The club escaped with a £5.5million fine from the Premier League in April for breaching rules on third-party ownership in relation to Tevez and fellow Argentinian Javier Mascherano, and Tevez then scored the goals which helped keep the Hammers in the top flight at Sheffield United's expense.
Magnusson and his club have since managed to negotiate a settlement with Tevez's representative Kia Joorabchian to release the player's registration to enable him to sign for Manchester United, avoiding the prospect of a lengthy court battle.
Many observers felt the Hammers had been lucky to escape with a fine rather than a points deduction over their signing of Tevez, and Magnusson accepts that rightly or wrongly there is bad feeling towards his club.
He told The Guardian: "It does hurt me because the club has been dragged into this in a negative way by some of my colleagues. West Ham has been dragged down and I don't think this is correct.
"This hurts me most, because what a few people decide should not be a burden to the whole club."
Magnusson also regrets the impact the whole affair has had on Tevez himself.
"The other sad thing is that Tevez got caught in the middle. He's a great lad, so enthusiastic about football and success, and I would have loved to have seen him (again) in a West Ham shirt. I really tried to make that possible but, as a great player, he had ambitions to play in the Champions League."
Meanwhile, England manager Steve McClaren has hailed Tevez's impact on the English game since joining the Hammers in a shock deal on August 31 last year.
"I like Tevez. I have always admired him. I remember coming across him in Geneva (where England played Argentina in a friendly in November 2005). He impressed me then. He has adapted to English football very well because he is an English type of player. He was certainly a big part in them staying up.
"There are a lot of players who could have a big say in the title. Only time will tell with regard to Tevez moving to Manchester United."