"This club is unsustainable in this division where we are with the wage bill - that is a fact and you can't get away from that," he admits.
"I knew that when I arrived and promotion this year was very important; we can still aim for that, of course - and we have got a great chance of that.
"But the realism is that we might not make it and if we don't then we have got some changes again to be made which is what has happened to teams that have been relegated in the past.
"We have got to be very careful that we don't end up like some of the teams that have been in then Premiership for a long time who now find themselves in the first division - and pretty much rooted in it with problems.
"Going out of the top division when it was the first division was never such an issue because there wasn't the great imbalance of money that there is at the moment.
"What you have now is a massive imbalance between sustaining players in the Premiership and sustaining them in the first.
"That needs to be addressed, I am afraid, at a much higher level than West Ham.
"The FA need to look at that, especially the FA Premier League, because it is damaging the clubs that are getting relegated.
"It must be damaging football because there isn't one club that has come out of the Premiership, apart from West Brom, and Charlton to be fair, because they both got promoted and made a conscious effort to try and stay in it with basically the squad they had.
"They took the money, saved it, and fed it back out in dribs and drabs.
"Everybody else who had grown with the Premiership like West Ham since just after when it began in our case, built up a huge collection of players and salaries and if you get relegated you are in trouble.
"Ipswich, who got promoted and then went for it, is another type of team that suffered.
"There are some shelter payments, but they don't last longer than two or three years and they are going to be important to us now.
"I think it needs to be looked at, without a shadow of a doubt, and I think it has been said before from managers and clubs who have been relegated.
"But, ultimately, we are in that position, and it is no good just looking at the short term - you have to look at the bigger picture.
"We need to do that because this is a fantastic club and it doesn't deserve to be in the financial position we find ourselves in.
"The only people that can put that right are the manager, the board, and the players who are in that position and that is what we are all fighting to do."
Alan is hoping to bounce back after another home defeat last weekend, and he says:
"We have got week to week so it is not like games are coming in thick and fast; we are having to live all week with that display Saturday which is never easy when you are disappointed.
"But has given us time to look at options for ourselves and work on other issues for the club.
"The scouting system is something I have been having a real good look at in the last couple of weeks and we are making changes there which, I think, will be better for us.
"That needs to be spot-on for us now because the players we bring in ultimately will be the key to our success."