Spurs are punching well below their weight

Tottenham’s pre-tax loss significantly reduced from £95m to £26m, despite revenue falling £22m (4%) from £550m to £528m, as profit from player sales shot up from £16m to £82m and operating expenses were also cut 4% (£28m) from £615m to £589m.

However, net interest payable increased £2m (6%) from £45m to £47m, which makes a big difference to the net result. In fact, without this hefty charge, Spurs would have made a £21m profit.

Their loss after tax was almost exactly the same as the pre-tax figure at £26m, but the year-on-year improvement was £8m less, because the previous season benefited from a tax credit.

The main reason for Tottenham’s revenue decline was the lack of European football, which led to reductions in both broadcasting, down £37m (18%) from £204m to £167m, and match day, down £12m (10%) from £118m to £106m.

This was partially offset by further growth in commercial, which rose £27m (12%) from £228m to £255m, a new club record. As Levy put it, “Our off-pitch revenues have significantly supplemented the lower football revenues this year, testament to our diversified income strategy.”  Commercial is now Tottenham’s most important revenue stream, accounting for 48% of total revenue, well ahead of broadcasting 32% and match day 20%.

Tottenham’s £528m revenue is now the fifth highest in England, but a fair way behind the top four clubs, especially Manchester City £715m and Manchester United £662m, who are at least £130m higher.   More painful to the Tottenham fans will be the fact that they have fallen behind Arsenal in terms of revenue for the first time in six years, mainly because of the Champions League factor.

Despite the significant improvement, the fact remains that Tottenham still posted a £26m loss, though it should be noted that this was pretty much an average result for the Premier League.

A large part of the improvement in Tottenham’s bottom line was thanks to a significant increase in profit from player sales, which shot up from £16m to £82m, mainly due to Harry Kane’s move to Bayern Munich. As he was “one of our own”, this sale represented pure profit, as he had zero value in the books.   Tottenham’s £82m profit was the sixth highest in the Premier League, as four clubs made more than £100m last season, namely Chelsea £153m, Manchester City £139m, Brighton £110m and Nottingham Forest £101m.

Tottenham have now suffered losses five years in a row, adding up to a sizeable deficit of £330m, though in fairness two of these seasons were severely affected by the pandemic.  One reason why Tottenham have struggled to make money in recent years is their low profits from player trading (for a big club), as they generating less than £20m in each of the five seasons between 2018/19 and 2022/23.

However, that changed for the better last season with their £82m profit being the club’s second highest ever, only behind the £104m they made in 2013/14, which largely came from the sale of Gareth Bale to Real Madrid.

This season is likely to be lower than 2023/24, as the Swiss Ramble estimates that Tottenham have only generated around £32m profit, mainly from the sales of Oliver Skipp to Leicester City, Joe Rodon to Leeds United, Emerson Royal to Milan and Troy Parrott to AZ Alkmaar.   Once again, quite a few players left on frees, including Eric Dier, Ivan Perisic, Ryan Sessegnon, Tanguy Ndombélé (originally purchased for £55m) and Japhet Tanganga.

Tottenham’s operating loss (i.e. excluding player sales, exceptional items and interest payable) was virtually unchanged at £59m, which means that they have lost £259m from day-to-day business in the last five years.  Tottenham’s £59m operating loss was mid-table in the top flight, a lot better than some of the massive deficits elsewhere. We don’t yet have the detailed accounts for Chelsea, but their deficit will surely be above £200m once again.

The importance of Europe

Even with no money last season, Tottenham have earned €159m from Europe in the last five years, which is not too shabby, though it should be noted that this is the lowest of the Big Six, and less than half of Manchester City €567m, Liverpool €399m and Chelsea €386m.

Tottenham are still in this season’s Europa League, where they will face Eintracht Frankfurt in the quarter-finals. The Swiss Ramble estimates that their progress has earned them €24.1m to date (participation fee €4.3m, prize money €10.1m and the new value pillar €9.7m).

If they do manage to win the trophy, they would earn €41m, but that’s not the real prize, as Levy noted, “Winning the competition would see welcome silverware and mean qualification for the Champions League.”  On the other hand, failure to win would mean Spurs missing out on European money for the second time in three years.

Since the opening of the new stadium, Tottenham have seen the highest growth in match day revenue of any club in the Big Six with their £61m being much more than any of the others, e.g. the next highest increase was Arsenal’s £32m.  The excellent growth in income from the new stadium made the unpopular decision to raise season ticket prices in 2023/24 by 6%, compounded by a phased reduction in senior concessions, fairly puzzling, not to say deeply unpopular.

Of course, Tottenham are not alone in implementing price increases, following the significant increase in inflation, affecting costs such as utilities, rates and consumables, but this move still left a nasty taste in the mouth, especially as Spurs already have the most expensive adult tickets in the Premier League.  It is therefore good news that Spurs have recently announced a freeze in their season ticket prices for next season.

Tottenham’s average attendance of 61,459 in 2023/24 was the third highest in the Premier League, only below Manchester United 73,534 and West Ham 62,463, but above North London rivals Arsenal 60,095.

Wages gap

Following last season’s revenue decline, Tottenham lowered their wage bill by £29m (12%) from £251m to £222m, but this is still the club’s second highest ever.   However, Spurs’ wages have only grown by £17m (8%) in the last three years, which is one of the smallest increases in the Big Six. This is significantly lower than the growth at Arsenal £90m, Liverpool £72m, Manchester City £58m and Manchester United £42m.

Tottenham’s £222m wage bill is now the seventh highest in the Premier League, having fallen below Aston Villa £256m. Villa’s 2023/24 accounts did cover 13 months, but even if their wages were pro-rated to 12 months, they would still be more than Spurs at £236m.  The wages at the top five clubs are much higher, especially Manchester City £413m, Liverpool £386m and Manchester United £365m, so the gap to Tottenham has widened to more than £100m.  That would help explain some of Tottenham’s under-performance on the pitch this season, but not why they are currently sitting in 14th place.

Tottenham’s wages to turnover ratio has pretty much always been the lowest of the Big Six (by far) over the course of the last decade, so this is clearly part of their modus operandi.   In fact, Spurs also have the lowest wages to turnover ratio of all the leading clubs in Europe, ahead of Real Madrid 45%, Milan 47% and Marseille 51%.

Daniel Levy’s remuneration fell 43% from £6.6m to £3.7m, though the chairman has still trousered a cool £50m in the last 15 years  Despite the reduction, Levy’s £3.7m director’s remuneration is once again the highest in the Premier League, much more than Paul Barber at Brighton £3.2m and Steve Parish at Crystal Palace £2.5m.

Transfer spending

Tottenham spent £272m on player purchases in 2023/234, which is easily a new club record, significantly higher than the previous £160m peak two years previously.   Tottenham’s £272m outlay was actually the second highest in the Premier League last season, only behind Chelsea’s enormous £489m outlay, giving the lie to the belief that they don’t spend money. In fact, they spent more than Arsenal £256m, Manchester City £226m, Manchester United £221m, Newcastle United £206m and Liverpool £194m.

Spurs have continued to spend this season, but the outlay was a lot lower at around £120m, as they brought in Dominic Solanke from Bournemouth, Wilson Odobert from Burnley, Antonin Kinsky from Slavia Prague, Lucas Bergvall from Djurgarden and Min-Hyeok Yang from Gangwon FC.

In fact, Tottenham have spent a hefty £830m on new players in the last five years, which is the fifth highest gross spend in the Premier League, around a quarter of a billion Pounds more than Liverpool’s £562m.  However, everything is relative, so Tottenham were still comfortably outspent by four other clubs: Arsenal £992m, Manchester City £970m, Manchester United £918m and especially Chelsea with an unprecedented £1.7 bn.   So it is a bit of a myth that Spurs have not spent money, at least in the transfer market, though it could certainly be argued that they have not spent very well.

Much of Tottenham’s increased player spend has been on credit, as transfer debt has increased by around £250m from £88m in 2019 to a staggering £337m, up from the previous year’s £307m.

Debt and funding

Tottenham’s gross financial debt was basically unchanged at £851m, mainly representing the loans used to finance the new stadium. Over 90% is at fixed rates at a very attractive average interest rate of 3.16%. The average maturity of the borrowings is 18.6 years, some of which stretch until 2051.

In the last decade Spurs have invested a substantial £1.5 bn in the new stadium and training centre plus £405m in the playing squad (net of sales), while shelling out £165m on interest payments, repaying £40m preference shares and £39m tax. Much of this was funded internally, as Tottenham’s own operating activities delivered £1.2 bln, while £803m came from external loans and £97m from a capital injection.

Given the lack of European competition, Tottenham did well to limit the reduction in revenue, thanks to their ability to monetise the stadium with more non-football events. Indeed, they even managed to significantly reduce their loss, though this required the big money sale of their captain.

The reality is that this is a club that needs to be in the Champions League to justify the massive investment in the new stadium, but Spurs have under-performed for a while, especially this season, when they have contrived to lose more than half of their games in the Premier League.

Levy has frequently been criticised by Spurs fans for a lack of ambition, but the club has actually spent quite big in the transfer market.  However, that’s only one part of the equation, and Spurs have not really been at the races when it comes to the other important element in building a competitive squad, namely the wage bill.

Their priority for the rest of the season should be the Europa League, as victory would bring them qualification to the lucrative Champions League, which would make a huge difference financially - and also bring Spurs an elusive trophy.

I have two good friends who are Spurs fans and I feel their pain, not least after last night’s defeat at Chelsea.  This is clearly a club punching below its weight.   Who is to blame?   Daniel Levy or Big Ange?   Probably both of them.   However, things could look very different if the club wins the Europa League.