Amortisation-Hammers Windfall?

The murky world of football finances has always been 'mudded' by strange accountancy terms that leave the layman baffled and that is exactly the intention. The most common term most people read is the ubiquitous "undisclosed' fee, when clubs reveal, or in most cases don't reveal the actual fee paid for a player.

The reasons are duplicitous, and one of the principal elements is 'amortisation', yes it does sound like some kind of 24 hour anti-perspirant or 'love' scent advertised by Johnny Depp, but actually it is a term used to describe a 'scaled' system whereby a player's value generally decreases the longer they are at a club, with the coefficient being how long there is left on their contract as well as contract renewal clauses inserted when the initial contract was enshrined.

Confused yet? You are supposed to be, essentially to understand the minute details involved you have to be an accountant! To put things into Layman's terms, some of the catastrophic losses Hammers have 'endured' through Pellegreedy's transfer profligacies will be offset against TV revenue and any operating profits, if any, during the next fiscal year.

So the losses generated by Haller, Anderson, Wheelchair, Yarmolenko and possibly Diop in the near future are not as tragic as they first look. In a way West Ham are a bit like a person on low income who receives Universal Credit, as soon as they actually earn anything, 65% of that 'additional income' is offset against their benefit, meaning that for many there is a 'grey window' whereby it is more financially beneficial NOT to earn any income, it is an anomaly but one that exists, I occasionally work with a charity to help people caught up in this 'under class' which is why I understand the issue. 

If you think of West Ham as a Barclays Premier League benefit claimant it becomes easier to understand, the club is currently losing money, but if it started to make money it would be tax liable, therefore ALL the losses are written off against tax liability, which in Hammers case means the difference between receiving a massive 'assessment' or a Nil request for payment.

The main expenditure of the club is on wages, but offset against that cost is also the magic 'amortisation' element so despite having been thoroughly 'spanked' on Pellegredy transfers, the club hasn't sustained as much long term damage as it initially seems.

Although the club might have 'got away with it' in the short term, HM Tax authorities look very badly on companies that continue with loss making activities that they then write down against tax, and the last thing the club needs is to have HM revenue and customs on their doorstep, HMRC being the ONLY authority that DOESN'T require a warrant to enter anyone's premises.

Financially West Ham have been skating on thin ice, hoping for a minor miracle, and that is exactly what they got when David Moyes, his support staff and the team managed to attain 6th place in the Barclays Premier league against all odds, events like these rarely re-occur, it is up to the Hammers board to be brave and not to bullshit as they have done consistently in the past, because they can't keep getting away with it! - Ed