finally ends.