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Covid-19 hits Spurs finances

The authoritative Swiss Ramble reviews the latest financial results for 2019/20 for Tottenham Hotspur.

Tottenham Hotspur’s 2019/20 financial results covered a season that was disrupted by the COVID-19 pandemic, but they still benefited from the new stadium.

The club swung from £87m profit before tax to £68m loss, a deterioration of £155m. Revenue dropped £69m (15%) from club record £461m to £392m (including exceptional £11m TV rebate), while profit on player sales rose £4m to £15m and expenses increased £85m. After tax loss was £64m.

This is the first year that Spurs have reported a loss since way back in 2012 – and that was only £7m. In the intervening 7 seasons, they have generated an impressive £412m of profits, averaging £59m a year. In 2018 and 2019 alone they delivered a hefty £226m.

Main driver of revenue fall is broadcasting, down £108m (44%) to £136m, due to Premier League deferral/rebate and reaching Champions League final prior season. However, new stadium led to growth in match day, up £13m (16%) to £95m, and commercial, up £26m (19%) to £162m.

The £68m loss is largest of the three Premier League clubs that have published 2019/20 accounts, much higher than Manchester United £21m, and is actually 14th worst ever in the Premier League.. However, all clubs likely to report worse numbers last season, e.g. Spurs had highest £87m profit in 2018/19.

COVID has significantly impacted revenue with some deferred into the 2020/21 accounts, while 5 matches were played behind closed doors, retail stores were closed, stadium tours and conferences were halted for 3 months, and none of the contracted summer events could take place.

The pandemic has significantly impacted finances in 2019/20 with many leading clubs posting horrific losses, e.g. Roma £184m, Milan £176m, Inter £90m, Barcelona £87m and Juventus £81m. From that perspective, the club's £64m (after tax) does not seem too bad.

The bottom line only benefited from £15m profit on player sales, albeit up from prior year’s £11m, mainly Christian Eriksen to Inter and Kieran Trippier to Atletico Madrid. This was much lower than some other clubs, e.g. Chelsea £60m.

Player sales have had a big impact on club figures with £166m coming from this activity in last 5 years, though worth noting they have been profitable even without this in 4 of those years. To reinforce the point that player sales have been a major part of the club's financial success, in the 5 years up to 2019 they made a sizeable £172m from this activity, only surpassed by Chelsea and Liverpool.

Despite the 2020 fall, revenue has still grown by £182m (87%) since 2016 from £210m to £392m, mainly commercial £103m and match day £54m. However, chairman Daniel Levy has estimated revenue loss for current year as an “irrecoverable” £150m if stadium remains closed. In fact, Spurs have enjoyed the highest percentage revenue growth of the Big Six since 2016.

The £392m revenue is now around the same level as Arsenal £395m, though the Gunners’ figure is likely to be lower when they publish COVID-impacted 2019/20 accounts. That said, Spurs are still a fair way behind the other leading clubs, e.g. Manchester United were nearly £120m ahead.

TV money has driven the club's revenue growth in recent years, but plunged £108m (44%) from £244m to £136m (domestic £85m, Europe £51m), due to revenue from 7 Premier League games slipping to 2020/21 accounts (plus £11m rebate to broadcasters) and lower Champions League money.

The club earned (estimated) £61m (€69m) after being eliminated in Champions League last 16, much less than prior season’s £90m for reaching the final, comprising €15m participation fee, €19m prize money, €23m UEFA coefficient and €12m TV pool This is before a 16% COVID rebate.

It is worth noting the big financial differences in Europe, e.g. Manchester United reached Europa League semi-final, but only got £25m, while Spurs received £61m in the Champions League, despite only reaching last 16. Therefore, Spurs will see revenue drop this season in the Europa League.

The importance of the Champions League to club revenue growth is clearly evident, as they have received €278m from this competition in the last 4 years, only surpassed by Manchester City €307m. Most tellingly, this is €117m more than Arsenal €161m in the same period.

The £95m match day revenue has overtaken Manchester United's £90m and is only behind Arsenal £96m, which will fall in 2019/20. In fact, based on incredible £5.9m per match for games played with fans, Spurs’ revenue would have been as high as £124m in a normal season.

The splendid new stadium has a 62,000 capacity, though there were lengthy delays and the total cost was £1.2 bln. Nevertheless, it will drive significant revenue growth, while the club is pushing for a £25m naming rights deal (more challenging, due to COVID).

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