PAI Capital was under the impression it was heading in the right direction. The private equity firm had heard that David Sullivan wanted out of West Ham and, after having an opening offer of £300m for the club turned down in November 2020, was preparing its next move.
There was reason for cautious optimism. PAI, founded by the Azerbaijani businessman Nasib Piriyev, had been invited for talks at Sullivan’s Essex mansion before making its first bid and had gone away feeling positive. There were discussions about figures, about life at the London Stadium, and the overriding sense was that a deal was there to be done with West Ham’s majority shareholder, who has experienced plenty of ups and downs since buying the club with David Gold in January 2010.
Yet it is not easy purchasing a football club. PAI returned with a £400m offer last February but Sullivan had become less welcoming. The 72-year-old would dismiss PAI as “property people” when its interest became public last summer and had caught it off guard by privately telling it he had given exclusivity to a Czech billionaire.
Enter Daniel Kretinsky, swooping in just as PAI was pondering where to go next last October. His deal was approaching the final stages when news of his interest in purchasing a significant stake broke a day after West Ham had knocked Manchester City out of the Carabao Cup. Negotiations with Kretinsky were smooth and there was a new voice at the table after the 46-year‑old became the second‑largest shareholder by purchasing a 27% stake in November.
Three months on, the question is what comes next.
West Ham are battling for fourth place, could win the Europa League and are on the rise under the shrewd management of David Moyes. The controversy over Kurt Zouma kicking his cat has been an unwanted distraction but they go into Saturday’s game at home to Newcastle full of optimism.
It is a far cry from the days when supporters bristled about the move to the London Stadium and accused Gold, Sullivan and Karren Brady, the vice-chair, of broken promises about investment in the team. Yet breaking the Premier League’s glass ceiling is far from straightforward. Champions League qualification is up for grabs but West Ham do not have as much depth as Arsenal, Manchester United and Tottenham, and must now also consider Wolves as contenders. Moyes’s squad is light and West Ham spent January trying to strengthen, with a striker and centre-back their priorities.
It was a trying window. With clubs reluctant to sell, West Ham grasped for solutions. Club-record bids for Benfica’s Darwin Núñez and Leeds United’s Kalvin Phillips and Raphinha were turned down. Frustration mounted when the deadline passed without anyone coming in and, although Moyes is famously picky, the attention usually falls on one figure when West Ham struggle to make signings: Sullivan.
Yet although Sullivan, himself a billionaire, remains the most powerful figure at the club, it is no longer just about him. Kretinsky has altered the landscape. He should increase their spending power and his arrival could ultimately spell the end of the Sullivan and Gold era.
According to documents submitted to Companies House in November, Kretinsky has an option for a full takeover. The papers revealed that there is a put and call option agreement between Sullivan, 1890 holdings a.s, the holding company used by Kretinsky to buy his shares, and EP Investment Sarl, Kretinsky’s investment company. The deal gave Sullivan the right to sell his shares to Kretinsky at a set price, and Kretinsky has the option to buy Sullivan’s shares. The price cannot change and other shareholders can be included in the deal under the same terms, though the option exists only for a certain period.
There is no guarantee Kretinsky will increase his stake. The co-owner of Sparta Prague could decide to hold back. He has not taken full control of Sparta since buying a 40% stake in 2004. Kretinsky is known as the “Czech Sphinx” because of his inscrutable business style and his intentions remain unknown. Kretinsky declined to comment.
“We have come to support the club but – so as to manage supporters’ expectations – that doesn’t mean big spending in the January transfer window,” he wrote in the Evening Standard in November. “Gradual evolution is, in my opinion, the most healthy way to build a strong club.”
The message was about patience and tallies with Moyes’s approach. West Ham were in a relegation battle two seasons ago. Their rise was unexpected. Gold and Sullivan have fought many fires since buying the club – relegation in 2011, leaving Upton Park in 2016, protests at the London Stadium – and one theory is that they would be able to leave with their heads high if they sold with the team on the up.
Club insiders, though, have repeatedly insisted that Kretinsky’s arrival will not automatically lead to Gold and Sullivan leaving. Sullivan has become less involved in recruitment in recent years, but he loves working in football and it is understood that he will look to buy a smaller club if he sells West Ham. The feeling is that he does not intend to leave, though there are no guarantees that will remain the case.
Kretinsky, a qualified lawyer who has a number of other investments, including stakes in Royal Mail, Sainsbury’s and France’s Le Monde newspaper, is not the only person who has shown an interest in buying West Ham. Reports of bids have captured the fanbase’s imagination in the past. The relationship between the board and supporters plummeted when West Ham toiled after moving to Stratford and campaigns to force out Sullivan and Gold grew at the start of 2020, protests before home games against Everton and Southampton laying bare the unrest.
At that stage, with the pandemic yet to force football behind closed doors, it seemed that West Ham were a broken club. Sullivan was downbeat. Supporters were constantly on the verge of erupting and although Moyes led his side to safety during Project Restart, the beginning of the 2020-21 season brought more discontent when Grady Diangana was sold to West Brom.
The heat was on after the departure of Diangana, a popular academy player, and it was not long before news emerged of a US consortium having bids of £350m and £400m turned down. The asking price, Sullivan said, was much higher.
Yet others were interested and PAI explored the possibility of buying the club. Piriyev, who supports West Ham, had begun to put plans together with his business partners.
Part of the discussions centred on the London Stadium, which West Ham rent from the London Legacy Development Corporation for £3m a year. PAI felt that the Queen Elizabeth Olympic Park was underutilised and a burden on taxpayers, so it decided that one of the key facets to its bid would be trying to taking control of the stadium.
That part of the plan would lead to Sullivan’s “property people” jibe. After a while he came to feel that PAI’s proposals lacked credibility. Initially, though, discussions between the two parties were productive. When Sullivan invited PAI to his home, according to sources he said that he knew his time at the club could be up and that supporters would love anyone who bought the stadium. PAI’s representatives left feeling “buoyed up”.
Sullivan had said his valuation of the club tended to rise and fall based on how well West Ham were playing, but PAI was under the impression that £450m would be enough.
On 25 November, PAI’s first offer came in: £300m. Sullivan dismissed it as “almost laughable”. By then, West Ham were starting to motor on the pitch. Moyes had transformed the team, who were driven on by Declan Rice in midfield, and European football suddenly felt a realistic target.
PAI, though, was undeterred. In December 2020 Andy Mollett, the club’s chief finance officer, gave access to West Ham’s data room. PAI was able to examine the finances and returned with a £400m offer two months later. Sullivan would publicly describe it as “derisory”.
By then PAI had unwittingly entered into a PR war. It announced that the former West Ham players Tony Cottee, Rio Ferdinand and Anton Ferdinand were on board but the communication around the bid came to feel naive. Supporters grew suspicious and, in any case, Kretinsky was talking to the club in secret. When PAI returned with another offer of £275m for a 51% controlling stake in September 2021, in their view valuing the club at almost £600m, time was running out.
The process with Kretinsky was smoother. Sullivan has always been open to investors coming on board. PAI did not want him to remain as the majority shareholder, because its influence would have been diluted, but Kretinsky has taken a more pragmatic approach. Talks between Sullivan and the Czech took place in secret and lasted about nine months. He attended West Ham’s 4-1 win over Leicester last August and was welcomed into the fold after securing a deal worth about £180m-£200m.
The agreement, believed to value West Ham at £700m, saw Kretinsky and his colleague Pavel Horsky appointed to the board. It reduced Sullivan’s shareholding from 51.5% to 38.8%, Gold’s by 10% to 25.1% and Tripp Smith’s by 2% to 8%, with the number of shares in the hands of other investors falling from 3.4% to 1.1%.
But what comes next? Gold, 85, has become less involved. Sullivan has spoken about letting his sons, Jack and Dave Jr, take charge. Nothing is off the table and any prospect of a full takeover by Kretinsky is complicated by the anti-embarrassment clause in the rental agreement for the London Stadium, which states that Sullivan and Gold have to pay a 20% penalty to the taxpayer if the club is sold for more than £300m before March 2023.
Perhaps Sullivan and Gold will leave as soon as that clause no longer applies. The LLDC has written to West Ham to ask whether the payment is already due after new shares were issued following Kretinsky’s investment. The LLDC wants to see the details of the deal. West Ham declined to comment.
It is another complication, particularly as the relationship between West Ham and the LLDC has not always been easy. It has improved in recent years – the stadium’s capacity has risen to 62,000 and the squaring off of the stands behind the goal has made it look less like an athletics venue – but West Ham were intrigued when PAI announced it had reached a provisional agreement with the LLDC to take over the running of the stadium last August.
West Ham had assumed they would be approached first were the stadium to change hands. Five and a half years after moving in, the stadium still poses challenges. For the LLDC, there is value in being able to host concerts and Major League Baseball matches, and there is a concession agreement with UK Athletics to consider. Its supporters argue that it brings a spotlight to London and point out that the Olympic legacy has helped to regenerate east London.
Yet the stadium runs at a loss, with the public purse propping it up. The naming rights remain unsold and there is a question about what works best for taxpayers. There have been suggestions that West Ham will look into taking control of the stadium. The LLDC is open to all options, whether selling the stadium or renegotiating the terms of West Ham’s lease, although both parties insist nothing is imminent.
There is no sense of urgency. The lease is generous for West Ham and they are starting to enjoy themselves in Stratford. Moyes has brought stability and the appointment of Rob Newman as head of recruitment is a positive step. Newman, who was highly respected at Manchester City, works closely with Moyes and has focused on improving the scouting setup.
Yet West Ham, who could struggle to keep Rice if they finish outside the top four, have a long way to go. Money talks loudest at the highest level. Sullivan and Gold know how hard it is to break the established order. Eventually they could ask themselves whether it is worth the hassle. They stand to make a huge profit on their investment if they walk away and, with Kretinsky on board, West Ham could be about to open a new chapter.
