Staged sale likely at Spurs

 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.