The authoritative Swiss Ramble comments from Zurich on the 2019/19 accounts of Tottenham Hotspur. He comments that the club 'have done very well to compete against teams that spend much more on transfers and wages, while their focus has been on building a new stadium. However, these excellent financials owe much to their success in the Champions League, where qualification is far from certain.'
In the last decade Spurs generated £1 bn cash from own operations, but also needed to raise £587m loans and £55m share capital. An incredible £1.3 bn has been invested in the new stadium and training centre, £77m interest, just £62m on players, £54m tax and £40m shares buyback.
The club generated an impressive £278m cash from operations (including £104m increase in trade payables), but then spent a massive £413m on the new stadium, £26m interest, £8m tax and £3m (net) on players. This was funded by £195m new loans. paid £26m interest last year, the highest in the Premier League, ahead of Manchester United £19m and Arsenal £11m. Despite the debt refinancing, interest payments will still prove a burden to Spurs in the same way as the Emirates Stadium debt has impacted their North London neighbours.
The £658m gross debt is by far the highest debt in the Premier League, well ahead of Manchester United £511m (Glazers’ leveraged buy-out). Worth noting that other clubs have also taken on debt for new stadiums, e.g. Brighton £280m and Arsenal £217m. Everton debt has risen to £337m.
The club only had £22m player purchases in 2018/19, the second lowest in the Premier League. For some perspective, Chelsea spent £281m and Liverpool £223m. Daniel Levy said, 'We could easily have spent more money on players. Who knows if that would have bought us more success or not.'
Chairman Daniel Levy remuneration increased from £3m to £7m, including a deferred £3m bonus for completing the stadium (albeit late), which is £4m more than Ed Woodward at United. He has now trousered a cool £31m in the last 10 years, though improved Money League ranking.
The wages to turnover ratio remained at an astonishingly low 39%, which is a full 14% below Manchester United 53%. This does raise the obvious question of how long Spurs can manage to keep their wages at a relatively low level without their stars moving to better paying clubs. The £179m wage bill is still miles behind the rest of the Big Six. Manchester United £322m is nearly twice as much, while Manchester City, Liverpool and Chelsea are all at least £100m higher than Spurs. In fact, their wages are only £19m more than Everton £160m.
In the last three years, revenue has shot up by £251m while wages have only grown £79m, which is testament to Spurs’ ability to keep costs down. Before that, wages had incredibly remained at the £100m level for three years.
The club's two major commercial deals increased in last 2 years: (a) AIA shirt sponsorship extended to 2027, up from £35m to £40m; (b) Nike replaced Under Armour in 2018, doubling money from £15m to £30m, running to 2033. However, these long-term deals run the risk of being overtaken.
Commercial revenue rose £26m (21%) from £109m to £135m, following growth in sponsorship, hospitality and merchandising. This is £24m higher than Arsenal, but way behind United £275m, City £227m, Liverpool £188m and Chelsea £180m. New stadium should help close the gap, e.g. NFL games.
The splendid new stadium has a 62,000 capacity, though there were lengthy delays and the total cost was over £1 bn, including nearly £500m spent in 2018/19 alone. Nevertheless, it should drive significant revenue growth, with club pushing for ambitious £25m naming rights deal. [Even before the pandemic, these were becoming increasingly hard to secure].
The importance of the Champions League to Spurs revenue growth is evident, as they have received €209m in the last 3 years (2017 €46m, 2018 €61m and 2019 €102m). In fact, they have earned more from Europe than any other English club in this period, just ahead of Manchester City €207m.
Broadcasting income rose £43m (22%) from £201m to £244m, comprising £150m domestic TV and £94m Champions League prize money (per club accounts). This was the fourth highest in Europe, only below Liverpool £264m, Barcelona £263m and Manchester City £253m.
They now have the highest revenue in London and fourth highest in England. That said, they are still a fair way behind the top three: Manchester United £627m are £160m higher, while Manchester City £535m and Liverpool £533m are around £70m more. The club's £251m (120%) 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 £44m (13%), so the £141m deficit against their North London rivals has swung to a £66m surplus.
Revenue has grown by a quarter of a billion pounds in just three years, from £210m to £461m, largely driven by success on the pitch (including Champions League). Most of the increase has come from broadcasting £134m, but also healthy growth in commercial £77m and match day £41m.
Player sales have had a big impact on the club's figures, contributing £336m profit in last decade, but worth noting they have been profitable even without this in last four years. To reinforce the point that player sales have been a major part of the club's financial success, in the last 6 years they made a hefty £276m from this activity, only surpassed by Chelsea £398m and Liverpool £305m.
Spurs have been profitable for the last seven seasons, making an impressive £412m in that period, averaging £59m a year. They made £226m profits in the last two years alone, while the last time they reported a loss was back in 2012 – and that was only £7m.One puzzle is that in the last three years Spurs paid £47m tax. Next highest were Arsenal £20m and Manchester United £15m.
The Swiss Ramble notes: 'Spurs scored a spectacular own goal this week when they furloughed 550 non-football staff, with the government paying 80% of salary, while their players’ wages were left untouched. This may be addressed at a later date, but the announcement left a bad taste in the mouth.'
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