The authoritative Swiss Ramble examines Tottenham Hotspur's accounts for 2017/18. Profit before tax improved by £87m from £52m to £139m, as revenue rose by £71m (23%) to £381m and profit on player sales was up £33m to £73m. There were new club records for both revenue and profit. Profit after tax increased by £77m from £36m to £113m.
All three Spurs revenue streams increased: commercial rose £33m (43%) from £76m to £109m; match day was up £26m (57%) from £45m to £71m, due to the larger capacity at Wembley; while broadcasting was £13m (7%) higher at £201m, due to advancing further in the Champions League.
Revenue has grown by 81% (£171m) in just two years from £210m to £381m, driven by success on the pitch (better PL positions and Champions League qualification). Most of the increase has come from broadcasting £90m, but also healthy growth in commercial £50m and match day £30m.
In fact, the club's £170m (81%) revenue growth since 2016 is the highest of the 'Big Six', both in absolute and percentage terms. In the same period, Arsenal only grew by £38m (11%), so the gap between the North London rivals has shrunk from £141m to just £10m (Money League definition).
The £381m revenue has just about closed the gap with Arsenal £388m, but is still a fair way behind other rivals, e.g. Manchester United £590m is around £200m higher, while Manchester City £500m is over £100m more. The difference with Liverpool £455m and Chelsea £443m has narrowed, but is still meaningful.
£139m profit before tax was the highest in the Premier League, ahead of Liverpool £125m, as the Reds reached the Champions League final, then Arsenal £70m and Chelsea £67m. The Swiss Ramble comments, 'This is obviously a fantastic achievement, especially as seven clubs in the top flight have reported losses.' The £139m profit before tax is the highest ever registered in the Premier League. Spurs have actually delivered three of the top 10 profits in Premier League history, including £80m in 2013/14 and £52m in 2016/17.
The profit was boosted by £73m profit on player sales, including Walker to Manchester City, Bentaleb to Schalke, Wimmer to Stoke, N’Jie to Marseille and Fazio tp Roma. Clearly, player sales have been a major part of the club's financial success. In the last 5 years, they have made a hefty £265m from this activity, only behind Chelsea £337m and around the same as Liverpool £260m. Only sale of note in current year is Dembélé to China, so sum raised will be much lower in 18/19.
Spurs made player purchases of £116m in 2017/18 (including Davinson Sanchez, Lucas Moura, Serge Aurier, Fernando Llorente and Juan Foyth), which might sound impressive until you realise that United splashed out £328m, while Everton spent almost twice as much with £215m.
Spurs have been profitable for the last six seasons, making an impressive £321m in that period (£64m a year). However, chairman Daniel Levy cautioned, 'Trading for the current year will be impacted by the additional costs at Wembley and the delay to the opening of the new stadium.'
Spurs earned €61m from Europe for reaching the Champions League last 16, €15m more than the prior season (CL group stage + Europa League last 32). Mauricio Pochettino’s view that “The most important thing is being consistently in the top four and playing in the Champions League” is underlined by revenue earned in the last five years. Spurs received a useful €140m, though lower than other leading English clubs, e.g. Manchester City €279m.
Spurs benefited from two major new deals in 17/18: (a) AIA shirt sponsorship extended to 2022, up from £16m to £35m; (b) Nike replaced Under Armour, doubling money from £15m to £30m, running to 2023. However, these long-term deals run the risk of being overtaken by others.
The wage bill rose £21m (16%) from £127m to £148m. In the last two years, revenue has shot up by £171m while wages have only grown £48m, though headcount up 20%, which is testament to Spurs’ ability to keep costs down. Before that, wages had remained at £100m level for 3 years.
Even after the growth, Spurs' £148m wage bill is still miles behind the rest of the Big Six. The closest is Arsenal, £75m higher at £223m, while Manchester United’s £296m is twice as much. Even more incredibly, Spurs’ wages are only £3m more than Everton £145m. Spurs cut their wages to turnover ratio from 41% to an astonishingly low 39%, which is a full 11% below United 50%. This does raise the obvious question of how long Spurs can manage to keep their wages at this level without their stars moving to better paying clubs.
Gross debt rose £281m from £185m to £466m, comprising £445m drawn against a £537m facility (up to £637m in October 2018) agreed with HSBC, Goldmans and Bank of America for the new stadium and £21m from Investec for the new training ground. The £466m gross debt is 2nd highest debt in the Premier League, only behind Manchester United's £496m (Glazers’ leveraged buy-out). It is due for repayment in 2020, but the club will convert to a mixture of maturity dates.
The club paid £14m in interest last year, only surpassed by Manchester United's £19m. As Spurs’ debt increases, the interest payments are likely to further rise, which should prove as much of a burden to them as the Emirates Stadium bill has been to their North London neighbours.
The Swiss Ramble concludes, 'Tottenham Hotspur have done very well to compete at the highest level against teams that spend much more on transfers and wages, while their focus has been on building a new stadium (and training ground). Whether they can continue to manage this tricky balancing act is the big question.'
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