Tottenham announced their financial results
recently and whilst the headline figures may have seen depressing,
can new manager Antonio Conte spend to improve the club’s chances of winning trophy?
Football clubs earn revenue from three main sources, matchday, broadcast and commercial,
and 2020/21 should have been the season when Spurs took the crown
for the highest matchday revenues in the Premier League.
Spurs new stadium has the second highest capacity in the Premier League but is still
12,000 lower than Old Trafford. However, it’s a much more modern stadium with better facilities
and “London premium” ticket prices. If the club has a successful European season,
especially in the Champions League,
then it could realistically generate at least £120 million from matchday sales.
Broadcast income is generated both domestically and from Europe.
The Premier League income varies due to the number of times a club is chosen for live
broadcasts by the likes of Sky and BT Sport, as well as the final position in the table.
UEFA broadcast income is mainly focussed on those clubs that qualify for the Champions League, and
their level of success in that competition, both in the season they are playing and historically.
In 2019/20, which was distorted by Covid curtailing the season by the time of the
club’s financial year end of 30 June, Spurs had the 4th highest total of Premier League clubs.
Despite Spurs only qualifying for the Europa League in 2020/21,
the additional matches that took place in the year from July 1st,
2020, to 30th June 2021 meant that broadcast income increased by over £60 million.
This figure is likely to fall in 2021/22 because Spurs only took part in the UEFA
Conference League this season, which only has 8% of the total prize money, compared to 74%
in the Champions League. Commercial income for Spurs
when the club was playing at White Hart Lane was some way behind that of the other Premier League
clubs who were amongst the instigators of the European Super League project.
The new stadium, though, with its ability to host multi events and concerts events
is transformative for Spurs and should help the club bridge the gap.
It’s been spectacularly successful. Given that both 2019/20 and 2020/21 were both impacted by
Covid the figures suggest that the move has achieved Daniel Levy’s objective
of making Spurs competitive at the top of the Premier League in terms of income generation.
Overall Spurs income decreased by £40 million in 2020/21, Covid could not have come at a
worse time, but the club’s solid financial base meant it was able to cope with this
decrease better than many other clubs. 2021/22 should see total income rise substantially.
The main costs for a club are in relation to players,
for wages and transfer fees. Spurs wage bill is far lower than that of other clubs, both in
absolute terms and as a proportion of revenue. Spurs wage bill went up by £24m in 2020/21,
due to a combination of player recruitment and new contracts for existing players.
Even so, wages were only £57 for every £100 of income. This is the highest level for many
years but is still much lower than UEFA’s ‘red line’ of £70 for non-Covid seasons.
The other player related cost is transfer fee amortisation, which spreads transfer
costs over the life of a contract. Spurs had modest transfer spending
in the years preceding the opening of the new stadium, to help fund the move
This has been a source of frustration for Spurs fans,
although in the last couple of seasons there has been a noticeable increase in amortisation costs,
as the rise in income has allowed the club to invest in new players.
Whilst Spurs have spent significantly by their standards in the last couple of years,
compared to other Premier League clubs their investment in player recruitment is modest.
Spending less money than bankrolled clubs is to be expected. Seeing Spurs sandwiched between
Leicester and Aston Villa in terms of player amortisation costs has made some fans angry,
especially as they are paying some of the highest ticket prices in the country.
When it comes to profit, it is important to define the term:
it’s usually revenue less costs. Spurs have been a very well club financially.
Covid meant that Spurs made a loss of £43 million from day-to-day operations in 2020/21,
to which can be added £37 million in the form of interest costs relating to loans taken out
to help build the new stadium. Does this mean that Spurs are
able to invest in players though? The Premier League Profitability
and Sustainability rules allow clubs to lose £15 million over a rolling three-year period.
The first £90 million invested by club owners in the form of shares can take this allowable loss
to £105 million over the three-year assessment. Spurs are in a strong position to spend money
on players, provided they have the cash and provided Daniel Levy and Joe Lewis,
the two main shareholders in the club, are willing to put money into the club in the form of shares.
The good news is that at the end of June 2021 the club had £148 million of cash.
The club also had loans, mainly due to banks, of £854 million, and owed other clubs £170 million
for outstanding transfers. The loans however are not due for repayment for many years,
as the club has negotiated the equivalent of an interest only mortgage from lenders.
Because Spurs has been such a profitable club historically it therefore has the capacity to
spend more money than any other club in the Premier League on player transfers.
The figure calculated for all Premier League clubs shows the maximum potential spending
under the estimated Profitability & Sustainability figures from the most recent accounts.
It’s not a measure of what clubs will or should responsibly spend,
but rather a gage of capacity. And in Spurs’ case,
there’s certainly an opportunity for the kind of investment that would satisfy Antonio Conte.