Monthly Archives: June 2016

A Spurs summer reading list

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I’m taking a summer break from blogging, and don’t plan to post anything new for the next couple of weeks.

In the meantime, here are a few links to recent pieces for any new visitors, or those wanting to catch up.

The number of readers to this little blog has soared in the last couple of months, which is great to see. Thanks to everyone who has read my articles, shared them and joined in the discussion.

I will no doubt be chirping away on Twitter through the summer, especially with the Euros on, so please do give me a follow and join in. I also post work on Medium.

Summer Spurs stuff:

How Spurs can take it to the next level: A blueprint for the summer of 2016

Good problems: Five questions facing Spurs this summer

Did Spurs leave points on the table? Lessons for 2016/17 from the failure to keep pace with Leicester

The stars align for Pochettino and his swaggering Spurs

Stadium stuff:

Spurs stadium update: New information on capacity, design and other details, plus analysis of timeline and finances

Stadium update: Local tickets, NFL hosting, cheap beer, timeline and Wembley groundshare

As Spurs stadium rises, NFL moves closer to announcing London team

New Spurs stadium the “front-runner for an NFL franchise”: Q&A with Sky Sports presenter Neil Reynolds

The state of the stadium naming rights market, and what it could mean for Spurs: An expert view

Money stuff:

Fun with numbers: How the new stadium will enable Spurs to join the Premier League’s £1 billion club

Waiting for the revolution to happen: Analysis of THFC’s financial results for the 2014/15 season

The business end of the season: How much is a league place worth for Spurs?

Media stuff:

How many people actually watch Spurs on TV? Audience analysis of the 2015/16 season

The Premier League Goes Global — And Leaves UK Fans Behind (The Cauldron)

And if you want a longer read, do check out my Deep Dives:

Chelsea’s Stamford Bridge plans

Spurs stadium funding

Spurs and the NFL

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Spurs stadium update: New information on capacity, design and other details, plus analysis of timeline and finances

 

stadium screenshot

Image by @ACEinBEDFORD

In recent months, huge progress has been made on the Spurs stadium project.

Key approvals have been gained, allowing construction to hit maximum pace. The stadium, as the timelapse video for May shows, is starting to emerge from the ground. An agreement has been reached for Spurs to play at Wembley in 2017/18, and Champions League games will also be played at the national stadium next season. Demolition work has started on the northeast corner of the ground.

By the final match of next season, the new stadium will be starting to emerge out of the old one, and the future of the club will be visible for all to see.

It will also look as weird as all hell, as this video from @ACEinBEDFORD shows.

It was a small thing, but I particularly liked how Spurs have added club logos to the giant cranes on site. To me, this bodes extremely well for the final finish of the stadium, and highlights the attention to detail in the planning phase. Spurs will be spending hundreds of millions on the stadium, but sometimes it is the tiniest of details that make the biggest difference when it comes to making a new “house” feel like a home.

In this update, I will discuss timeline, project finances and the NFL, and also provide some additional details of the project in terms of final capacity, colours, pitch and in-stadium connectivity.

You can read my previous reporting on the stadium here.

Attention to detail

While the club is doing a good job providing images, videos and updates on construction, there is really no end to the amount of information Spurs fans want.

I put a few questions to the club about the minutiae of the project, and to their great credit, a club spokesman gave me some answers

First, I asked about the final capacity of New White Hart Lane. In the planning documents, the “gross total” of all seats is 61,461, or 61,131 if you strip out seats allocated to media and players. However, this total was done before Mace, the construction contractor, had done its assessment. Are there any revisions to this number?

A club spokesman said the final seating number was not yet decided, but would be close to the 61,461 number.

“The capacity of the stadium will be approximately 61,000 and the exact figure continues to move slightly as we refine the detailed design, although we shall operate within the tested capacity established through the planning process,” the spokesman said.

My second question was about the pitch. The playing surface at White Hart Lane has been excellent for many years, greatly helping attractive football.

How were Spurs going to go about finding a new pitch, and were there plans in place to ensure an equally good playing surface and to avoid the issues Wembley experienced in its early years? Would it be hybrid or grass?

The spokesman confirmed the club was currently working on this issue and carrying out testing of various playing surfaces.

“We currently use a hybrid surface at White Hart Lane and we are in the process of examining and testing a number of different systems to ensure we achieve the highest possible quality surface at our new stadium,” the spokesman said.

My third question was a pretty basic one, but I’m not sure I’ve actually seen it confirmed beyond the mock-up images: What colour are the seats going to be? Will they be the “royal” blue currently at White Hart Lane, or will it be a switch to a “navy” blue?

“We shall be using traditional Spurs colours,” the spokesman said.

So there you have it.

Fourth, I asked about atmosphere, and specifically if there were any stadiums, for example the wonderful (and Populous designed) Grande Stade de Lyon, that Spurs/Populous are “learning from” in the design.

“Atmosphere has always been at the heart of our designs and we have studied some of the finest stadia in Europe best known for this,” the spokesman said. “We are looking at all aspects in terms of how we can create and retain an incredible atmosphere including the distance of the pitch from the stands, the tightness of the bowl and the introduction of a single tier south stand.”

Finally, I asked about connectivity. Much play gets made of how technology such as in-stadium wifi is incorporated into these projects, but, to be brutally honest, it doesn’t always work as well as intended. Would the club outsource this sort of technical aspect?

“We are working hard to ensure we deliver on our desire to make this stadium one of the most technologically advanced in Europe. We are currently in discussion with specialist contractors,” the spokesman said. “Technologies are updated continuously so we shall look to future proof too.”

Tight timeline

It is no secret that the timetable for this project is tight, and minutes published by the Tottenham Hotspur Supporters’ Trust of a meeting with club executives last month confirmed this.

Mace, the company overseeing construction, is now working 15 hour days, seven days per week. According to Daniel Levy, construction is on schedule, “but it remains a hugely complex project.”

Levy confirmed that Spurs had requested two matches at the end of the 2016/17 be played away from White Hart Lane to give more time for demolition and construction. This isn’t quite the “last resort”, as a block of fixtures could also be requested away from New WHL at the start of 2018/19 season. But it shows just how tight it is that every bit of extra time is being sought.

The club has announced a Wembley deal for 2017/18, but reading between the lines of reports into the deal, a “second-year option” has in all probability been discussed in case of delays. And with approvals still needed for associated works, and the myriad logistical challenges that come with building a 61,000 capacity stadium in a dense part of North London, we shouldn’t kid ourselves that delays are possible.

I’m sure if you zoomed in on the webcams on site you’d see Kevin McCloud wandering around, as this is the ultimate episode of “Grand Designs”. And you know if you watch the programme, the contractors never deliver the bloody glass on time.

The good news for Spurs, in terms of Wembley availability, is that Chelsea appear quite bogged down in their plans for redeveloping Stamford Bridge. As I reported in April, Chelsea have yet to secure key consents and will have to go through another public consultation due to changes to the design.

Money and Naming Rights

In the minutes published by THST, Daniel Levy provided an update on the financial side of the project. He confirmed that the amount invested so far had risen to £150 million.

Meanwhile, contrary to ITK chatter, naming rights have not yet been put to market, but will be “shortly”.

It will be fascinating to see what Spurs can achieve in this regard. Personally, given the way the club is falling behind the likes of Chelsea and Arsenal in commercial deals, I’d be cautious in expecting too high a figure. However, with the upswing in on-field performance and exciting homegrown core of players, not to mention the NFL tie-in, Spurs should be a far better commercial proposition now than in recent seasons.

A concern of mine is that Spurs may seek to bridge any gap in funding by simply piling up more debt on what will already be a pretty large load — £350 million has been promised by banks. In the minutes, Levy addressed this concern, loosely, noting he was “aware of the level of debt the Club could sustain and there were lots of options open at this point.”

Levy also hinted at the possible structuring of the stadium from an ownership perspective, with the establishment of an SPV (a special purpose vehicle, which sounds more like something you need to get across the construction site than a financial arrangement).

According to filings with Companies House, Spurs registered two companies recently which point to such a structure: Tottenham Hotspur Stadium Development Limited (April 26) and Tottenham Hotspur Stadium Limited (April 27).

There are no details on these companies yet, but nonetheless, it indicates that the financial and legal structuring is also being put in place alongside the steel and concrete.

Spurs and the NFL

I wrote in detail recently about the NFL and how its plans for a team in London appear to be kicking into a higher gear.

In writing this story, I learned from an NFL UK source that the NFL is having regular meetings and conversations with Spurs through the construction phase, and feels “fully engaged”. The relationship between the NFL and the UK was characterised as “excellent” and “ongoing”.

This is hardly revelatory, but nonetheless I thought it was interesting that the NFL remains involved. No doubt, the NFL is keen to ensure the facilities for American football — the retractable pitch, the locker rooms and media facilities — are installed to specification.

This is a “first of its kind” project in the UK, meaning a lack of local expertise, so it is understandable the NFL is keeping a close eye that, for example, the artificial turf is the correct sort.

Thanks for reading. I welcome any comments, and please give me a follow on Twitter for more Spurs and stadium chat. The video is by Asil Purcell, proprietor of Visualhorizon3D. You can see more of his work here: 

As Spurs stadium rises, NFL moves closer to announcing London team

You can read my previous coverage on Spurs and the NFL here. My “deep dive” on the gamble being taken by Spurs with the NFL is here.  You can follow me on Twitter here.

Is London ready for some (American) football? The NFL appears to think so.

Comments in the off-season from Commissioner Roger Goodell, who described a London NFL franchise as a “realistic” prospect, and public support from the league’s powerful owners, indicate a decisive shift taking place, in which an idea is starting to turn into a reality.

If the NFL has not quite “pushed the button” on launching its first international franchise, the Commissioner’s finger is hovering above it.

Meanwhile, in recent weeks clearly visible progress has been made on the potential new home of a London NFL team, with Spurs’ spectacular new stadium finally starting to emerge from the ground.

The sense of momentum was crystallized in a report last week by CBS “insider” Jason LaCanfora, who stated that a London franchise was a “major topic of conversation” in a meeting of NFL owners in late May.

According to LaCanfora, Mike Waller, the NFL executive in charge of international matters, gave owners a “detailed progress report and presentation” which “led many teams to come away more convinced than ever that this is something (the NFL) very much wants to happen.”

The presentation detailed concerns over timing and travel requirements for playoff games, particularly if a London franchise drew a team on the US west coast.

LaCanfora connected the dots:

“Yes, that’s how far down the line the NFL is in addressing London contingencies, and these are the types of things owners are being asked to consider as further preparations are made toward moving a team to England.”

Crucial to any forward progress for a London team was finally sorting out a franchise for Los Angeles. The league couldn’t seriously move ahead with a franchise in London before placing one in the USA’s second-largest media market. This anomaly was rectified in January when it was announced that the Rams would be moving from St Louis to LA.

(There is no pretty way to move a franchise, and the people of St Louis were royally screwed. The outrage if a team is taken from a US city overseas will be even more vociferous.)

With this resolved, attention at the league’s Annual Meeting in Florida in late March could turn to other things. Judging by the comments by owners, it is clear that London was a topic of conversation. I counted four owners — the Dallas Cowboys, Cincinnati Bengals, Baltimore Ravens and New England Patriots — who discussed London in positive terms with reporters.

Jerry Jones, the Cowboys owner who is considered one of the most influential in the league, was asked by SI’s Peter King where was “next” after LA.

Jones replied: “We don’t get many opportunities to say “this is what we give back to fans, this is a wow”. Los Angeles was that. What else could we do that with? London looks like that to me.”

Jones also mentioned Mexico City, which will host its first regular season game next season, as a possible destination.

The importance of these comments can’t be stressed enough given how decisions are made in the league. It is the 32 owners who will ultimately decide on a London franchise.

A few days later, at a townhall meeting with members of the Jacksonville Jaguars, Goodell stated, clearly, that he felt London was ready for a franchise.

“As a market, I believe they (London) can support a franchise,” he said.

“I actually believe that a franchise in London is realistic.”

According to Goodell, his concern was ensuring a London team wasn’t at a competitive disadvantage due to logistical issues such as flight times and scheduling.

“I think we can find solutions to those issues,” Goodell said. “The way we schedule and the way we do things, those are things we’re still focused on.”

I don’t think the importance of these comments can be stressed enough. Before a franchise is placed in London, the league has to be comfortable with several pivotal things:

  • The London market can support an NFL franchise
  • A London franchise has a stadium to play in
  • There is a suitable candidate for relocation to London, or viable plans for expansion
  • US broadcasters are happy (London games would never be played in primetime Sunday, Monday or Thursday evening slots)
  • A London team, with logistical issues, would be competitive and schedule integrity would not be affected

Stating that the London market is ready for a full-time franchise is a HUGE statement, as without it, the rest is moot. Again, if the question now is the brasstacks of how the games are scheduled, then it is hard to argue against the idea that we are “almost there”.

If the market was the most important, second is the stadium. An NFL standard facility is required, and Spurs are delivering it. The Spurs stadium will feature a retractable pitch as well as NFL-size locker rooms and media facilities.

Huge steps have been taken by Spurs in the past few months in terms of receiving key permissions and commencing full-scale construction.

The NFL is in regular contact with Spurs and feels fully engaged in the stadium construction process, an NFL UK source told this blog. The relationship was characterised as “excellent” and “ongoing”.

(And yes, if this had been “terrible” and “dead in the water”, I might have a story)

A couple of weeks after Goodell’s comments, ESPN ran a long primer discussing the remaining hurdles for London — for example whether an expansion or a relocation was more likely, the issues facing players, and logistical matters. It is worth a read.

The final comment from an unnamed team executive summed up the mood:

“It’s one of those things where I know all the problems,” said the team executive. “But one of the things you learn in this league is it doesn’t matter what the problems are, you better figure them out because if it’s going to happen, it’s going to happen, tough crap.”

The setting for Goodell’s comments was interesting, given the Jaguars are widely assumed to be the most likely franchise to move to London. Goodell tweaked the franchise, stating the growth of the market in northeast Florida was “below expectation.” Another contender is the Oakland Raiders, although a move for them to Las Vegas seems more likely.

The “magic date” (albeit never an official target) for an NFL franchise has always been 2022. In January, Mike Waller was quoted as saying by the BBC that plans were “on track” for a London team by this date. In my Q&A with Sky Sports NFL presenter Neil Reynolds, he said 2022 was “very realistic”.

Is the league on course for 2022? It would seem so. Judging by the comments from owners in recent months, London is at the forefront of their thoughts and discussions. I can’t recall an owner trashing the idea of a London franchise, or at least not in recent years. (Please point out these comments if they do exist, I’m interested to learn)

“Pushing the button” on an NFL franchise in London doesn’t mean it will materialise overnight. Instead, it will trigger the start of an ignition sequence preparing for launch to the next footballing frontier.

If the NFL put it to a vote and announced the establishment of a London franchise by the time of its next Annual Meeting in 2017, that would give the league five seasons to launch in time for 2022/23. Five years to build the hype, five years to find a team, five years to resolve any lingering logistical issues, five years to experiment with new timeslots in London that appeal to US broadcasters.

I’m biased on this because I’m a huge NFL fan and would love to see a team in London. The fact that it would most likely use New White Hart Lane as its home only adds to the appeal.

But I’m pretty sure that interest would grow rapidly across the Spurs fan base and beyond once a London team was announced and became “real”. To quote Buddy Garrity in Friday Night Lights, everybody loves football, they just don’t know it yet.

If the league hasn’t formally decided on bringing the NFL to London on a permanent basis, it is getting close to the point of no return regardless.

Thanks for reading. Please follow me on Twitter for more Spurs (and NFL) chat.

Fun with numbers: How the new stadium will enable Spurs to join the Premier League’s £1 billion club

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I was chatting football finances on Twitter the other day, and the conversation turned to the value of Spurs — specifically, what impact the new stadium is going to make.

Stories have surfaced now and again in recent years about possible interest in the club, and a valuation of £1 billion has been bandied around. This has generally been dismissed as excessive, and a figure aimed at deterring potential investors. Nonetheless it is widely accepted that the value of Spurs will soar once the new stadium is built.

The question my co-conspirator (who may or may not have been @ztranche) and I were wanting to answer was: what sort of increase in value are we talking about?

Clubs are valued in many ways, most famously by Forbes, but also by standard measures in the investment world such as through cash flow or revenue multiples.

These valuations often serve as poor guides for what a club may fetch when sold, but nonetheless movements up and down the Forbes rankings serve as fodder for the “my club is bigger than yours” pissing contest that football fandom so often comes down to.

In 2013, an academic and soccer nerd, Dr Thomas Markham, proposed a more sophisticated valuation system, the Markham Multivariate Model, which correlates far more closely with the actual price of clubs when sold.

The key is in the word “multivariate” — and yes, in case you are wondering, we are deep into the off-season.

The model uses several variables — revenues, assets, profit, wage ratio and stadium utilization percentage — that better represent the business of football and the differences among clubs.

The formula is as follows:

MMM variate

Dr Markham’s last published rankings in August 2015 valued Spurs at £710 million — comfortably above Liverpool (£537 million), but well behind Arsenal (£1.18 billion).

That figure was based on the 2013/14 accounts, so first I wanted to get an updated value using numbers from the recently published 2014/15 accounts. I don’t have the exact stadium utilization percentage, but it is fair to assume it is somewhere around 99 percent, which most sold-out Premier League stadiums are.

The “current” value of Spurs: £717 million.

The small increase in value reflects moderately increased revenues and a decrease in wage ratio. It seems “about right”, as really the value of Spurs won’t have changed all that much given how static things are while we are stuck at White Hart Lane, and with the TV deal flat in the period.

But what happens once the new stadium is built?

I have done some quick and dirty calculations. There are too many variables to sensibly project what the revenue will be in 2018/19 given soaring TV deals and critical commercial deals to be negotiated. But, with Arsenal having built a similarly sized stadium in a nearby part of North London, there is a very useful proxy for projecting what sort of uplift a new stadium may have for Spurs, were it to open tomorrow.

Arsenal’s revenue increased from £137.2 million to £200.8 million after its move to the Emirates, according to its accounts for the 2006/07 financial year. This is an increase of 46.4 percent.

Revenue mix varies from club to club: Arsenal recorded sizeable income from property development but only increased commercial revenue by £7 million, far below the target of £30 million Spurs have set for commercial revenues associated with the new stadium. But nonetheless this feels a decent starting point, as much of that increase was from rising matchday revenue due to the larger capacity and better corporate facilities.

Applying the same 46.4 percent increase, Spurs revenue would jump from £196.4 million to £287.5 million.

Net assets are interesting. The key is “net” — while Arsenal’s fixed assets soared when the club moved to the Emirates, so did what it owed to creditors. In the two years that covered the final year at Highbury, and the first year at the Emirates, net assets increased by only 8.7 percent. This slightly broader view seems a better gauge as it cuts out year-to-year churn, and I will apply the same increase to Spurs. This would take net assets from £183.0 million to £199.0 million

Arsenal’s profits dipped slightly in the first year at the Emirates (but the club remained profitable). I don’t want to get too involved in guessing what direction Spurs profits will move as it is actually quite a small variable in the calculation, so I’ll keep them the same. Likewise, stadium utilization will remain at 99 percent, if the season ticket waiting list turns out to be an accurate measure of interest, and not some Potemkin justification for the whole project.

I’ll calculate a range for wage ratio: from the current 51.35 percent, to the desired 45 percent (Arsenal got wage ratio down to 46 percent at the lowest point).

So, plugging these variables into the MMM formula, what is the value of Spurs once our shiny new stadium is opened?

My calculation: £968.5 million to £1.105 billion.

As stated, the revenue is hard to project given the changes in the TV deal, meaning that by the time 2018/19 rolls around, this is likely a very conservative estimate. But it shows that the new stadium, right now, would add £250 million to £386 million to the value of the club.

It also shows that the £1 billion figure that is batted around isn’t actually all that optimistic. This simple MMM projection shows it is a good ballpark figure for what ENIC may seek should they chose to cash out once the stadium is built, or as a guide if they seek new investment to help bridge any funding gaps in the project.

A valuation of £968.5 million to £1.105 billion would put Spurs third in the current MMM rankings, and hot on the heels of Arsenal. They still have advantages in commercial revenue, and Spurs have not shown any indication of being able to land the big sponsorship deals to narrow this gap. But it would put Spurs ahead of the two oligarch playthings, Chelsea and Manchester City.

Tottenham Hotspur has been one heck of an investment for Joe Lewis and Daniel Levy, and no doubt quite the ride.

In 2000, when ENIC first bought into Spurs, the deal valued the club at around £60 million. In 2007, when ENIC bought out Alan Sugar’s remaining stake, the deal valued the club at £209.5 million. The club is now valued, by my calculation, at around £717 million, and once the new stadium is complete this should pass the £1 billion mark.

Some may be curious about what this means for Daniel Levy himself? Remember, he owns* 29.41 percent of ENIC, which itself owns 85.55 percent of the shares in the club.

(*The exact wording is, “Daniel Levy and certain members of his family are potential beneficiaries of discretionary trusts which ultimately own 29.41 percent of ENIC’s share capital”)

Actually, I’ll let you do the maths as it feels a bit gauche to be spelling it out. But, put it this way, the new stadium could see the value of his stake increase by something approaching £100 million, which is very nice and is one heck of an incentive to make sure this thing gets built on time and on budget.

I have no idea if ENIC really want to sell — this has always been an investment with an emotional component. But if they do, ENIC will be quids-in once the stadium is built. The value of Spurs is about to soar — and for the first time in a while, this may actually be mirrored by success on the pitch.

Thanks for reading. Please follow me on Twitter for more Spurs chat. Thanks to Sam Z for pointing me to Dr Markham’s research.