West Ham's financial woes were laid bare last night when the club published their latest accounts.
The club's decision to award injury-plagued striker Dean Ashton a new contract in December 2008 backfired, leaving them liable for a 5.81 million British pound payment when he was forced to retire in December.
Freddie Ljungberg and Kieron Dyer will have cost the club 34 million pounds over the terms of their contracts, having only started a combined total of 32 matches for West Ham since the summer of 2007.
For two years under the ill-fated Icelandic regime, West Ham's wages totalled around 80 per cent of its annual turnover, nearly 20 per cent higher than the Barclays Premier League average.
The club's finance director, Nick Igoe, wrote in the accounts that the club's subsequent on-field performances were unsatisfactory following such major investment.
"It is a truism to observe that a club's playing success (and almost certainly long-term financial success) is largely dependent on how wisely it invests its available resources," Igoe wrote.
"It has to be concluded that many of the group's investment decisions in the last two to three seasons have been ill-judged."
"Two players who signed in the summer 2007 transfer window, one of whom has since left the club, have started a combined total of 32 games and will have cost the group 34 million (pounds) over the term of their contracts."
"No football club can sustain this level of expenditure on underperforming members of its squad."
"It must be concluded that the investment in the playing squad has not generated an appropriate return, either financially or in terms of performance."
"It follows that an eighth and 10th-place league finish, one Carling Cup last eight and one FA Cup last 16 represent an unsatisfactory return on this expenditure."
"Clubs with fewer resources and lower levels of expenditure on their squad have achieved a greater level of league and cup success."
The figures also reveal the major belt-tightening programme West Ham undertook last season in the hope of staving off financial meltdown.
The wage bill was reduced and West Ham made 10.8 million pounds from player sales - but that accounted for less than a quarter of the transfer expenditure from the previous two seasons.
Igoe continued: "(The year) 2008/09 saw the group take steps to generate essential cash flow by a programme of player sales and wage savings."
"This comprised a reduction in the size of the playing squad and the trading of certain players for less costly replacements."
The club's turnover was down to 76.1 million pounds, due mainly to the collapse of title sponsor XL, but the wage bill also dipped.
West Ham's losses before tax of 16.2 million pounds were not helped by 'exceptional expenses' - such as the Ashton pay-out - but the figure was still half what it had been the year before.
The club's bank debt of 45 million is not considered 'excessive' for a company generating 75-80 million pounds of annual turnover.
But West Ham say the debt 'is challenging because it is relatively short term in nature, expiring as it does in August 2011, and has to be viewed alongside other liabilities such as the Sheffield United settlement and net transfer fee creditors of 14.4 million".