Q&A: Your questions answered on the new Spurs stadium and the state of the club’s finances

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Charles Richards / @spurs_report

I have written extensively about the new Spurs stadium and finance issues on this blog for the past two years. I get a steady stream of questions from Spurs fans keen to know more about the stadium, and the club’s financial health. In particular, the jump in construction costs to £800m has caused a considerable amount of concern.

Borrowing the idea from more imaginative bloggers, I asked my Twitter followers to send in their questions — and boy did you. I had more than 40 questions, *most* of which were serious. I’ve grouped the questions into subjects, and tried to answer as many as I can.

NAMING RIGHTS

@KarnaRohit
Any chance we can still have it called White Hart Lane ? How much are the naming rights going for ?
@hertfordlilly
How far off are we from finalising naming rights? This year’s performance must mean we are in a stronger bargaining position?

There is zero chance the new stadium will be called White Hart Lane — well, unless you have £300m burning a hole in your back pocket and want to buy the rights for the next 10 to 15 years. Daniel Levy has made clear, from the outset of this project, that Spurs will look to sell naming rights, and nothing will make him deviate from this plan. It is an integral part of the project funding.

In terms of naming rights, we’re now into the window of when the club may announce it. Levy has previously stated that a deal is typically agreed after the midway point in construction: sponsors want to know the stadium is going to be delivered on time and as specified. In terms of an “optimum” time — you think once demolition of old White Hart Lane is complete, this would be the time to do it. That should be around September — but it is just conjecture. The announcement that Spurs were renewing the AIA partnership until the end of 2022 suggested there won’t be a joint shirt-stadium sponsorship arrangement such as Arsenal have with Emirates. It seems unlikely Spurs would agree to a short extension with AIA if a naming rights deal weren’t signed and sealed.

Whenever I tweet the words “naming rights”, a bunch of people say “it’s going to be Nike”. I’m pretty confident it won’t be — it’s a building, not a superstar striker. I wrote about naming rights a while back, and urged caution on what Spurs could expect — the talked-about £30m per year seems extremely optimistic. I hope I’m proved wrong — Spurs have picked a good time to go up a level in league performance, and the NFL tie-in may appeal to some companies.

WEMBLEY

@njs10
Are we going to make more money next season at Wembley vs last season at WHL and how does that compare to season after at new stadium?
@jakemrich3
How will Wembley affect revenue? If we get nothing from food but how much of ticket sales do we get and will it counter the rent?

It is extremely hard to forecast what impact playing at Wembley will have on Tottenham’s bottom line. First, we don’t know how many tickets/hospitality packages Spurs will sell — maybe we’ll sell out every game, but I strongly doubt it — and second, we don’t know how much Spurs are paying. I’ve seen figures of around £20m per year bandied around. But do Wembley take a slice of ticketing income? And how are concession sales split? We just don’t know.

(Update: Spurs will NOT receive proceeds for concession sales. See comment below, with link to THST minutes)

However, we do know one thing: when full, Wembley is a cash cow, there’s a reason two Champions League finals and countless other major sporting events have been hosted there. If Spurs can come close to selling it out each week, and make a good stab at the corporate hospitality market, then, even with the rental fee subtracted, Spurs should easily exceed the modest £40m or so matchday revenue from White Hart Lane.

On the subject, here’s a fun fact: Daniel Levy once tried to buy Wembley. Talk about things coming full circle.

WAGES

@WindyCOYS
Do you have a feel for (or better, actual info) whether our players are *actually* underpaid compared to similar players at wealthier clubs? And, if so, how long will we need at new WHL before we can expect to see increase in wage spending (i.e. how long did it take other clubs)?
@m13tul
Revenue 2 wages we have always been 40% to 48%. If we try and up that figure to 55% will it make enough of a impact and what is he downside

Spurs had a wage bill of £100m in 2016, and revenue stood at £209m. The average wage bill of the other top six was £211m. Quite simply, Spurs have been playing in a different league to the other five teams, and it only underlines what a remarkable job Mauricio Pochettino has done.

However, things change quickly.

In the coming years, Tottenham’s revenue is going to soar: the next accounts will show Champions League revenue and the new PL deal (income from the latter alone will jump from £95m to £148m). From next season, we’ll have the additional income from Wembley, as well as another season of Champions League football. After that we should be into our new stadium and all the additional revenue that comes with that. There will also be the uptick from the next kit deal.

By my (very rough) projection, Tottenham’s revenue should jump to around £275 million next season, and the only way afterwards is up. Of course, Spurs will have stadium financing costs to absorb, but there is significant scope to increase the wage bill as required.

Spurs aren’t standing still. In the current accounting period, 13 Spurs players have signed new contracts, while Champions League participation likely will have triggered significant bonuses.

Are Spurs players underpaid? Sure they are — every single one could dramatically increase their earnings if they moved to another top six club. Ultimately, Chelsea and Man City are billionaire playthings and will always be able to offer more than a rationally run club such as Spurs. But Spurs, with every window that goes by, will be in a better position to compete. While we’re offering Champions League football, a chance to compete for trophies and be part of a close-knit and ambitious squad, plus the best manager in the league, we’ve got points in our favour too.

I don’t think the relatively low wages is just a case of Daniel Levy driving a hard bargain, Pochettino also appears to have made a virtue out of keeping a relatively fair balance of incomes among the squad. This will remain true through the years ahead — you’ll see the likes of Dele, Eric Dier and Harry Kane regularly sign new contracts, each time bumping them higher and higher, creating new ceilings. If Kyle Walker moves to Manchester this summer, it will be spun as “Spurs can’t afford to keep Walker”; but actually the situation is far more complex. Walker allowed his head to be turned, in the heat of a title race — for Pochettino, this may be an unforgivable breach of the team ethic by a player who is ultimately relatively easily replaced.

As for wage-to-turnover ratio, actually for Spurs it has rarely been in the 40 to 48 percent bracket. Generally, in the last decade, it has been between 50 to 60 percent. It topped out at 65 percent in 2013 — spending more on wages is no guarantee of success.

Spurs are hoping to bring it to about 45 percent through the stadium construction phase — but ultimately, keeping this special squad together has far greater financial benefits than whatever savings could be made achieving that ratio.

You can read my analysis of the 2016 accounts here, and I explored the issue of balancing stadium and on-pitch success here.

OWNERSHIP

@stevecco
THFC in unprecedented position for title challenge. Balancing the books is laudable but why is the owner so reluctant to dip into own pocket

I’m guessing, the photos that spread about “Uncle” Joe Lewis’s new yacht didn’t go down too well?

As Spurs majority owner, Lewis has been consistent through his tenure: he doesn’t speak, and he doesn’t put significant money into the club. Spurs has always been an investment — ENIC stands for English National Investment Company. It’s been a hugely successful one. When ENIC first bought a 27% share in 2001, the deal valued Spurs at around £81m. The value now is comfortably above £1 billion.

Lewis’s worth is estimated at around $5.7bn, per Forbes, but, there has never been any indication that it is for spending. Nothing is going to change at this point. Personally, I’m fine with the current ownership — Lewis isn’t extracting money from the club in dividends, or borrowing against its assets personally, while Daniel Levy is an experienced and competent chairman who cares about the club. Success earned is far more satisfying than success bought — whether it’s dodgy Chinese tycoons, unpleasant Qataris or spivs pretending to be billionaires, be careful what you wish for.

DEBT

@FrankMersland
How huge is the clubs debt stipulated to be when the stadium is built? And how much to be paid in annual mortgage/interest?
@jilllewis33
Seen suggestion Arse made big thing of making funding streams public while we’ve been more secretive. Any cause for concern/funding gaps?
@Phon1k
We will be the most indebted football club in the world when the stadium opens, cant uncle joe lewis just pay it all off?

The simple — and scary — answer: we don’t yet know how big the debt will be, or how much it will cost each year. Spurs have agreed a £350m funding package with three banks, and this will be the main element of the finance. But, with costs set to top £800m, more money is going to need to be found. Naming rights and future ticket sales are the main two elements to add to the funding mix — but it’s not clear how much Spurs will actually be able to bring in and if another debt facility may be required. By my (very rudimentary) assessment, Arsenal’s finance cost peaked at £47m, and hovered around £40m for four years before being refinanced to a lower annual payment. Arsenal pay around £20m per year on their Emirates “mortgage”. Spurs will likely pay more as we are borrowing more, but it’s impossible to say how much it will be until the details are known. We’ll get our first look in the next accounts. In terms of length, think the mortgage on your house — this will be a long-term arrangement.

The transparency question is an interesting one. There’s a balance to be struck between keeping fans informed and protecting commercial information; Spurs will reliably err on the side of the latter. It’s just part of Levy’s personality, and isn’t going to change. The club has said it will announce the funding package, and I would expect it to explain the financing costs when the annual report is published. But we’re not going to get a running commentary, as the saying goes.

Will Spurs be the most indebted football club in the world? It depends how you measure it. Here’s a handy guide.

Manchester United’s net debt, at last recording, was £409.3m — Spurs may or may not end up topping this (I suspect Spurs will, not least as the club has already invested heavily in the training centre). United have that debt for the privilege of being owned by the Glazer family, while Spurs are going to have the best new stadium in the world. Technically, there’s a clear leader in the debt stakes — on paper at least, Chelsea owe Roman Abramovich £1.053bn.

And no, Uncle Joe isn’t paying off Tottenham’s debt.

NFL

@brits_endzone
Is the plan for the new stadium to be the home of the NFL London franchise (if it happens). If so do you think that’s good for spurs overall

Spurs have made clear they are building a home not just for themselves, but also for the NFL if the American league decides it wishes to put a franchise into London. The NFL has put a small amount of money in — around £10m up front plus a 20-game agreement that will be worth tens of millions — and has been actively engaged through the design and construction phase.

A year ago, I wrote that it appeared that the NFL was close to pushing the button on a London franchise, but there has been little in way of developments since then. There are major logistical hurdles: training, travel, tax, and those are just the things that begin with “T”. There’s another scenario, in which rather than having a franchise, the NFL plays a full eight-game schedule in London (or a full eight-game schedule overseas, including London, Mexico City and wherever else they take games). It works well with a 32-team league — each team plays overseas every other year, and loses a home game every four years. It gives London fans the chance to see regular NFL football, but without the risk of having to endure a terrible team such as the Jaguars on a permanent basis.

What does this mean for Spurs? The NFL deal is a winner as it guarantees that at least two of the 16 non-Spurs major event slots are used. Each one will probably be worth between £2m and £3m for Spurs, so the more they can get booked out, the better. The NFL connection may offer some marginal uplift in terms of naming rights, and modestly boost Tottenham’s profile in the USA. But if Cameron Carter-Vickers kicks on and represents Team USA regularly, that would probably be a far greater boost. If the NFL does decide it wants a franchise in London, then Spurs can help in other ways — for example in helping build a training facility, accommodating players, and so forth. Hotspur Way is becoming home-from-home for NFL players visiting the UK — they all head up there for marketing work, and NFL commissioner Roger Goodell has visited.

TRANSFERS

@ZevRoberts
How much money realistically do we have to spend in the coming transfer windows?

Whatever Spurs spend, it will be dwarfed by what the other members of the top six spend, and possibly a few of those below. But there is money to spend if needed — Spurs found £30m on deadline day last summer for Moussa Sissoko, for example. I’d expect Spurs to have around £30m to £40m net over the next couple of summers, plus whatever profits can be rolled in from player trading. This summer, there is £18m of Nabil Bentaleb money to spend, and likely a decent profit on Kevin Wimmer if he moves on. Plus there could well be Kyle Walker money to spend. On the one hand, we’re not going to spend as much as Manchester United or Manchester City; but on the other hand, we have far less work to do. There’s nothing that should stop Spurs competing for talented youngsters such as Ryan Sessegnon, or spending big to fill the troubled right-sided midfield position.

REVENUE

@mepfish
Current match day revenue is £40m vs Arse £100m. Post stadium build will we eliminate this differential?
@craig4589
Aside from incr revenue from ticket sales, what are the significant commercial opps the new stad brings? What extra revenue could we expect?
@lewkc1
How, specifically (like by revenue stream, can Spurs close the gap with other 5 and how does stadium help that?

The aim of the stadium isn’t to eliminate the gap in matchday revenue with Arsenal, it is to put Arsenal behind us. It’s not a design statement like Roman’s coliseum, if Chelsea’s new stadium is ever built: everything Spurs have done is about maximising revenue. Even without the NFL connection and facilities, it feels very American — designed to make you spend time there and open your wallet, whether you are in the South Stand, or in a Sky Box. Things have moved on a lot in the decade since the Emirates was built.

So aside from beers and burgers, how else can Spurs make money? There are 16 non-Spurs major events allowed each year, two of which are blocked out by the NFL. Spurs will want to fill as many of these as possible, earning between £2m to £3m a time. They may get some help from AEG to fill these slots. In addition, the club is marketing the stadium as a year-round destination, aiming to attract visitors to the Tottenham experience, restaurants and stadium tours; there will also, no doubt, be conferences hosted within the stadium. This will feel more tangible once the hotel and luxury housing is developed on the southern portion of the site — bless it, but Tottenham High Road is hardly Regents Street.

The area Spurs continue to lag most seriously is in commercial revenue. While Manchester United are a money-making machine, and Manchester City pump revenues to evade FFP, Spurs continue to fall further and further behind. The new Nike deal sums up the situation: a £30m annual fee brings parity with the likes of Arsenal and Liverpool, but, seemingly out of nowhere, Chelsea tore up its Adidas deal and signed up with Nike for £60m per year. Spurs don’t seem aggressive or well-connected in this particular market, which is why I’m cautious on naming rights. For now, all Spurs can do is keep on winning and hope this brings new deals.

ACCESS

@basdaly How many Wheelchair Accessible Seats will there be in the New stadium ? Thanks

Per the planning documents, there will be 259 wheelchair spaces in the new stadium. In old White Hart Lane, there were just 51.

I’ve not yet seen confirmation of final number of wheelchair spaces as the seating configuration has been tweaked in the past two years. But, there’s no excuse for a brand new stadium in accessibility. If you look at the stadium cameras now, you can make out some of the areas for disabled fans — right in the centre, not tucked away in the corners.

The full section of the planning statement is here:

Screenshot 2017-05-22 at 9.48.24 PM

READINESS

@pasavito
What happens if new stadium isn’t ready in Aug 2018? Could we play in a stadium that is maybe 4/5′s complete? Would we be allowed to?

The stadium, quite simply, has to be ready. The aim is to be ready for July 2018 — that will enable test events to take place before the season starts, or, heaven forbid, something like Europa League qualification. If it slips into August, there are contingencies — Spurs could open the season with a block of away fixtures, similar to what Liverpool did last summer as their new stand was delayed. Essentially, this gives Spurs until mid September due to the international break. After that, if the stadium still isn’t ready, it would be a second year at Wembley. Daniel Levy has confirmed that there is a contingency arrangement in place for that scenario. Unfortunately, Premier League rules prevent a team from having two home stadiums in a season, so there’s no chance of switching after Christmas, say.

It won’t be possible to play in a partially finished stadium — Spurs will be building the sliding pitch underneath the south stand, so it simply won’t work. Perhaps there is some leeway in terms of internal fit-out, but it promises to be an enormously difficult and stressful 15 months.

In terms of markers, Levy has said that the roof should start to go on in late January/early February 2018. If this happens, things are looking good. Spurs are pretty much working around the clock — here’s hoping they don’t discover any rare newts under old White Hart Lane.

That’s all I have time for — thanks to everyone who sent questions in. If you are looking for answers to specific queries, try the iSpurs section of the club website, or the stadium minisite — there’s a lot of information online. Some I couldn’t answer! If it’s really gnawing away at you, hit me up on Twitter or in the comments — it’s always nice to talk Spurs in the long summer month between post-season and pre-season tours.

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6 thoughts on “Q&A: Your questions answered on the new Spurs stadium and the state of the club’s finances

  1. martincloake

    Interesting stuff. On one point, we do know how concession sales are split. It was confirmed at the last meeting between the boards of the Club and the Supporters’ Trust that THFC would receive none of the proceeds of catering concessions at Wembley. All Wembley’s concessions are handled by Delaware North.

    http://www.thstofficial.com/thst-news/thfcthst-board-to-board-meeting-2-may-2017-report

    We also did our own detailed analysis of the Club’s accounts, and people reading this post may find that useful.

    http://www.thstofficial.com/thst-news/thst-analysis-of-tottenham-hotspur-ltd-financial-statements-2015-16

    Like

    Reply
  2. Harry m

    Here one what is the expansion capacity? has it been planned so at later date we can get bigger so we don’t have the issue we had at the lane ??

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  3. Mark Bilton

    Vocal home end.
    I am concerned that going to Wembley will not feel like home unless we try to turn it into a fortress like the Lane this season. The vocal support has been amazing and we need to ensure that one end behind the goal that Park Lane, East Stand Shelf side season ticket holders and club members turn that end into something special.
    If not our vocal fans will be spread all around the stadium and it will not feel electrified. Away fans may still get 10-15% and it will feel like a home game for them if we do not adopt a vocal fan Zone. My champions league experience was colourful at Wembley with so much white everywhere but it’s wasn’t the Lane and we need to take steps to ensure we do our best to make this happen.

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  4. Pingback: Money, Money, Money…#THFC | pantomimefootball

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