There has been plenty of interest in investing in Tottenham Hotspur in recent years but no would-be investor has received the welcome Forrest Li got in December.
Not only was he Daniel Levy’s guest at a home game but Li
was put up at the Tottenham training ground afterwards, and introduced to
senior staff and players.
It was the full red-carpet treatment, more than Levy has put
on for any other potential investor before. And it has got people at Tottenham
wondering whether Li, one of the richest men in Singapore, could be about to
become their new boss.
If Li wanted to buy Tottenham outright, the 44-year-old
billionaire would have to get very, very close to what the club’s current
owners ENIC think it is worth, as the Bahamas-registered investment firm
does not need to sell. That price tag is understood to be £3 billion: £2.3
billion for the shares, plus £700 million of debt.
While Li is rich enough to do that, he is more likely to
start with a minority stake — £3 billion is a scary number for anyone to write
on a cheque and even the biggest hitters tend to do these things in
instalments. The staged investments in Leeds United and West Ham
United are good recent examples of this trend.
A gradual divestment is an idea that ENIC founder Joe Lewis
and his partner Levy have been considering for some time, strengthening the
club’s finances while not ending their 21 years of control. But whatever
happens between Li and ENIC — and we should point out that both sides have
denied that they have discussed an investment, as is always the case even when
there are talks — his apparent interest raises one of the most important
questions around the club in recent years: are Tottenham Hotspur really for
sale?
The answer to that depends on your definition of “for sale”.
The club would certainly not describe themselves that way, and there is
certainly no urgency to find a buyer or sell up. Levy is the longest-serving
chairman in the Premier League, and there is no suggestion that he is
touting the club around.
Another potential investor into Tottenham said that while
the whole club might not be on the market, the sale of a minority stake,
leaving Levy in charge, is in play at this point.
If Levy does want to talk turkey, he and Lewis would make a
huge profit on their investment. Whatever fans might think about their
management of the football side of the business, there is no question they have
built Tottenham into something far more valuable than it was in 2000, when
they bought 29.9 per cent of the club from Alan Sugar for £22 million. That
deal valued the club at £80 million.
Any investment prospectus for Tottenham would include the
following. Over the last decade, they have built themselves a £50-million
training ground and £1.2-billion stadium, each of which can claim to be best in
class.
But the point of the stadium is not just to do with
prestige, it also guarantees the first thing any potential investor would look
for: annual revenue. Tottenham bring in roughly £6 million for every home game.
They have made a big bet on persuading fans to spend more time at the ground,
which is why not being able to fill the stadium from March 2020 to August 2021
was so damaging, costing them an estimated £200 million in lost earnings.
But there are obvious risks associated with owning a team
like Tottenham.
First, there is the debt. According to the most recent set
of accounts published in November 2021, it stands at £706 million, up from £605
million a year before. This was largely made up of a £525 million bond issue in
2019 to pay for the stadium, with another £250 million from another private
placement in May 2021. While the average interest rate on this debt is 2.7 per
cent, a far lower rate than most other teams are paying on their debts, it
still amounts to £19 million per year in interest.
Then there is the fact that while Spurs’ Premier League
revenue is more or less assured, there are no guarantees of Champions League
football
ENIC is certainly in no rush to sell, and Levy is naturally
keen to make sure that, when the time comes, he is selling to the right people.
So, in the short term, a more likely outcome than selling
the whole club would be ENIC selling a stake, bringing in some external
investment while not fundamentally transforming the running of the club. There
is also speculation that the stadium’s naming rights — still unsold — could be
packaged up in any deal.
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