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Spurs in good shape financially despite losses

Tottenham’s pre-tax loss increased by more than 50% from £61m to £95m, which chairman Daniel Levy said was a reflection of “significant and continued investment in the playing squad.”

Tottenham have now suffered large losses four years in a row, adding up to a deficit of more than £300m over this period, though to be fair two of these seasons were severely affected by the pandemic.  Before that, Spurs had reported profits for seven consecutive seasons, which had generated an impressive £412m surplus. In 2018 and 2019 alone Spurs delivered a hefty £226m profit.

Revenue rose £107m (24%) from £443m to £550m, which was a new club record, breaking through the half a billion pounds barrier for the first time. This was predominately due to participation in the Champions League and hosting major events at the Tottenham Hotspur Stadium.  Tottenham have enjoyed the second highest revenue growth of the Big Six since 2019, only behind the behemoth that is Manchester City.

 Commercial is now Tottenham’s most important revenue stream, accounting for 41% of total revenue, ahead of broadcasting 37% and match day 21%.

However, the revenue growth was wiped out by a substantial increase in operating expenses, which were up £132m (27%) from £483m to £615m, while profit from player sales dropped from £19m to £16m.

In addition, net interest payable increased by £4m (10%) from £41m to £45m. It’s worth noting that this substantial charge contributed almost half of the club’s £95m pre-tax loss.

Tottenham’s £95m pre-tax loss is the second worst in the 2022/23 Premier League, only surpassed by Aston Villa’s £120m. That said, they are not alone in posting a large deficit, as half of the top flight lost more than £50m last season, including Chelsea £90m, Leicester City £90m and Everton £89m.

One reason why Tottenham have struggled to make money in recent years is their low profits from player trading (for a big club), generating less than £20m in each of the last five years.   As a result, Tottenham’s £80m profit from player sales in the last five years is towards the lower end of the Premier League and the smallest of the Big Six. This was miles below the likes of Chelsea £496m, Manchester City £337m and even Leicester City £249m.

However, that will change this season following the big money sale of Harry Kane to Bayern Munich for a reported £82m (€95m). Although he might no longer be “one of their own”, his sale will make a difference financially, especially as the proceeds represent pure profit, given that he was an Academy product.

Tottenham earned €66m for reaching the last 16 in the 2022/23 Champions League, which compromised €15.6m participation fee, €20.6m prize money, €19.3m UEFA coefficient, €9.5m TV pool and €0.6m final balance.  UEFA prize money is a major differentiator for the leading clubs, so qualification is a key part of Tottenham’s strategy.

Tottenham have earned more north of €300m from Europe in the last six years, which is pretty good, though it should be noted that this is the second lowest of the Big Six, only ahead of Arsenal’s €150m.

In the last seven years Tottenham have seen the highest growth in match day revenue of any club in the Big Six with their £72m being considerably more than the others, e.g. the next best increase was only £25m at Manchester United.  As a result of the steep growth, Tottenham’s £118m match day revenue is now the second highest in the Premier League, only surpassed by Manchester United’s £136m.

Following investment in the squad, Tottenham’s wage bill rose £42m (20%) from £209m to £251m, which is easily a club record. Wages have increased by more than £100m in just five years.  Tottenham’s 46% wages to turnover ratio is by some distance the lowest in the Premier League, even better than Arsenal and Manchester United, both 51%. For even more perspective, this is significantly lower than the other three members of the Big Six: Manchester City 59%, Liverpool 63% and Chelsea 79%.

Spurs’ squad (£579m) remains the sixth highest in the Premier League, a fair way below the top five. Manchester City have broken through the billion pound barrier and Chelsea will almost certainly join them (and probably overtake them) when they publish their 2022/23 accounts.

Tottenham’s gross financial debt was basically unchanged at £851m, mainly the loans used to finance the new stadium. Over 90% is at fixed rates at a very attractive average interest rate of 2.79%. The average maturity of the borrowings is 19.4 years, some of which stretch until 2051.

They now pay the second highest interest in the Premier League with their £25m only surpassed by Manchester United’s £31m, though Spurs do at least have a shiny new stadium to show for this, in contrast to merely paying for the privilege of having the Glazers as owners.

 

 

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