Manager Billy Bonds was given restricted spending money and was only able to pay small fees for defender Mitchell Thomas, full-back Kenny Brown and striker Mike Small. On the evidence of the goalless draw with Luton Town on the opening day it seemed likely that it was going to be a difficult campaign. By the end of September only two league wins had been recorded, but it was encouraging that Mike Small had scored seven goals.

Bradford City were beaten 5–1 on aggregate in the League Cup and during October and early November fortunes changed, with successive wins against Tottenham and Arsenal and a 2–0 away victory in the League Cup against Sheffield United. A slump in December, however, brought defeats at Everton, Aston Villa and Notts County, and a last-minute penalty gave Norwich City a 2–1 win in the League Cup.

In the New Year the Hammers struggled in the FA Cup but managed to knock out non-league Farnborough Town and Fourth Division Wrexham, both in replays. League form improved with successive 1–0 victories over Luton and Oldham, but the Hammers went out of the FA Cup following a 3–2 home defeat by Sunderland. The team slumped to the bottom of the league in March after going four games without a goal. Striker Clive Allen was bought from Chelsea but arrived too late in the campaign to make an impact. Despite beating Norwich City 4–0 and Manchester United 1–0 there was no escape, and the Hammers were relegated. The final home game against Nottingham Forest saw Frank McAvennie make his last appearance for the club and he responded with a hat-trick in the 3–0 victory.

During the season, to finance ground improvements a bond scheme was introduced to the anger of the supporters. There were ugly scenes and protests during games, which did not help matters on the pitch. In hindsight it was a bad scheme, and the rift between supporters and the club took years to heal.