Tuesday, November 21, 2006

Another takeover - yet more question marks....

West Ham have today announced they have accepted Eggert Magnusson's £85m takeover bid for the club. Magnusson's consortium have secured agreements to buy 83% of shares and the Hammers' board have recommended the offer to remaining shareholders.

From the outside looking in, Magnusson appears to be a genuine football fan having been President of the Icelandic FA since 1989, he's also been on Uefa's executive committee since 2002. However, Magnusson is also a businessman and so are his backers, his chief investor Bjorgolfur Gudmundsson is a billionaire, but businessman don't get rich by throwing money away and throwing money away can be the definition of running a football club as many previous club owners have found out to their cost. So what is their movtivation?

Bjorgolfur Gudmundsson isn't in the same league as Roman Abramovic and Magnusson has stated that the club will move forward one step at a time, so don't expect a Chelsea style revolution. Magnusson is saying all the right things and there's talk of taking over the new Olympic Stadium, but as I understand it, the people running the Olympic Stadium project want a £100m contribution towards the development costs. Having just splashed out £85m to acquire West Ham it seems highly unlikely that the consortium will find that £100m. The fact is the British Government, Sport England and the Olympic committee are fully committed to building the Olympic Stadium - and I for one seriously doubt they'll find any willing partners with £100m to spare, the danger is the Government could end up with another Millennium Dome on its hands, they wont want that to happen again and so with them fully committed, a compromise will have to be found.

I predict that the government will end up funding any shortfall and then the Olympic Committee/Government will end up brokering a similar to deal to Man City's where they pay rent to the local authority.

One sticking point for any football club will be that it's highly likely the Olympic stadium will have to retain its running track, which isn't what happened at Man City. Also, the capacity will be only 25,000, so that is another huge potential sticking point for a club like West Ham and interestingly another East End club Leyton Orient are interested in the new stadium, but the Orient Chairman Barry Hearn isn't even willing to enter into talks about funding at this stage, but he's very interested...

Getting back to our new West Ham owners, imagine they broker a deal for the new stadium on a pay as play basis, they could probably recoup much their investment in West Ham by selling off Upton Park. Gudmundsson is a banker and so I expect prudency rather big changes, the takeover could work out well for all concerned providing everyone acts with the best long term Hammers interest at heart, but with foreign ownership comes uncertaincy and that is what Hammers fans will be thinking.

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