Spurs move into the bulge bracket

IT HAS been an exceptional week for Tottenham Hotspur, despite the comments made by their England defender, Danny Rose, that he cannot wait to see the back of football due to the racism that has emerged over the past few weeks.

Spurs opened their excellent new stadium – innovative beer filling mechanism and all – and announced a world record profit for a football club. Little wonder that some people are beginning to see the Lillywhites as the London club with the most interesting and sustainable future.

Spurs desperately need some silverware to confirm their elevation to Europe’s elite. It will probably have to wait a season – there’s only the Champions League left for them this term and they face quadruple winners-elect Manchester City in the last eight – but regardless, it is difficult not to be a little impressed with the way Daniel Levy and his colleagues run Tottenham Hotspur.

The club’s profit for the 2017-18 campaign totalled £ 113 million, a massive jump from the £ 36.2 million generated in 2017. Obviously, the club’s move to Wembley while their new ground was being built made a huge difference, with Premier League gate receipts rising from £ 19 million to £ 42.6 million. Spurs averaged 68,500 in their first Wembley season, almost double their last campaign at tired old White Hart Lane.

With the new stadium holding more than 62,000 the club can look forward to consistently higher matchday income as well as higher commercial revenues. Total revenues in 2017-18 amounted to £ 381 million, some £ 71 million higher than 2016-17. Spurs secured UEFA prize money of £ 53 million thanks to their Champions League run to the last 16 and generated £ 148 million in TV money.

Spurs’ financial performance in 2017-18 is all the more remarkable given the burden of building the new stadium. The club has total assets of £ 1.3 billion and £ 366 million in debt, thanks to the £ 637 million credit facility that won’t run off until April 2022. Spurs have stated that Wembley’s additional costs and the prolonged construction of the new ground will have an impact on the club’s balance sheet for 2018-19. In 4Q 2018, £ 237 million was added to the £ 400 million originally borrowed from Bank of America Merrill Lynch, Goldman Sachs and HSBC. At the same time, the club revealed that it would be looking to convert its current facility into notes with variable maturities.

One of the reasons Spurs have posted such an impressive result is that they have resisted the temptation to spend big on players in the past couple of windows. This was partly attributable to the fact the club has managed to keep hold of its prized assets – players like Harry Kane and Dele Alli, who, according to KPMG’s Player Valuation Tool, are worth a combined sum of £ 250 million. There’s little doubt the immediate future depends on Spurs keeping their squad intact, but if the club is to remain competitive, it seems unlikely that it can continue to show restraint in the market and sell key players.

Nevertheless, it is notable that Spurs operate relatively prudently when it comes to player wages, although this philosophy may be tested if clubs try to lure away players like Kane and Alli. The wage bill for 2017-18 came in at £ 148 million, which is far lower than the club’s peer group in the Premier. It is estimated that Spurs’ are sixth in terms of wages, but in 2018 they finished third, a position they are chasing again in 2018-19. Indeed, Arsenal, the fifth-placed by wages, pay-out some £ 223 million, which is some 50% higher than their north London rivals.

Furthermore, Spurs’ £ 148 million is 50% of Manchester United’s staff costs of £ 296 million and they are way behind Liverpool’s £ 263 million and Manchester City’s £ 260 million. Liverpool are the only other Premier League club to generate a profit of £ 100 million-plus. Spurs have also kept operating expenses flat at £ 229 million.

The true picture of the cost of creating a new, state-of-the-art stadium that can position Tottenham as a modern “European” club will likely be more transparent when 2018-19 and 2019-20’s financials are revealed over the next two years. By that time, London’s biggest club ground and the local regeneration that is expected to accompany it may have brought benefits such as jobs, housing and economic growth for a neighbourhood that gets more than its fair share of negative publicity.

Photo: PA


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