Spurs splash the cash, but can they afford to?

I don’t know which UK TV channels the Swiss Ramble can watch in his Zurich fastness but in any event, he may not have seen a recent edition of Have I Got News For You in which it was joked that Manchester City would be deducted 45 points which would put them two points ahead of Tottenham Hotspur.

I should hasten to add that I have two good friends who are Spurs fans and I feel their pain.

The Swiss Ramble knows how to read a set of accounts and has an unrivaled data set on football finances.  He admits that this analysis of Spurs is ‘very detailed’ which is saying something for him.  Subscribe to his Substack page to get some fascinating detail.   But here are some highlights.

Tottenham splashed out a hefty £312m this summer, the major signings being Sandro Tonali from Newcastle United for £92.5m, Mateus Fernandes from West Ham for £85m, Savio from Manchester City for £75m and Jan Paul van Hecke from Brighton for £52m, as well as Tosin Adarabioyo from Chelsea for £7m.   Including agent fees (assumed to be 10%), the 4% Premier League levy and a 5% solidarity payment for international deals, the total cost was £348m.

Excluding the various add-ons, Tottenham’s £312m gross spend was the third highest in the Premier League, only surpassed by Manchester City £458m and Chelsea £362m. Spurs were well ahead of the other members of the Big Six, namely Liverpool £234m, Arsenal £196m and Manchester United £155m, while they also outspent a couple of aspirational clubs, Newcastle United £274m and Aston Villa £261m.

The transfer spending was partially offset by £155m of player sales, most notably from the deals taking Luka Vuskovic to Brighton for £46m, Cristian Romero to Atletico Madrid for £34m and Djed Spence to Inter for £30m.

Tottenham’s £157m net spend was again the third highest in the top flight, only behind Liverpool £207m and Ipswich Town £175m. The latter might seem a little incongruous, but the fact is that clubs newly promoted from the Championship have to spend big to have any chance of staying up.

Tottenham’s big spending marks a clear change in strategy, as the club appears to have abandoned its notoriously frugal approach.  It’s not so long ago that former manager Ange Postecoglou suggested that Spurs would never spend £100m on a player, but they have effectively done so just a couple of years later, if all of Tonali’s add-ons are considered.

This has followed the departure of Daniel Levy, who “stepped down” from his role as Executive Chairman after nearly 25 years at the club.  Levy’s uncompromising transfer negotiations were infamous in the football world, as he ran the club as if he was spending his own money, which impressed financial analysts, but left many fans frustrated at the seeming lack of ambition.

It’s clear that Tottenham’s hierarchy had to do something, as the club finished narrowly above the relegation zone in each of the last two seasons, having steadily declined from the runners-up spot achieved by Mauricio Pochettino in 2016/17.

Much of Tottenham’s increased transfer spending has been “funded” by taking on more transfer debt, which more than tripled in the six years up to 2024/25, rising from just £88m to £304m - and that was before the significant outlays in the following two seasons.  In theory Tottenham could fund their transfer spending by taking on external debt, except for the fact that this is already very high at £852m, mainly representing loans used to finance the new stadium.

The good news is that over 90% of the debt is at fixed rates with a very attractive average interest rate of 3.07%, while it is long-term in nature, as the average maturity of the borrowings is 17.6 years, some of which stretch until 2051.  However, the club would understandably be unwilling to further extend their debt, especially as interest rates are now much higher, given that their £852m is the second highest in the Premier League.

Owner funding adds up to a chunky £453m since 2021/22, including £355m in the last three years alone.  After many years of not putting any money into the club, the Lewis family has turned the taps on big time, especially this summer, when they provided £100m in June, followed by another £120m in September.

Tottenham’s profit and loss account portrays the financial challenges facing the club, as they have now reported losses six years in a row, culminating in the club record loss of £121m in 2024/25.  As a result, they lost £462m in the last six years, compared to £408m of profits in the preceding 6-year period.

The Swiss Ramble goes through a great deal of detailed working to see whether the spending is compatible with PL and UEFA regulations.  This necessarily involves making some assumptions about future income and expenditure, but the Zurich guru takes great care over these matters.

He concludes that even with the projected £140m loss in 2025/26, Tottenham would have had no problems with the Premier League’s PSR.  Tottenham are also fine for UEFA’s football earnings target for 2025/26, even though the maximum allowable loss over three years is much tighter at only €60m.

However, if they return to Europe, Tottenham will almost certainly fail the 2026/27 assessment for UEFA’s Football Earnings rule, even based on my rather optimistic assumptions, partly because the 3-year monitoring period drops the favourable 2023/24 season.

Indeed, the financial sage of Zurich reckons that they will breach this rule by a hefty €118m, which means that the margin of error in the forecasts would have to be quite large for them to have any chance of complying.   Realistically, their only chance of coming close would be to make some very profitable player sales either in the January window or before the end of June 2027, as UEFA does not permit the creative intra-group disposals that are allowed by the Premier League.

The SR concludes, ‘the irony here is that Spurs actually did quite well on the pitch during the austerity era, but have struggled since they have started spending big.’