Category Archives: Deep DIve

Analysis: Is the stadium stopping Spurs from spending?

nasdaq730aAfter ringing the opening bell at the Nasdaq Stock Exchange in New York, Daniel Levy was in a punchy mood during a Q&A with investors as part of Tottenham’s pre-season tour to the USA.

In a near hour-long session, the Spurs chairman lashed out at overspending by rival Premier League clubs, and defiantly backed his prudent approach to managing the club’s finances. However, for fans still awaiting the first new signing of the summer, his comments on the club’s transfer policy caused eyebrows to be raised.

Denying that the new £800m stadium was stopping Spurs from bringing in fresh blood, Levy stated: “It’s not impacting us on transfers at the moment as we’re not yet in a place where we’ve found the player we definitely want but can’t afford.”

For a club that finished seven points behind Premier League winners Chelsea, crashed out in the Champions League group stage and failed for a ninth season in a row to win any silverware, it seemed dreadfully complacent.

There was a huge amount to admire in what Levy said about his vision for the club: backing local talent, earning success and not buying it, investing in infrastructure with the long-term future of the club in mind. However, the comment on transfers seemed an odd one as soon as it was uttered, and certainly makes the chairman a hostage to fortune.

Mauricio Pochettino’s subsequent Baldrick-esque reassurance to fans — “We have a plan!” — did little to ease the concern that Spurs are missing an opportunity to strengthen. A brutal dismantling by Manchester City in Nashville only heightened fears.

I wanted to look in a little more depth at Tottenham’s approach to transfers, and in particular try to gauge what impact the stadium is having on the club’s transfer spending.

For those interested in learning more about the club’s finances, I have written in detail about stadium funding through the construction phase, naming rights, rising construction costs and club accounts. Dig in, and do join me on Twitter for more Spurs chat.

The three-phase transfer approach

If you look at the past two summers, Spurs have followed a similar three-phase strategy in their approach to transfers.

In phase one, “essential business” is done. In 2015, Kevin Wimmer, Kieran Trippier and Toby Alderweireld came in early. In 2016, it was Victor Wanyama and Vincent Janssen.

In phase two, there is a long selling period, as Spurs try to maximise returns on those leaving the club (for example Ryan Mason, Nacer Chadli and Kyle Walker).

In phase three, there is a final purchasing period as the club goes bargain hunting and filling squad holes in the final weeks of the window (Son Heung-min, Georges-Kevin Nkoudou, Moussa Sissoko and so on).

This summer, Spurs have skipped straight to phase two. This early spending wasn’t just about filling glaring needs — but also spoke to the club’s approach to the market. Tottenham’s strength has never been in outspending rivals, out-scouting or out-analysing — it has been about having quality market intelligence. Knowing, say, that Trippier had a £3.5m release clause, or that Wanyama wasn’t re-signing his contract and wanted to reunite with Poch. This year, for whatever reason, that sort of bargain was never available. You suspect Spurs hoped Everton would opt to dump Ross Barkley quickly rather than see his situation fester with his contract winding down, but Everton have chosen for various reasons to cling on. There are also no immediate positional needs — a right back will be needed, but Trippier is first-choice for the time being so Spurs can afford to shop around.

Is this an ideal strategy? Of course not, given the number of potentially useful players who get snapped up before Spurs come into the second purchasing phase, and the poor returns on those bought late in the window.

Is this a logical strategy for a club that is also trying to finance a stadium? It would seem so.

Ring-fenced vs sell-to-buy

Levy has previously spoken about the transfer budget being “ring-fenced” — essentially, a portion of club funds are set aside for transfer activity with the aim of ensuring Spurs have a competitive team when the new stadium opens. However, how much exactly is ring-fenced is another question entirely.

Trying to think on a practical level, Spurs must be facing huge cash management challenges at the moment, ensuring the stadium continues to advance at the required rate. Even with the £25m credit facility agreed as part of the stadium funding package, Spurs can’t afford to take any chances: there’s virtually no room for manoeuvre on the timeframe. Think back to the story where Spurs purchased cranes for the site as they weren’t able to wait for rental cranes to become available.

There’s a lot of talk about net spend over the course of the season, as the numbers are remarkable. Since the Abu Dhabi takeover in August 2008, Manchester City have a net spend of £970m, while in the same period, Spurs have made a net transfer profit of £60m.

But I want to drill down a bit further to see to see the cash management in action: is there a “ring-fenced” amount Spurs can spend, or actually are Spurs in a situation where we must sell to buy, in order to avoid going into the red and ensure maximum available funds for stadium construction.

The chart below shows all transfers since the start of the 2014/15 season, in chronological order. For deadline day, I’ve gone by time the deal was announced on the club website — deadline day in September 2014 was a busy one. The line shows the cumulative balance — so exactly how much is in the transfer kitty, using June 2014 as the starting point. The values are what’s on Wikipedia — it’s not perfect, but it’s just what was closest to hand.

Spurs transfers June 14 to August 17

A few things to point out:

1. Spurs have only dipped into the red three times, and barely. The first was on deadline day in Sept 2014, so this was for a matter of hours and it is a technicality. The second was after signing Vincent Janssen last summer. Can you recall the haggling over that deal, dragging on for weeks? Spurs simply didn’t want to spend the extra four or five million AZ were demanding — this deal pushed Spurs £4.4m into the red, until Alex Pritchard was sold to Norwich. The final dip was for Moussa Sissoko — however, this was widely reported to be an installment-based deal, so you can see why this so appealed to Levy. A £30m player, available for £6m initially — perfect for a club managing cash flow, just a shame he is crap.

2. Think back to Georges-Kevin Nkoudou and last summer’s barbershop ITK. It was rumoured he was on his way to London in mid-July, but his transfer wasn’t announced until the end of August. All sorts of reasons were floated — Marseille were being taken over, Clinton N’Jie may have been stalling on a return to France — but was Tottenham’s cash flow also an issue? Having dipped into the red to complete the Janssen deal, it took Spurs until late August to offload Pritchard, Yedlin, Chadli and Mason, while Nkoudou languished in a hotel.

3. You can see the bursts of activity — a few players are sold, a couple come in, a few more leave, and it continues. Up until Man City took a liking to Kyle Walker, the amount in the kitty never got about £36.4m. Now, Spurs have, by this very rough measure, £74.4m.

So, there’s plenty in the kitty if Pochettino wants to spend. You hope, “ringfenced” means this accumulated transfer wealth is separate from the stadium funding and is entirely for squad strengthening (on transfer fees or wages), rather than getting rolled into construction.

Ongoing risk factors

image (12)

Spurs have now secured the main bank finance for the stadium — a £350m loan package, with £25m credit facility and a £50m contingency fund provided by Tavistock Group, the ultimate owners of the club. Coupled with the £240m already poured into the project and funds from advanced hospitality sales, Spurs are in a good place.

However, there are two main risk factors remaining with the stadium. First, a naming rights partner has not yet been found. This leaves a hole — perhaps as high as £300m, although that amount always seemed optimistic — in the project finances. Second, while construction is ongoing, there is the risk of cost overruns. It was reported that during the demolition of the South Stand, an issue with gas pipes delayed work briefly — these little things can add up. It certainly looks like Spurs are going full bore at the moment, judging by the webcams, but if the timetable starts slipping, more money may have to be put in than was originally planned.

In this context, it is understandable that Spurs remain cautious on transfer activity for the foreseeable future. The hope is that, once naming rights are secured and the stadium is completed, Spurs can start to move more aggressively. That may not be January, but perhaps by next summer, the constraints will ease and Spurs can focus more on securing targets they want, when they want them.

Wages to turnover

Of course, transfer fees are just one part of the picture — another issue is wages. There is concern among some Spurs fans about the club being uncompetitive in wages, risking the departures of key players and limiting arrivals. Personally, I’m not quite as concerned. Of course, Manchester City will be able to offer more than Spurs can offer — but Spurs could double the wages of everyone at the club, and that would still be the case.

Here is a look at how wage growth has moved versus revenue from financial year 2005 to 2016, the last published. As you can see, wage growth has stalled, while revenue has continued to slowly climb.

Revenue vs Wages 05 to 16

Next season, revenue is going to go through the roof — simply adding in known amounts for Premier League and Champions League revenue distribution, Spurs revenue should jump to nearly £280m. And it will climb again in the next year with both new Nike and AIA deals kicking in.

In short, Spurs have plenty of money to increase the wage bill — if the club wants to. The wage bill is artificially low at the moment — in FY 2016, a lot of high earners came off the books, such as Paulinho, Soldado and so on. In the past year, there have been more than a dozen contract renewals, so the wage bill should jump somewhat. It currently stands at £100m — if Spurs were to maintain the same 47.4% wage to turnover ratio, that would mean a wage bill of £133m or thereabouts. What isn’t known is the amount of bonuses that are paid out — there may be Champions League kickers and the like. The next accounts may give us more insight.

Spurs being strict on wages isn’t just about Daniel Levy and the stadium — it’s also about Pochettino maintaining the harmonious environment in the squad. It’s frustrating during the transfer window, but so long as Spurs continue to move firmly on offering key players new deals to ensure the core of the team is in place once the new stadium opens, then most fans will be happy enough.

There are lots of other factors that have an impact on how Spurs act in the transfer market — relationships with certain agents, a weak scouting department and failure to embrace analytics, the broader context of the Premier League’s financial situation, the focus on youth, a starting XI that is hard to improve, the personalities of Pochettino and Levy, and so on.

The stadium is undoubtedly a huge constraint, but it’s not an excuse. The key to the success of the stadium will be ensuring it is full — and the best way to ensure that is by having a successful, appealing team. I’m pretty sure Levy and Co know this. There is money in the kitty, and room on the wage bill — now it’s just a case of finding those players who will realistically join and will be able to push us over the line.

Thanks for reading. Please follow me on Twitter for more Spurs chat.

Building a brighter future, on and off the pitch: Analysis of THFC’s accounts for the 2016 financial year

By Charles Richards / @spurs_report

(Update 21/04: Per ESPNFC, the £10m figure identified in this piece as a potential upfront NFL contribution to the stadium project has been confirmed. The mysterious £45m in accruals and deferred income remains in question. Answers on a postcard!)

Tottenham Hotspur’s newly published accounts for the 2016 financial year show a club in transition, still hamstrung by the constraints of White Hart Lane but moving clearly towards the altogether grander future that beckons.

Spurs chairman Daniel Levy has described the club, in its current state, as essentially two businesses — a football club, and a stadium development. This appears to be a useful mechanism for digesting the swathes of information contained in this annual insight into Tottenham’s finances.

In this analysis, I’ll focus on the football first, and then talk about the stadium. I’ll also talk about the NFL partnership — and ask whether the financial terms have finally been revealed.

For those new to this blog, I wrote a similar analysis last year. You can read my recent piece on stadium costs here, and my analysis of club spending through the construction phase here.

The club’s statement with the key figures is here, and you can find the full accounts in the Investor Relations section of the club website. Bear in mind, the accounts cover the 2015/16 season only — they end on June 30, 2016 and anything that has happened since then will be included in next year’s edition.

ON THE PITCH

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Cost controls

Spurs achieved something rare in 2015/16, particularly in the inflationary environment of the Premier League: the club lowered football costs and improved on-field performance.

However, if Spurs were hoping for any credit for finishing third in the Premier League on a budget dwarfed by the five wealthier clubs, this was dashed by Leicester’s remarkable title win and the limp finish.

What Spurs achieved in 2015/16 was highly impressive. While Leicester have fallen back to earth and mounted a title defence even limper than Chelsea’s in the previous season, Spurs have kicked on another gear since. There is a sustainability to what Mauricio Pochettino, Daniel Levy and others in the Spurs brainstrust have built, and that’s why the mood among Spurs fans is so positive. We see it, even if others don’t.

Once again, these accounts show Daniel Levy’s tight grip on the club’s finances. Net profit increased from £9.4m to £33.0m.

Spurs managed to reduce wages slightly, from £100.8m to £100.04m. Revenue, meanwhile, increased from £196.4m to £209.8m, an increase of 6.8%. As a result, wage to turnover ratio dropped from 51.4% to 47.4%. This continues the sharp downward trend — in FY 2014 it stood at 55.6%.

How did Spurs achieve this? A look at transfer activity and new contracts in the period shows how:

PLAYERS OUT: Paulinho, Holtby, Capoue, Kaboul, Stambouli, Chirches, Soldado, Lennon, Adebayor

PLAYERS IN: Wimmer, Trippier, N’Jie, Alderweireld, Son

NEW CONTRACTS: Dembele, Onomah (x2), Winks (x2), Alli, Dier, CCV, McGee, Pritchard, Bentaleb

Spurs managed to get rid of a lot of high earners — including a lot of flotsam from the failed Bale money splurge — while of the new signings, only Alderweireld and Son commanded “big” wages.

Meanwhile, Dembele was the only senior player to sign a new deal in the period — the rest were part of the “contract escalator” Spurs have in place for young players to increase their earnings as their role grows. Both Alli and Dier, for example, have signed new contracts in the current financial year, and will soon join the very top earners.

Crucially, with the old Premier League deal in its final season, Spurs were able to hold off on pay rises for all other senior players. This prevented “double dipping” — players seeking new contracts, then demanding another new one the next year citing soaring revenues.

Here are the players who have signed new contracts in FY 2017 so far: Lloris, Kane, Dier, Eriksen, Rose, Walker, Alli, Vertonghen, Winks, CCV, Wimmer, Carroll and Vorm.

That’s a lot of new deals — probably in the region of £15-20m of additional salary, by my estimates. But with Premier League TV income jumping by around £40m next season, it’s the perfect time to do it.

Looking at the ins and outs, you may be wondering why wages didn’t decrease further. Without transparency on player contracts, it’s hard to know — there may well have been some Champions League-related bonuses that kicked in.

Meanwhile, transfer spending ticked down. The “net spend” picture is confusing from accounts: the accounts reported a £27.1m profit from the “disposal of intangible assets”, but this isn’t a true picture of player trading.

I prefer to look at amortisation, the measure of the cost of new signings spread over the length of their contracts and reported on annual basis. A full explanation is in the notes of this story, but in the simplest way: If Spurs sign a player for £10m on a five-year contract, that equals £2m in annual amortisation cost.

For Spurs, amortisation dropped from from £38.6m to £31.8m, thanks to a large number of expensive failures leaving the club and mostly cheap replacements coming in.

If you combine wages and amortisation, you get a good measure of “real football spend” — how much clubs are actually investing in their playing squads. For Spurs, this decreased from £139.4m to £131.8m.

Here’s how Spurs compare with selected other clubs:

image (4)

As you can see, not only is the gap between Spurs and the wealthier five clubs growing, the gap between Spurs and the clubs below is narrowing. Spurs, simply put, are defying gravity — and no club better demonstrates the value of homegrown talent.

Revenue roadblocks

Revenue was a mixed picture, and further underscored what by now barely needs stating — Spurs need a bigger stadium and new sponsorship deals.

Matchday revenue was essentially flat, down from £41.2m to £40.8m, while commercial revenue dipped from £59.9m to £58.6m. If there is one area that will disappoint, it is the latter.

Spurs are stuck in the tail-end of the Under Armour kit deal (expiring at the end of the 2016/17 season) and are midway through the AIA deal, which ends in 2018/19. With each year, these deals grow less competitive. But success on the pitch failed to boost merchandise sales (which declined slightly from £12.3m to £12.0m). Lack of Cup success also hit commercial and matchday income.

As far as I can tell, Spurs did not sign any major new sponsorship deals in FY 2016. The partnership with Kumho Tyres started in FY 2017, and certainly, just comparing the “Partners” section of the club website compared with similar sections for other clubs, and you can see that Spurs are far less active.

Does it matter, given how tacky this stuff gets? Ultimately, if Subway want to offer £2.5m a year to be official sandwich partner, that’s the easiest money a football club will ever make. There’s significant room for growth in this area.

The bulk of the revenue growth came thanks to the increase in Europa League prize money. Previously an irritation, the Europa League is far more valuable now. Prize money increased from £4.7m to £15.5m due to the largesse of BT Sport. That’s a lot of money for not very many viewers, but Spurs aren’t complaining.

Premier League revenue also increased thanks to improved on-field performance. 21 games were selected for UK broadcast, compared with 18 in the previous season — under the old TV deal, each extra selection above the minimum 10 was worth around £750,000, while performance-based prize money jumped by around £2.5m for finishing 3rd compared with 5th.

In a previous piece, I noted a development whereby revenue and spending, previously moving in concert, were starting to diverge.

image (2)

As you can see, this divergence was amplified in FY 2016. I like this chart as I think it tells a story, of Spurs shifting from the “wheeler dealer” mentality to a more sustainable approach as the club enters the stadium build phase.

In the coming three years, this trend is only going to increase. Next year, Premier League revenue should increase to around £140m, while the brief Champions League campaign should bring in around £35m. In the following year, pending the official announcement, Spurs will have much higher gate receipts due to playing home games at Wembley. The financial year after that, we’ll be into the new stadium.

These are exciting times for Spurs: it feels like things are falling into place. We’ve got the right manager, the best core of players in years, and a boardroom focused — almost to the point of obsession — with delivering a world-class stadium. It’s going to be fascinating to see how we manage to screw this up.

OFF THE PITCH

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Stadium developments

Arguably the most important disclosure in the annual report concerned the stadium: the borrowing has officially started.

The first £200m portion of the bank finance Spurs have sought is in place, £100m of which was drawn as of June 2016. Interestingly, this facility was entered into on December 10 — six days before Spurs secured planning permission for the new stadium from Haringey council.

This is the “bridge” portion of the £350m loan Spurs will seek to cover a chunk of the construction costs. There has been public posturing over the finance of the project amid negotiations on public sector contributions and infrastructure delivery, but the annual report shows that financing is moving forward broadly as the club said it would in the planning process.

This £200m facility cost £855,000 in arrangement fees, but we don’t yet know the annual finance cost. The first £100m is repayable in December 2017 — or to put it another way, in December this year it will be refinanced into a bigger and longer-term facility. It may be that Spurs are able to borrow more than the planned £350m, given the increasing revenue and rising construction costs.

Overall, spending on the project has increased from £59m to £115.3m, per the club.

Meanwhile, two other unusual items, a long way down the accounts, caught my eye.

The first was a payment of exactly £10m, received from “a company, which is not a related party, as a contribution towards future construction expenses related to the Northumberland Development Project.”

Who is this money from? Public sector contributions have been a matter of contention, and do not extend to the stadium itself — certainly no agreement was reached before June 2016. If it were Tavistock Group — Uncle Joe — injecting money, it would be listed as a related party contribution.

The second, found in the non-current liabilities section, was a disclosure of £45m, again an exact amount, in “accruals and deferred income”. In 2015, the club recorded £0 in the same category, likewise in 2013 and 2014.

Screenshot 2017-04-02 at 8.22.51 AM

Deferred income is income received for services that will take place beyond the period covered in the balance sheet. Season ticket income and payments received for commercial deals that stretch beyond the reporting period are listed in the current liabilities section.

While it has been reported that Spurs have agreed a deal with Nike as the next kit supplier, this has yet to be officially announced, and certainly wasn’t announced during the previous accounting period.

So what is it?

While no major new sponsorship deals were announced during the period, there was one major new commercial partnership: the 10-year, 20-game NFL deal. If there was a payment, it would be reported in these accounts — with stadium completion date yet to be confirmed, it would be deferred income.

No financial terms were announced, but it seems likely that Spurs would seek money “up front” from the NFL to at the very least cover the additional costs of installing NFL facilities within the stadium. Likewise, expect Spurs to see at least a portion of naming rights income up front to help with cash flow when a deal is agreed, and advance ticket sales income.

A concern has grown among some Spurs fans that the NFL may be “using” Spurs, in the same way the organisation brazenly exploits local taxpayers in the USA. But, in reality, trying to gauge the additional costs incurred by the NFL elements is hard.

Once the project stalled amid the legal dispute with Archway, the stadium design was always going to be tweaked so that Spurs could get as much into the site as possible. To make it a true NFL stadium, additional work had to be carried out to basement areas, plus there was the need to reconfigure the interior to allow for enlarged locker rooms and media facilities. The sliding pitch sums up how tricky it is to put a value on the NFL additions: it is a new and expensive piece of technology that, while useful to Spurs when hosting concerts and other sporting events, feels like an extravagance too far if there were no NFL contribution.

So can we now put a price on this partnership? A one-off £10m payment, plus a 10-year, £45m hosting arrangement that has been paid up front. In total, a £55m ($69m) contribution to the £800m or so total cost.

It certainly sounds reasonable, and realistic. For the NFL, it gives them the stadium they desire in London for future growth plans. For Spurs it is money that can be used to turn the stadium into the world-class venue the club has always hankered to build.

I can’t confirm this — any journalists looking for a story could do worse than run this up the flagpole — but it certainly seems possible. Certainly, there have been suggestions that the NFL is putting money into the stadium — including recently by MMQB journalist Albert Breer.

I welcome any other suggestions on where this £10m construction cost and £45m in deferred income may have come from. But my hunch says NFL.

Other business

Away from the stadium, Spurs are continuing to invest in the training centre with construction of a new player accommodation facility. The £16m loan facility for the training centre was expanded to £25m, at a cost of £265,000.

Spurs being Spurs, there is a commercial element to this. In addition to providing accommodation for the first team and youth teams, and players visiting for medicals ahead of signing, the facility will also be used by other teams. An agreement is in place with England to use it before games at Wembley — all those times England train at Hotspur Way isn’t an ad hoc arrangement — while it is also available to European sides ahead of midweek matches against other London sides. Both Barcelona and AC Milan even provided letters of support in the planning process.

The planning agreement makes clear this isn’t a hotel, but no doubt visiting teams and England will pay handsomely for the privilege. Speculation that NFL teams may use the facility is wide of the mark — at 45-rooms, it is simply too small.

There are a couple of other lines of note.

The first is exceptional items of £9.6m in “commercial and employment contract costs”. In the previous year, £6.5m was reported in “redundancy costs and onerous employment contracts”.

My assumption was that at least a part of last year’s exceptional items referred to Emmanuel Adebayor, who at some stage stopped being a footballer. More likely any payoff was included in this set of accounts. But as for commercial costs, it is hard to understand what that may be. £9.6m out of £209.8m total revenue is not an inconsiderable sum, and I’d welcome any suggestions. If there is an inference from the new description, I’m missing it.

Second is £500,000 paid by Spurs to Melix Financial Services, another Tavistock Group company, for “commercial advice on global sponsorship opportunities”. Melix, like much of Tavistock (the investment umbrella for Joe Lewis of which Spurs is just one part), is Bahamas registered — but beyond that, there is no public profile. If you Google the name, you’ll get a few links to a late 2000s Romanian property scandal, and that’s about it.

There may be a perfectly reasonable explanation, but it beats me. Answers on a postcard – preferably with a nice picture of the Bahamas on it.

Thanks for reading. Please follow me on Twitter for more Spurs chat. Comments welcome, either below or to spursreport at gmx.co.uk.

The balancing act: Can Spurs find a way to remain competitive through the stadium construction phase?

stadium_aerial_aug1216_730b

If it didn’t already feel real, the sight of the new stadium starting to rise up from the ground illustrates that a new era is finally dawning on Spurs. The next five years promise to be one of the most exciting, and most risky, periods in the club’s history.

Spurs are borrowing at least £350 million from banks, plus securitising future commercial and matchday revenues, in order to fund the stadium project and associated development.

The debt load will surpass what Arsenal took on to build the Emirates a decade ago, and will only be topped by Manchester United, who last year paid around £35 million in financing and £15 million in dividend payments for the privilege of being owned by the Glazer family.

Having spent a decade wading through the planning process and acquiring the land, now the club has the challenge of delivering a 61,000-seater stadium in a densely populated part of London on a tight timeframe, and to budget.

Things appear to be on track at this early stage, but an extraordinarily challenging few years await. The reward is clear though — New White Hart Lane promises to be a world-class stadium, and a true sporting cathedral that is everything the dreary Olympic Stadium will never be.

I have previously written about the stadium financing issue in great detail. In this post, I am going to take a look at the broader state of the club’s finances, and the challenges that lie ahead through the stadium construction phase.

Moving away from pragmatic player trading

A look through the recent financial history of Spurs reveals a number of distinct eras, layered on top of each other like sedimentary rock.

From 2001 to 2007, you have the “Early ENIC” years, in which Daniel Levy inherited the mess from Alan Sugar and piled on more mess as he tried to get to grips with the intricacies of Premier League chairmanship.

From around 2007, the “Wheeler Dealer” era truly began. This was a period of frenzied transfer activity that gradually pushed Spurs from mid-table to the fringes of Champions League contention, but without any sense of stability or sustainability beyond the confidence that more bargains would be found, and more mega fees extracted. This era came to a shuddering halt with the failure of the Bale money splurge, and the realisation that Spurs were never going to be able to compete with the moneybags elite when needing to sell as well as buy.

Since 2014, a new era has emerged, with a more prudent approach to player trading and a greater focus on cost controls. How much this is connected to the stadium funding, or the arrival of Mauricio Pochettino, is unclear. Certainly, you suspect Andre Villas-Boas was supposed to be ambitious young manager to lead Spurs through the tricky stadium construction phase, but there was a problem with a beanie hat and not everything works out.

Pochettino has made a virtue out of having a young, hungry and therefore relatively cheap squad, and the narrow band into which most of the player salaries reportedly fall is seen as a contributing factor to squad unity. Likewise, the club has had the incentive to ensure its accounts are glistening as it struck agreements on financing — a little money saved now could mean a lower rate of interest on the £350 million stadium loan.

Tottenham has been a consistently profitable club in the past decade, but has been reliant on player trading (profit on disposal of intangible assets, as it is known) to achieve this, as the following chart shows:

ProfitandTrading

In the past decade, the club is £152 million in profit. However, in that time, accounting profit on player trading is £295 million — without player trading, the club would have theoretically lost £143 million. Of course it’s not nearly that simple, but it illustrates the degree that Spurs have needed to sell in order to buy.

When Levy referred to “pragmatic player trading” in the club’s rather panicky statement to reassure disgruntled fans in September 2015, it didn’t sound right to me due to the suggestion of a continuation of the “buy low, sell high” era that had already started to pass. “Prudent player trading” would have been a better phrase — no need to sell players the manager wants to keep, but limits on what can be spent and a more cautious approach to acquisitions.

What the stadium financing phase needs is as great a degree of stability as is possible in the anarchic environment of Premier League football. Player trading is the biggest uncertainty of them all in football’s financial landscape. Now that Pochettino has cleared out the flotsam inherited from the Franco Baldini era, fans can expect the “churn” to reduce in transfer windows to come.

Cost controls in action

If you read any analysis of THFC finances from recent years, you’ll see some variant on the following phrase: “Daniel Levy runs a tight ship”.

There are many stories of these cost controls in action — my personal favourite was Mido being told to run across the tarmac to ensure he got a seat with extra legroom on a budget airline flight to London after being bought from Roma.

For a couple of months a year, this gets frustrating. The club’s approach to transfers is akin to dental surgery — deals are done painfully and slowly. Contract negotiations seem to drag on endlessly, key targets are missed, players leaving the club are left in limbo while the market is scoured for someone desperate enough to pay the premium.

Part of this, undoubtedly, is personality driven, and there appears a genuine relish in tough negotiations and brinkmanship. But part of this is necessity — with matchday revenues at their limit, and the club unable for various reasons to match the commercial growth of the richer clubs, it has become increasingly important to find value in the transfer market and control player costs with the stadium financing ahead.

I want to illustrate “where the money goes” at Spurs, and demonstrate what these cost controls actually look like.
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I’ve gathered data from the past 10 years for revenue and the two major outgoings, namely wages and transfer spend.

(For transfer spend I will use the figure for amortisation. Amortisation is an accounting method whereby the cost of buying players is spread over the lengths of their contracts. There’s an explanation at the bottom of this piece, but essentially amortisation is an annual figure that shows how much the club is actually spending on transfers. The advantage of this is that, while most transfer fees are undisclosed, the amortisation figure is listed in the accounts.)

Here is a chart:

RevWageandAmort

This gives you a picture of how revenue and wages are rising, but transfer spending has actually been quite flat.

However, if you combine wages and amortisation, something interesting happens:

RevWplusA

As you can see, wages plus amortisation tracks revenue remarkably closely from 2007-2014, to the point that it is almost a mirror. It is only in 2010 (financial year) when the gap becomes close. You can see the balance-sheet management in play to ensure spending remained at the desired level.

Why am I so confidently proclaiming a new financial era? Look at 2014. For the first time, revenue starts to diverge, and there is every indication that the divergence will grow starker over the next two financial years.

In the next accounts, the following senior players will come off the books, or be added:

OUT: Paulinho, Holtby, Capoue, Kaboul, Stambouli, Chirches, Soldado, Lennon, Adebayor.

IN: Wimmer, Trippier, N’Jie, Alderweireld, Son,

While there have also been a number of new contracts, and there are hints some of Adebayor’s contract pay-off may have been factored into the 2015 accounts, in all likelihood the wage bill is going to be level or even lower in the 2016 accounts. Meanwhile, the strong league performance means TV money will increase. In the 2017 accounts, we’ll have both the new Premier League TV deal kicking in, and Champions League revenue, to counterbalance a series of new contracts and the signings made in the past window.

My prediction is that revenue and first-team spending will continue to diverge in the next two years. This puts Spurs in opposition to most other Premier League clubs, which are frantically offloading the new TV money on transfer fees and wages as fast as it is pouring in.

As it stands, here are the combined wages and amortisation for the four clubs arguably “closest” to Spurs financially (United are on a different planet, and Chelsea and City are billionaire playthings, so a comparison isn’t worthwhile):

Arsenal — £244.1m
Liverpool — £227m
Tottenham — £139.4m
Everton — £97m
West Ham — £94.3m

In previous years, Spurs have been all alone in “sixth” place in spending on wages (among several other indicators of club “size”) — we will start to see other clubs narrowing the gap. Some may interpret this as a lack of ambition, but ultimately Spurs have a £750 million stadium scheme to fund, which seems pretty ambitious to me.

The growing gap between revenue and first-team spending means more funds that can be rolled into the stadium project. Spurs appear to be positioning themselves to absorb the spike in financing costs that is to come.

In short, since 2014 Spurs have been shifting to a more sustainable model that relies less on big transfer fees to balance the books. The emergence of home-grown stars like Harry Kane, smart acquisitions like Dele Alli and Eric Dier, and the strong management of Mauricio Pochettino have turbocharged this shift. Sometimes you need a bit of luck.

Learning from Arsenal

Over the next five years, the period of peak financing, Spurs need to strike a balance between funding stadium construction, and remaining competitive on the pitch.

Over the next two seasons in particular, the financial benefits Spurs can accrue from being competitive (Champions League money, greater share of British TV money, improved receipts from Wembley), relative to the amount of money that can be saved, justify continued investment in the playing squad. A competitive and appealing Spurs team will greatly help the club sell the increased number of tickets and long-term hospitality packages that is the rationale underpinning the whole project.

Levy has repeatedly stated that there is no need to sell players to fund the stadium, including at the last board-to-board meeting with the Tottenham Hotspur Supporters’ Trust. This isn’t just a statement of confidence in the funding package for the stadium, but also recognition of the need to ensure Spurs field a strong team on opening day of the 2018/19 season.

However, there is a difference between not needing to sell players, and having limits on what can be spent to secure new ones. The extent to which Spurs can compete for new players over the next five years will depend on how much Spurs will have to spend to finance construction. Spurs will be taking on huge debt — at least £350 million — but the key will be controlling the amount that is spent each year on interest payments and repayment of principal.

(Why do I keep saying five years? As previously reported, the £350 million loan will be a five-year loan, which will then be refinanced — per the Viability Report for the project submitted during the planning process. Until I hear otherwise, I will assume the basic funding plan is the same.)

As the only other club to have built and financed a comparable project, the best example for what lies ahead is Arsenal. I don’t want to go into too much detail as the comparison isn’t perfect, but there are a few points worth making.

Arsenal, notoriously, felt the squeeze during construction, creating a need for parsimony that some fans argue Arsene Wenger has never really shaken off. Spurs have the great advantage of learning from Arsenal’s experience. From my understanding of what I have read, Arsenal ploughed ahead without all the required funding in place, which made it more expensive and at one stage forced construction to stop. Spurs can’t afford such a delay given the tight time schedule imposed by the need to play away from White Hart Lane.

I’ve attempted to gather data for the finance costs paid out by Arsenal, to demonstrate, not so much the amounts, as the “profile” — how finance costs will peak and then reduce and flatten to a tidy annual sum. This is extremely hard — Arsenal have refinanced their debt load on several occasions, making it hard to track. The chart below gives the club’s stated figures for interest charges in the period, and debt payments due in the coming year (repayment of principal).

Arsenal raised debt for both the Ashburton Grove stadium project, and the redevelopment of Highbury — likewise, Spurs will be funding property development (on the “southern development land” on the stadium site and at 500 White Hart Lane) as well as stadium construction. I can’t be sure all the debt payments relate to stadium/property development, so take the figures with a pinch of salt. But, it is a consistent measure.

Arsenal Emirates Financing

The 2007 figure isn’t right, as I can’t find the “repayment of principal” number due to refinancing, frustratingly. But for the first four years, you can see how total financing costs were between £35m and £45m — quite a burden. From 2008, things levelled out, and Arsenal continues to spend around £19m a year on its Emirates “mortgage”.

Spurs can expect a similar profile to this. For five years, repayments and interest will be high, but then the bank loan will be refinanced into a long-term debt package at a lower rate of interest. Arsenal’s debt is split about 80-20 between fixed-rate and floating-rate bonds, at 5.8 percent and 6.6 percent interest respectively. More than any aspect of this whole project, I expect Daniel Levy to get the best possible terms on this sort of financial jiggery-pokery — he has years of experience.

We won’t know how much Spurs are spending on financing costs (I could ask, but I will get a polite note stating the commercial sensitivity of the topic, I guarantee) until the accounts covering the financing period are published — we’ll have to wait for the 2016 accounts, published in April/May of 2017. Any attempt to put a figure on it on my part would be conjecture. But it will be substantial.

One final point of comparison with Arsenal is the shift in the broader financial environment of a Premier League football club in the past decade. Here are the comparative revenues of Arsenal at the peak of Emirates financing, and Spurs last year:

ArsSpurRev

As you can see, Tottenham’s revenue is nearly £60 million higher, due to more commercial income and TV money (and that number will spike in future accounts with the new TV deal).

On the one hand, Spurs are taking on a bigger finance package — £350m versus £260m. On the other hand, Spurs are doing it from a stronger financial position — £196m revenue versus £137m.

The ability of Spurs to control financing costs and maximise revenues during the construction phase will ultimately determine the amount that is ringfenced to be spent on transfers and wages.

Capital expenditure

What shouldn’t be forgotten amid the talk of the massive new financial burden is that, for years now, Spurs have been investing heavily in both the stadium project and the training centre.

In the meeting with the THST in May this year, Daniel Levy stated that £150 million had been invested in the stadium project to date. Per the last accounts, the “cumulative” spend on the stadium (professional fees and “enabling works”) was stated to be £59 million, up from £40.9 million in the previous year. On top of that £59 million are property acquisitions, professional fees/other costs for the previous design that will have been written off, and construction costs in the six-week period between when Spurs gained the final green light and the board-to-board meeting.

As for the training centre, upon opening, it was capitalised at £27.5 million — in line with the £30 million price tag that is generally put about for the wonderful facility.

This £177.5 million capital expenditure has taken place over the past nine financial years (prior to 07/08 there was none). The average spend is about £20m per year, although of course it is far from a straight line. This investment has been funded by a combination of equity contributions, bank loans and club profits.

As an aside, I was curious to see how much money has been put in by ENIC to fund this sort of expenditure in the past decade, and how much has come from loans/profits.

This stuff gets hard to track as the club accounts are pretty complex. But from what I can make of it, in 2014 there was a £40m injection, while in 2010 there was a £15m injection plus a further £18.4m “investment in group companies”. This refers to the many subsidiaries that are mostly focused on property, so it would be reasonable to suggest this was for property purchases.

From my chats with people who know about this stuff (OK, that’ll be @ztranche), this equity contribution has been in the form of loans converted into preference shares.

The combined equity contribution is £73.4m, meaning the rest — £104 million or so — has been funded by loans and from profits. This is equity contribution is fairly modest, given the size of Joe Lewis’s Tavistock Group portfolio and the way the value of the club is going to soar once the stadium is complete. I’d compare this level of investment to adding a conservatory to your house to increase the value, rather than being a sugar daddy and sticking a helipad on the roof. But the money was found, and the investment now will help the club in years to come (and help “Uncle Joe” cash in, if and when he sells).

Overall, while not on the level of the stadium financing costs once the £350m loan kicks in, this £177.5m is not an inconsiderable amount of capital investment in the period. It will have given Spurs experience in managing its balance sheet to ensure not all the TV money is pissed away on agents and transfer fees. There is an adjustment coming, but won’t be like Spurs are accelerating from 0 to 60mph — we’ve already been cruising along at 30mph for a while now.

Final thought

The next five years is about finding the right balance between funding the stadium and funding a competitive team. It’ll be hugely challenging, and even if Spurs get it “right”, events out of the club’s control — luck, relative performance of others, macroeconomy, you name it — may mean it looks like the club got it “wrong”.

Underinvestment in the playing squad could have a negative impact on the viability of the stadium project, just as overinvestment could. It is safe to assume Spurs will be on the cautious side of this spectrum — the unofficial target of a 45 percent wages-turnover ratio hints as much.

But, building a new stadium doesn’t mean the club must put away the chequebook for a few years — in fact, the club must not. A drift back towards mid-table would be counterproductive in terms of both lost revenues, and the potential loss of Champions League calibre players that would harm the effort to sell tickets and hospitality packages in the new stadium when it opens.

I don’t want to see the club hide behind the stadium project as an excuse for not sufficiently strengthening the playing squad. The fact that Spurs were prepared to overpay on deadline day to secure a player like Moussa Sissoko shows the money is there, and the club is prepared to spend it. Likewise, continued investment in Hotspur Way through the construction of player accommodation shows the bigger picture isn’t being ignored, and the club is not being stretched beyond its limits by the stadium scheme.

The data I have gathered shows, in my opinion, that Spurs are well positioned for the huge leap that is now being taken. Years of pragmatism in the transfer market, and stringent cost controls, mean Spurs are as well prepared as they could be for the jump in stadium-related spending that is coming.

The spike in Premier League money, improvements in performance under Mauricio Pochettino and emergence of a clutch of homegrown talents are perfectly timed and give Spurs a little more leeway, arguably, than Arsenal had when building the Emirates. Of course, the Premier League TV deal has an inflationary impact on transfers and wages, which makes finding value harder.

Investing big bucks during boom years on capital projects such as training centres and stadium upgrades is exactly what a football club should be doing from a business perspective. Personally, I am very happy with what is being attempted and fully supportive. Some readers will disagree — that is your right.

For Daniel Levy, the new stadium is his vision and the defining project of his chairmanship. He has skin in the game — as the owner of a significant portion of the club, his net worth will soar if the stadium project is completed successfully.

The incentives for him to get things right are clear. But finding the right balance will be hugely challenging, and involve much guesswork. It’s going to get interesting, folks.

Thanks for reading, please follow me on Twitter for more chat. I welcome comments and criticism (preferably constructive) — I’m not an accountant or economist, so there are bound to be areas where my analysis falls short.

The Pochettino Revolution: How Tottenham were transformed from also-rans to title contenders

By Charles Richards/@spurs_report

Poch_cover

Sky Sports, via Google Images

As a Spurs fan, you can pick your nadir.

Maybe it was Lasagne-gate, or the night when Chelsea snatched our hard-earned Champions League spot in 2012. Perhaps it was the sight of Arsenal celebrating the league title on the pitch at White Hart Lane, Sol Campbell among them. For some the pain predates the Premier League era, while for others each new misstep supersedes the last and it is the final-day faceplant against Newcastle in May that stings more than anything.

For me, rock bottom came on March 8, 2014:

Chelsea 4 Tottenham 0.

I had some things going on in my life at that time, and more than ever before or since, I needed my team. I needed that temporary uplift, that two hours of escape, that feeling of togetherness that a good Spurs performance brings. Instead, I witnessed one of the most abysmal displays in recent memory.

The BBC summed up the shambles in its match report:

“Spurs fell behind to Eto’o’s 56th-minute strike, which came after Jan Vertonghen’s slip and aimless pass, before more mistakes – from Sandro and Kyle Walker – led to Chelsea’s third and fourth goals at the death. Chelsea’s second came from Hazard’s penalty after Younes Kaboul fouled Eto’o, a challenge that also saw the French defender sent off.”

That Tim Sherwood, parachuted into his first managerial role mid-campaign, was out of his depth tactically was already clear. But as he appeared before the TV cameras and lambasted the players, it was becoming evident that he wasn’t psychologically suited to the task either. It wasn’t what he said — the performance was gutless, the squad did have players who didn’t care — but rather the way that he said it. As he lost control, he lashed out; his attitude appeared to be, “If I’m going down, I’m taking you down with me.” There was a real risk that his interim appointment could cause lasting damage, and the few positive legacies from the lean preceding years, such as Hugo Lloris and Christian Eriksen, would seek a departure as the club stumbled blindly into the next false dawn.

Spurs as a club wasn’t just fractured, it was broken. Daniel Levy’s schizophrenic switching between “continental” and “English” strategies had gone into overdrive, bordering on parody, with the transition from the “Emperor’s New Clothes” vacuity of Andre Villas-Boas and Franco Baldini to the cartoonish footballing provincialism of Sherwood.

When Levy, rebuffed by Louis van Gaal, turned to Mauricio Pochettino in May of 2014, this was an appointment that simply had to work. The club’s “best of the rest” status, that ambition of Champions League football that could be sold to potential recruits even if it wasn’t quite achieved, was threatened as Spurs drifted back towards the mid-table pack. The stadium project was stalled, while the new training ground was an expensive new facility that no-one appeared to know how to make the most out of, like an iPad only used for playing Angry Birds.

I don’t think, in hindsight, we can overestimate the scale of the job that faced Pochettino when he first joined. Aged 42 and with little more than five years of managerial experience, he became the 10th Spurs manager in 12 years on the strength of a hugely impressive, if low-pressure, spell at Southampton.

Two years on, Spurs are back in the Champions League, playing vibrant football, and have a young and united squad with a strong homegrown core. The success appears sustainable, and I can’t recall ever feeling that the future was so bright. Only the most attention-seeking of contrarians will argue that Pochettino hasn’t succeeded in every respect.

Which begs the question, how on earth has Pochettino prospered where so many of his predecessors have failed?

Heading into the Argentine’s third season in charge of Tottenham, now is the perfect time to look back at what Pochettino has achieved, and the work that still needs to be done.

 

The Kaboul Cabal and a dressing room revolt

Poch1_angry

For the first 11 league games of Pochettino’s tenure, it had all the hallmarks of another trademark Tottenham false dawn.

Eric Dier’s late winner against West Ham and a thrashing of QPR raised expectations, only for a crushing defeat by Liverpool to send Spurs back down to earth. A point at the Emirates was fine, another inept thrashing at the Etihad a sign that nothing had really changed.

The real problems occurred once the Europa League campaign kicked in, and those early Sunday kick-offs at White Hart Lane, fans and players equally unenthusiastic, returned. First was a narrow defeat to West Brom, which happens, then a farcical defeat to Newcastle in which Alan Pardew’s side scored seven seconds into the second half, which really shouldn’t. When Stoke went 2-0 up within 33 minutes on November 9, with Spurs devoid of ideas and any clue how to defend, for the first time the atmosphere turned mutinous.

There’s a story, which I heard from THST Co-Chair Martin Cloake on The Tottenham Way podcast, about the Spurs dressing room after the Stoke match. Returning down the tunnel, the boos ringing out after a 2-1 home defeat, it was business as usual for the likes of Emmanuel Adebayor. At this point, Harry Kane and Ryan Mason stood up and took control, informing the dressing room that this wasn’t acceptable. There was a rebellion, and Pochettino needed to decide who to back.

This match would prove to be a watershed, above all in Pochettino’s understanding of his squad’s willingness and ability to carry out his instructions. Adebayor, who didn’t care, was cast aside, as were the likes of Kaboul and Etienne Capoue, after being deemed inadequate technically and tactically. The “Kaboul Cabal” was born — even if the term was harsh on Kaboul himself, a committed player for whom injury rather than attitude had been the (primary) downfall.

Others would find themselves pushed to the sidelines. Aaron Lennon, the club’s longest serving player, was a walking, talking (and rarely playing) version of the “needs a new challenge” cliche. By February he’d be at Everton on loan. Paulinho continued to appear, occasionally and never effectively, while Roberto Soldado’s crisis of confidence deepened. New signings like Federico Fazio and Benji Stambouli were evidently sub-standard. In their place, the young guns led by Kane, starting to embark on his rise to national prominence, would be given their chance.

In hindsight, Pochettino’s biggest achievement at Spurs may have been surviving his first season. He inherited an unmotivated, fractious and poorly assembled squad, but one that was expensive enough to raise expectations. Ditching the “Kaboul Cabal” was the right move, as was turning to the likes of Kane, Mason and Nabil Bentaleb. But there was also an element of luck that these players were able to step up. Was it good management, or just good fortune?

This “lucky vs good” question would be an issue through the 2014/15 season. All those late Eriksen or Kane winners that kept the campaign afloat — was that the mark of enhanced fitness stemming from superior training methods, or just the rub of the green? The Pochettino pressing game wasn’t just poorly executed, it was positively dangerous, with Spurs shipping 53 goals. Southampton conceded just 33, yet we finished fifth while they finished 7th.

If the dismal Stoke defeat was one milepost, another would come on New Year’s Day against Chelsea. For the first time, Spurs fans witnessed the sort of performance that we’d allowed ourselves to dream about in the most optimistic moments when Pochettino was appointed. A young Spurs side descending on Chelsea’s league leaders like a pack of wolves, ripping them apart and scoring five.

For many fans, this was seen as a turning point, the moment when the Pochettino project found its feet and the club kicked into the next gear. But perception is a funny thing, especially when it comes to gauging success. Even though we all felt that performances were finally improving, and revelled in the thought that a brighter future was starting to take shape, actually results didn’t really improve much. In the 19 games before we played Chelsea, we averaged 1.63 points per game, in the 18 games after we averaged 1.66. The reality was Spurs were playing a bit better, had one or two excellent performances (notably against Arsenal), but were still a flawed unit with huge holes in the squad (and in the defence).

Ultimately, Pochettino did enough in his first season. Spurs got enough points, there was enough hope about the future, enough signs that his methods were working, enough understanding that a lot of the failures could be laid at Baldini or Levy’s doors. But going into 2015/16 there were precious few hints of what was going to come.

“I hear people say stuff about Tottenham and I don’t like it”

Poch_Dier

After a familiar slow start to Pochettino’s second campaign in charge, and a frustrating summer where key areas of the squad (central midfield and striker) were not strengthened, it soon became clear that something was happening at Spurs.

It wasn’t like the previous season, where, rightly or not, the 5-3 win over Chelsea could be seen as a visible turning point. Instead, after there was a steady drip of events, information, quotes and social media buzz that pointed to a more positive dynamic emerging.

After losing narrowly at Old Trafford, Spurs were unbeaten for the next fourteen games. The defence was miserly, and for the first time in years we had a proper central defensive partnership in Toby Alderweireld and Jan Vertonghen. In front of them, Eric Dier was starting to demonstrate that he was much more than a centre-back slotted into midfield due to a shortage of options. Dele Alli was proving that the impish nutmeg of Luka Modric in pre-season really was the precursor to greater success that we’d hoped for. Even Erik Lamela, so lost in his first two years and nearly shipped out on loan to Marseille, was starting to get it. Harry Kane, after a slow start, rediscovered his shooting boots.

Above all, the penny had appeared to drop about the type of play Pochettino wanted. The pressing was notably better, the way the centre backs split and the fullbacks zoomed forward was smoother than a Swiss watch, while Dele Alli’s ability to get beyond defences unlocked space for Eriksen and Kane. The passing became crisper, the ball and players fizzing around menacingly.

After his first season, Pochettino diagnosed two primary problems with the squad he inherited. First, there were the players who weren’t up to it, for a variety of reasons; second, the squad was simply too big. It was counterintuitive, given how widely accepted has become the Mourinho doctrine of two quality players in each position, and how Spurs have struggled with Europa League demands in the past. But Pochettino wanted a more united and cohesive squad, and placed faith in the quality of his fitness work and injury prevention record to withstand the rigours of the schedule.

“Character” is a tainted word in football, thanks to the Proper Football Men’s overuse of the word to describe a myriad of situations and problems. But anyone who has followed Spurs in the past two years will agree that a greater emphasis has been placed on identifying the “right” sort of player. Call it character, mentality, psychology, attitude or personality, the dressing room at Spurs hasn’t come together by accident. Pochettino and has staff have created an atmosphere of hard work and common purpose, and on the recruitment side, more attention has been paid to finding players who buy into this.

There were softer touches too. The club invested in improved social media over the summer of 2015, bringing in The Times journalist Henry Winter to advise players on how to communicate. Unlike other clubs, the players were always on message, but nonetheless it felt natural and not contrived PR fluff. The Dier-Alli bromance blossomed, photos of the squad eating together were shared, a mid-season trip to Barcelona was a roaring success, and created an impression of harmony. Even Pochettino and his staff got in on the act, larking about on a jog around Baku before the match against FC Qarabag, brightening what could have been a long and boring trip. The players genuinely seem to get along, and be happy at Spurs.

In previous years, the leaks out of Hotspur Way were negative, the internal politics spilling out into the open and undermining the attempts at unity from whichever manager happened to be in charge at the time. Gone were the stories about strikers falling out with managers over beanie hats and and transfer blame games, now it was all positive — little vignettes such as the players all joining in board games, shooting competitions after training, the tough fitness work seen as a badge of honour, not a cause for complaint.

This shift in mentality, the new toughness and determination emanating from the camp, was summed up by Eric Dier after Spurs thumped Man City at White Hart Lane:

“I don’t think we get the credit we deserve. We are an extremely young squad. I hear people saying stuff about Tottenham and I don’t like it. I don’t think the other boys like it either.”

I hate it, but the term “Spursy” was coined for a reason — too many sloppy goals, weak performances, decades of prioritizing style over substance. “Spursy” became a catch-all term to explain how it felt for success — however you cared to define it — always being just out of reach. We were Charlie Brown, trying to kick the football, and maybe, just maybe, things were starting to change.

Gary Neville, before embarking on an annus horribilis that would see his reputation in tatters, declared Pochettino his favourite manager in the league. “There is not one negative word I could use,” Neville said of the Argentine’s work. “There is nothing I dislike.”

A lot has gone right at Spurs in the last two years. Recruitment has improved with the arrival of Paul Mitchell and Rob MacKenzie, the return of Ian Broomfield and (unofficially) David Pleat, and much-needed investment in the scouting network. Assistant manager Jesus Perez is a sports scientist, and the standard of physical training (and injury prevention) has improved remarkably. A pathway for youngsters fostered by academy guru John McDermott has been established.

Perhaps most important is the relationship between Pochettino and Levy. In his rare media or public outings such as the Q&A with fans last year, the chairman has appeared unusually relaxed. He even undertook the “Ice Bucket Challenge” — remember that? — although the two players who soaked him didn’t last long. Pochettino revealed he’d watched one of the Leicester games at his house with Levy in last season’s title run-in.

It seems, more than anything, like Levy has finally “found his guy” — a manager who offers middle ground between the continental and the English styles. Levy is able to focus on non-football things — things that arguably he is far better at — such as the stadium project and other property ventures, as well as the money side. There is a balance of responsibilities and a structure that has previously been lacking at the club. Pochettino’s title change from head coach to manager reflects the extent to which he rules the roost at Hotspur Way, and the trust he has earned from a chairman with a reputation for micro-management.

It isn’t all handshakes and hugs at Hotspur Way either. Pochettino has shown he can be tough, and will treat expensive imports and homegrown talent equally firmly if the situation requires. When Andros Townsend threw a tantrum during a warm-down after the match against Aston Villa, Pochettino’s response was swift and firm: “When you behave in the wrong way, you have to pay.” Townsend was suspended, and left the club a few months later.

According to Toby Alderweireld, the key change under Pochettino was the team spirit: there were “no longer any heroes” in the Spurs team.

“When one makes a mistake, the other one picks it up. We have a togetherness. We want to achieve something this season and I think you can see that on the pitch. There is confidence and self belief — not arrogance — that we can beat everybody. We know that if we don’t put the effort in, we are a normal team.

“He [Pochettino] only puts in guys who work very hard. A lot of guys have left the club. If you do not follow the path, you don’t belong in Tottenham.”

Pochettino doesn’t seek credit, and when he signed his new contract, he made sure his team of coaches were signed up too. But, undoubtedly, when looking at the progress made by Spurs in the past 24 months, the Argentine is the common denominator.

“When your face isn’t smiling, your feet aren’t smiling”

Poch_kane

Pochettino doesn’t court publicity and he keeps his opinions to himself. There are no mind games, no taking of the bait, and rarely any insight into how he goes about his business.

On a personal level, two years on, we know practically nothing about him. We know Pochettino works incredibly hard — arriving at Hotspur Way very early and leaving very late. We know his son Maurizio is in the youth set-up. We know nothing about Mrs Pochettino — beyond the fact she thought he’d put on some weight last season forcing him to spend time on the treadmill over lunch. We know he insists on organic meat. We know Marcelo Bielsa is the dominant influence, from the day El Loco signed Pochettino up on the strength of his legs.

The contrast with Jose Mourinho, whose PR blitz for the Manchester United job would have made Kim Kardashian blush, couldn’t be starker.

The lack of soundbites and storylines from Hotspur Way frustrates journalists covering the team, and there have been communication problems with fans. Comments appearing to de-emphasize the importance of finishing above Arsenal last season, while reasonable, did not come out quite as intended and added to the frustration of slipping down to third.

We have rarely seen Pochettino flustered. About the only time last season was after comments about him wanting to manage his former club PSG in the future, again reasonable, emerged and took on a life of their own. His subsequent announcement that he had agreed a new deal with Spurs seemed impromptu. The sense above all is that he sees media duties as an obligation, not an opportunity. Because of his still-limited English, it is the one part of his fiefdom where he doesn’t have the degree of control that he would like.

But despite this, we all know what the Pochettino mantra is. Performance in training is crucial, fitness is paramount, the process of improving mentally is continual. Homegrown talent must be given the same opportunities as expensive imports, players are treated like adults and expected to behave as such. The sum of the parts must never be greater than the whole.

Over the busy Christmas period in 2014 and with three days before the next match, Pochettino was asked by a TV reporter if his plan was to “rest, rest and rest.” He replied, quick as a flash and with a smile, “No. Train, train, train.” Not every footballer will like this approach, and those thinking of joining Spurs will know exactly what is in store. It’s like the Spartans leaving out their newborn boys — it filters out the weak.

Rare insight into the way Pochettino works was given by John McDermott in a talk in California that was transcribed and posted on Reddit.

McDermott revealed that he spent several hours a day working with Pochettino. He considered Pochettino by far the best manager he had worked with, and described him as the “best strategist in terms of how he got the club working.”

“Pochettino is a leader of people, a very warm, Latin, touchy feely man, he has got something about him, an X factor. If you took Pochettino from Tottenham right now, they would not be half as successful. Pochettino will often say something doesn’t ‘feel’ right, he uses his intuition. For example, (he said to) Bentaleb, ‘When your face is not smiling, your feet are not smiling’. It is an intuition allied with statistics.”

For McDermott, who has spent years trying to work with Spurs managers, some of whom have shown no interest in the young talent he is developing, he now has a very different problem keeping him awake at night.

“How do I make sure our academy keeps up with Pochettino? He has taken it to another level.”

“We are ready to compete against any team”

poch3_etihad

I have always thought captaincy is a good indication of the health of a squad. When a squad seems united, potential captains, vice-captains and future captains abound. When a squad seems short on “character” — perhaps Man United in recent years — there appear few, if any, choices.

If Pochettino could have one mulligan from his time at Spurs, it would be appointing Kaboul as captain and Adebayor as vice-captain. In hindsight, it was a horrible decision, but it was also an indicator of the extent to which the lunatics had taken over the asylum. The artful way that Pochettino buried the likes of Kaboul and Adebayor for the rest of the campaign was testament to his man management skills and the way a previously leaky club was starting to tighten up.

Now, you could happily see any of Alderweireld, Danny Rose and Dier joining Lloris, Vertonghen and Kane among the Spurs leadership group.

No-one speaks in more positive tones of Pochettino than Lloris. The France and Spurs captain revealed to the Guardian not only how close he had coming to leaving the club, but also how immediate Pochettino’s impact was.

“I had some concern and I question a bit myself two years ago, after AVB and Tim Sherwood were in charge. I think the first meeting with Mauricio Pochettino was very clear for me, for my future. I think I trust him since the first second I meet him, and because I understand what he wants, fully agree about his football view. I can say we have the same football view and he’s brought a lot to the team and the players.”

“The credit is for the gaffer. I think he changed all, inside the training ground, inside the squad, it’s about his mentality, his personality. We can feel we improved a lot. We have a real identity now and, from outside, it’s very clear. We try to play good football but don’t forget that we need to be aggressive, especially in the Premier League.”

“If you’re not aggressive, it’s difficult to be competitive and so if you have a good philosophy of football, you add aggression, hunger, because of course we are young but we can feel the team is very hungry. It means a lot for me. It’s about competitive mentality. Now we can feel we are competitive, and ready to compete against any team.”

“We show this season a lot of character. Of course, it will be interesting what will happen next season but I think in the way we work, we are improving every month so it’s not about this season. It’s also about the next season and the project of the gaffer.”

Mentality. Hunger. Aggression. Project. These are the new buzzwords at Hotspur Way.

For decades, I feel we’ve misunderstood what Bill Nicholson was trying to tell us when he said “It’s no use just winning, we’ve got to win well.” For Nicholson, the winning part was assumed. In the Premier League era, Spurs have been so fixated on winning well that we’ve forgotten to win.

It turns out, winning matches and competing for the title is far more entertaining than playing pretty football and finishing 10th. We can add the flourishes in years to come, but first of all we must win.

I still believe the most exhilarating football that I have seen from a Spurs team in the Premier League era was for a short spell under Harry Redknapp. Gareth Bale was metamorphosing in front of our eyes from unlucky left back to world-class winger, leaving Aaron Lennon free on the other flank. With Luka Modric pulling the strings, the ball always seemed to find the right man.

Redknapp secured two top-four finishes, which sometimes gets forgotten, but his was a flame that burned brightly and then faded. Redknapp — you could imagine Levy cringing in embarrassment whenever the car window got wound down on transfer deadline day — carried so much baggage he needed a roof rack. Redknapp turned Spurs around, and history will judge him as a successful Spurs manager once his tiresome self-promotion fades, but it was never clear that he was able to put in the foundations for longer-term success.

At its best, the defining characteristic of Pochettino’s football has been the intensity, rather than the swagger.

There have been spells, usually in the biggest matches, when we’ve torn the opposition to shreds. Against Manchester United last season, once Spurs had the breakthrough, we savaged them. Likewise in the second half against Arsenal in 2014/15 when Harry Kane scored twice.

But to me, the peak Pochettino performance — not in result but in the manner it represented what the Argentine has been able to change in his two years in charge — came against Manchester City at the Etihad in February.

Manchester City, embarrassed by a thrashing at home to Leicester the previous weekend, were desperate to bounce back. An inconsistent team even before Manuel Pellegrini’s regime began to run out of steam, they were fired up against Spurs. For 80 minutes, Spurs absorbed City’s blows and got a few in of their own. Aguero buzzed around like a hornet and Yaya Toure strode forward like he used to in his prime, none of the old-man shuffling that was seen so often last campaign.

In the 81st minute, score 1-1, four Spurs players surrounded Toure like muggers in a dark alley, stealing first the ball, then the three points. Pochettino celebrated like we’d not seen before, because he must have known that this was not only a huge moment in the title race, but also a vindication of his methods. All that hard work on fitness and mentality, the drilling of the press so tired players could still execute it effectively late in a top-of-the-table clash, had come to fruition.

It was the clearest indication that the plan was working, even if Spurs would eventually come up just short.

“Going down like Tony Montana”

poch_stamfordbridge

Ultimately, while the match at the Etihad would be a high-water mark, the match that will be remembered last season is the Battle of the Bridge. It showed how far Spurs had come, but also the room for further growth.

Fans of other clubs say Spurs bottled it, ignoring with standard footballing myopia that Spurs were still in the title race with three games to go, unlike everyone else. Some Spurs fans were critical of the performance, considering the aggression unattractive and indicative of a team that had lost its head.

Comparing Spurs’ disappointment to Manchester City’s limp defeat against Real Madrid, the (brilliant) Rob Smyth wrote one of those pieces which seemed to capture my every thought at the time:

“Spurs and Manchester City both missed out on major prizes this week; one went down like Tony Montana, the other closed the door quietly behind them. As a neutral or a fan, what would you rather watch? … Spurs stood up to Chelsea in a way that would never have happened in the past, and that burst of aggression is intrinsically linked to other qualities that make this the best Spurs side in decades. It is almost impossible for a team to excel in the Premier League without those qualities. In their darkest hour, Spurs looked like winners.

“If that happened every week it would be an issue, but these were unique circumstances. Spurs gave a human response to crushing disappointment; as such, they deserved a bit more sympathy and a lot more empathy. They had been battling for the title all season, and saw it disappear, at a time when they were being goaded by 40,000 fans, not to mention a number of Chelsea players. What were they supposed to do, smile sweetly and take a selfie?”

I’ll view every game at Stamford Bridge through the prism of the misery of March 8, 2014. Watching Spurs go down all guns blazing made me feel proud. I can live with disappointment, I can’t live with surrender.

What the Battle of the Bridge showed, however, was that fighting and togetherness wasn’t enough. I don’t buy the argument that inexperience was the problem that night, given it was more experienced players like Mousa Dembele and Kyle Walker who lost their discipline first. When HMS Dier went into Destroyer mode, the game was already gone.

The 2-2 draw, more than the two defeats of an emotionally exhausted team that followed, highlighted what Spurs lacked, and offer the blueprint for what needs to happen next.

Spurs need better squad options when players are injured, rested or suspended. We need reliable impact players off the bench, both defensive and in attack. We need to get better at controlling games we are leading, and seeing out the close ones. When teams like Chelsea, who have world class players and who hate our guts, throw everything at us, we need to be able to withstand it better. We didn’t lose that night, even though it seemed that we did — but we needed to win.

In his first season, Pochettino got by with a makeshift central midfield of Bentaleb and Mason, who’d made a combined 24 senior appearances for Spurs before he took over. In his second season, Dele Alli and Eric Dier, combined Premier League midfield appearances zero, became first choice for club and country. Dembele, seemingly destined to see out his career at somewhere like Sunderland, finally found a way to fulfil the potential he’d flashed for the past ten years.

Can you imagine what Spurs will be capable of as the quality of the squad improves, with a squad that is a year older and a year wiser, and motivated by the anger of how the season ended? There are still a thousand things that can go wrong, not least given the unprecedented arms racing taking place among the big-money Premier League rivals while Spurs are forced to cut the cloth more conservatively while the stadium is financed. But optimism is no cause for embarrassment.

I wrote last season that Pochettino has an opportunity to build a dynasty at Spurs, and what encourages me more than anything is that he knows it too.

“When you compare Tottenham with big sides people can see our approach is for the long term. We have the youngest squad in the Premier League yet here we are fighting for the title. The project is fantastic, because we are ahead of the programme – we are only going to get better. This is true because for a lot of players this is their first season in the Premier League and next season they will be better because they will have more experience. In football you always need time to develop to your full quality.”

“It is impossible to set limits. It is also important to improve our squad because this is always our idea to improve. Our idea is to keep the main group for the next few years and to try and build and add players that can help us.”

I love the line about it being impossible to set limits. It’s going to be tough for Spurs to take that next step and win a title, but we will never have a better platform. Let season three begin of the Pochettino era begin.

Thanks for reading. Please follow me on Twitter for more Spurs chat.

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

Through the course of this campaign, I have been tracking the audience figures for Spurs matches.

This was an exercise born out of curiosity: I wanted to know how many people were actually tuning in to watch Premier League matches involving Spurs.

The tables contain the full data (explanatory notes are below) for the 2015/16 Premier League season, and also for the 2014/15 campaign. Green denotes matches with an audience over 1 million, red are matches below the threshold for the precise figure to be reported.

201516audience

201415audience

A few key numbers:

  • Spurs were shown 21 times on UK TV in 2015/16, compared with 18 in 2014/15.
  • The average audience for Spurs matches in 2015/16 was 1.13 million, up from 1.04 million in 2014/15.
  • The average audience for Spurs matches on Sky Sports was 1.23 million in 2015/16, up from 1.05 million in 2014/15.
  • The average audience for Spurs matches on BT Sport was 717,000 in 2015/16, down from 1.02 million in 2014/15. The figure for the home match against Chelsea in November on BT was not available.
  • The highest audience for a Spurs match in 2015/16 was 1.79 million against Arsenal (a). In 2014/15, the highest audience was 1.44 million against Manchester United (a). Not our best match, that one…

A few other thoughts:

*The audience varies greatly depending both on the opposition and the timing, as you would expect. The most watched match is normally the prime Sunday 4pm slot. Manchester United and Liverpool attract far more viewers than other teams — after 20 years of Mauricio Pochettino-inspired domination, Spurs will no doubt have a similar pull.

*The sample size is of course far too small to draw any big conclusions in terms of whether the Spurs audience has “increased” or not. But one thing I would note is that Spurs beat the 2014/15 maximum of 1.44 million on four occasions in 2015/16 — Arsenal (a), Man City (a), Man Utd (h) and Chelsea (a).

*Spurs were shown in the Sunday 4pm slot six times in 2015/16, averaging 1.57 million. In 2014/15, Spurs were shown seven times in the prime spot, averaging 1.07 million. Did the fact that Spurs were challenging for the title, rather than drifting around in Europa League contention, make a difference to neutral fans? Certainly, this average of 1.57 million is impressive and must encourage Sky to increase the number of Spurs games next campaign.

*Spurs were shown 21 times on UK television, up from 18 in 2014/15. Under the old TV deal, every extra match that was shown (above the minimum 10) earned an additional £747,176 in TV money (these facility fees account for 25 percent of the total TV pot). This campaign, Arsenal were shown more than any other team, in total 27 times. So simply for being chosen for broadcast, they earned £4.48 million more than Spurs in TV money. The Europa League hurts here, as it means Spurs can only be selected for the slots on Sunday or Monday after European matches, reducing the chances Spurs can secure additional facility fees.

*There were a couple of audiences that appeared disappointing. For BT to draw just 880,000 for a North London derby in March with title implications, and heralded as one of the biggest ever, seemed poor. Likewise attracting just 660,000 for the home match against Liverpool — Jurgen Klopp’s first in charge. The same channel’s failure to crack 590,000 for Spurs v Man City (this one was so low I don’t have the real number) was also below what may have been expected. Sky’s decision to show Spurs three times in a row on Monday night down the stretch didn’t really work for them any more than it did for Spurs. While the Battle of the Bridge was widely viewed, the matches against Stoke and West Brom did not capture the imagination. I hope Sky reconsiders such an unconventional choice should Spurs be competing for the title again in 2016/17 — it can’t have helped.

*The data doesn’t include pubs. However, this may change soon, if developments in the US are a guide.

*As those who follow me on Twitter are aware, I am a big critic of the TV rights system. I believe it short-changes UK fans of Premier League teams, and gives us a far inferior product to what is available everywhere else around the globe. The final day summed up the farce: The match at Old Trafford was abandoned, and instead of offering British viewers the chance to watch, say, Chelsea v Leicester or Newcastle v Spurs, which were being broadcast around the world, Sky Sports showed Swansea v Man City on two channels. I wrote about this issue extensively here — my feelings on the subject have not changed.

My comrade in audience figure monitoring, @Spurs_US, has shared his data for US viewers.

As you can see, the numbers are impressive and are part of a widely reported upward trend. As an unashamed Yankophile, I am delighted to see the English game making such huge strides. I will respond in kind by, erm, watching even more NFL in seasons to come.

Thanks for reading. Please follow me on Twitter for more Spurs chat.

* I use the seven-day data published by BARB, the body which monitors audience figures. The public data only encompasses the top 30 programmes per week, from ALL channels aside from the five main terrestrial ones, which are counted individually. This means certain matches (mostly European ones) don’t rate. If anyone has access to full BARB data, please get in touch. I use the threshold audience for the week in the averages, but it may be much lower.

This data averages the audience through the length of the programme, rather than the peak. It doesn’t include pubs, but it does include legal streaming. You can find out how it is gathered here. It isn’t perfect but it is the best data that is freely available for people like me without a corporate subscription. It enables consistent comparisons.

The Weekly Max: As well as Spurs, I list the most-watched match in that week among all teams, for purposes of comparison.

Deep Dive: Chelsea’s Stamford Bridge redevelopment — Trying to keep the train on the tracks

stamford-bridge-gates--a-design-competition.img

London is in the middle of a stadium arms race. Next season, West Ham will join Arsenal in playing at a 60,000 seater venue, while the new White Hart Lane, capacity 61,000, is finally starting to emerge from the ground and will be a world-class home for Spurs.

Not wanting to be left behind, Chelsea late last year announced plans for a 60,000 capacity stadium of their own to replace Stamford Bridge.

I have written extensively about the new Spurs stadium, and will continue to monitor developments through the construction phase. I have also covered the deal that secured West Ham the use of the Olympic Stadium, an agreement that has drawn strong criticism over value for money offered to the taxpayer.

In this post, I am going to examine Chelsea’s plans in some detail. Of all the stadium projects in London, it is arguably the most ambitious.

After years of trying and failing to secure an alternative site in West London, Chelsea in December last year unveiled plans to demolish Stamford Bridge (capacity 41,798) and replace it with a new 60,000 capacity stadium.

To achieve a bigger stadium, Chelsea’s architects have drawn up innovative plans to expand the boundaries of the site, raising all manner of issues that the planners at Hammersmith and Fulham London Borough Council and other authorities will have to weigh up in their decision-making process.

I have spent several weeks researching the proposals and soliciting information. In this post, I will discuss various aspects of the project including the complications arising from the need to construct over railway lines, matters relating to finance and housing, and potential security concerns.

From my research, it is clear that there are serious hurdles for Chelsea to overcome. I can reveal that certain aspects of the project are now being redesigned, and a further public consultation will be required, raising the possibility of delays.

Before I start, I want to make one thing clear: I have no objection to Chelsea building a new stadium. I am writing this piece as much to educate myself as anything — as regular readers know, I find these projects fascinating.

Football stadiums are our modern-day cathedrals, vast monuments to our devotion and places of congregation. Stamford Bridge had a 99.7% attendance in 2014/15, and if the club feels there is sufficient supporter demand, and local fans in particular are being prevented from attending, then of course they have every right to try to build a bigger stadium.

It makes no difference to me as a Spurs fan if Chelsea build a new stadium — I am sure we will show it due respect when we visit.

I welcome feedback and comments — these are huge documentation bundles and no doubt there are interesting things that I have not covered. If you want to read my previous “deep dives”, you can find them here. Full coverage on the Spurs stadium project can be found here. The planning documents are here.

Railways and delays

When I first looked at these plans in December last year, there was one aspect that immediately jumped out at me as being potentially problematic beyond the more typical planning issues associated with a project of this size. Namely, the need to build over railway lines.

While Spurs had to undergo the torturous process of compulsory purchases orders to acquire the necessary land, much of what Chelsea are attempting will be achieved by knocking down the existing stadium, “Chelsea Village” apartment blocks and the two hotels on site.

The club does not own the freehold of the stadium, which is held by the fan-owned Chelsea Pitch Owners. There is no agreement yet, as far as I am aware, but one assumes that eventually the club reaches a deal that enables them to proceed.

While this makes it easier, the problem Chelsea have is that the site simply isn’t big enough for a 60,000 seater stadium. To create enough space, the project will sprawl out, Blob-like, over both the District Line underground line, and the “Southern Mainline” on the eastern side. These maps show how the boundaries will expand:

MAPCOMP

Chelsea are planning major changes to Fulham Broadway underground station to create direct access, and will construct decking over the line. On the other side, the club will again construct decking, and trains will run under the East Stand (see image below).

As you can see from the maps, this is a considerable land grab by Chelsea. While the East Stand would go over the railway, the decking stretches out all the way across the “cutting” and up to Brompton Cemetery. It covers the length of the eastern side of the scheme, and connects up with Fulham Road.

While the District Line essentially going “underground” for another hundred metres is one thing, the Southern Mainline is an overground line. If you look along its route, from Clapham to Willesden Junction, nothing is built “over” it, with the notable exception of Earls Court Two (update 14.20pm: which is being demolished — thanks to Twitter user Ross Paul for pointing this out).

The line carries passenger services — London Overground and Southern — and is also the main freight route through the west side of London.

The Chelsea plan struck me as problematic for two reasons. One, this is public infrastructure and there must be limits to what is “allowed” in terms of private development going over the top of it. Two, a long covered section, quite tightly enclosed as the long-section shows, may pose maintenance and “future-proofing” problems.

East Stand Long Section

The authority that will ultimately decide whether Chelsea can build over the Southern Mainline is Network Rail, which also owns the land. I contacted them to get their view.

In addition to answering my questions on various matters, they provided a copy of their correspondence with Hammersmith and Fulham planners. These are public documents that are part of the planning process, but they have not yet been published online by the council, at least as far as I can see.

In its correspondence, Network Rail describes Chelsea’s plan as a “major operational liability” citing maintenance and safety concerns, and says it is yet to give its approval.

“Due to the East Stand sitting directly above the railway the new structure represents a potential major operation liability for us in terms of safeguarding future access for inspection and maintenance requirements and similar (and the ongoing cost implications of this) and also to ensure that the appropriate railway standards are followed in this design to safeguard the safety of the railway and the travelling public.”

The correspondence also reveals that changes are being made to the design of the eastern decking, and these changes will require a further public consultation phase.

“We understand design of the deck is undergoing significant revision due to recent planning objections relating to neighboring properties immediately east of the stadium, and that both the height and the horizontal extent of the deck are likely to change.

“We look forward to reviewing the amendments as they are prepared, via the APA (Asset Protection Agreement), and will write to you again following the further public consultation phase that will take place when these plans are formally submitted to the LPA (local planning authority)”.

Network Rail notes that the redesign, as of the February date of the letter, was at too early a stage for engineers to approve.

As Network Rail makes clear, an “Asset Protection Agreement” would need to be reached between the rail authority and Chelsea before planning permission can be granted. Alternatively, conditions requiring Network Rail’s consent could be inserted into a planning agreement. It warns that as the stadium offers no “operational benefit” for railway users, the taxpayer should not be liable for any increased maintenance obligations or liabilities arising from the project.

Simply put, until Chelsea can come up with a design on the eastern side of the project that satisfies Network Rail in terms of maintenance, safety and cost, the project cannot proceed. The need for a further public consultation will mean delays.

Right to light and other issues

While the railway poses a specific and major headache, a project of this scale inevitably raises a host of more run-of-the-mill planning issues.

In its planning statement, the club identifies issues such as traffic, “right to light”, noise, air quality and so forth, and presents its arguments of how it feels the scheme complies with the many codes and standards in place to control development in London.

For example, Chelsea argue that the construction of a direct access to a rebuilt Fulham Broadway station will reduce congestion on Fulham Road on match days. It may well, but it should be noted that the proposed eastern decking creates a whole new egress onto Fulham Road just a 100 yards or so down the road. These are factors the planners will weigh in their deliberations.

One issue of concern will be “right to light” — the principle that new developments should not tower over other buildings and block out their sunlight. For 60,000 capacity stadiums in residential areas, this is tricky.

In its planning statement, Chelsea note that “moderate (significant) adverse effects as a result of a loss of daylight are limited to only one property.”

Looking at the plans, my best guess is that this is one of the properties immediately north of the site, in the Brompton Park development. As you can see from the comparison below, the new north stand will be much taller, and closer to the houses the other side of the District Line. I am sure the planners would want to scrutinize this assessment closely — the wording strikes me as rather careful.

NS Long Section Comp

From my reading of the other maps and drawings, the properties to the south have long been overshadowed by Chelsea Village, and the new stadium won’t be any closer or taller on this side.

On the western side are the Sir Oswald Stoll Mansions, which houses disabled and vulnerable veterans. From my reading of the plans, the West Stand won’t be significantly taller or closer than it already is. However, three years of demolition and reconstruction work, not to mention increased traffic from 19,000 additional supporters, may not be welcomed by residents and managers of this community.

The good news for Chelsea is that there don’t appear to be significant heritage issues. Spurs, by contrast, had to seek consent to demolish three listed buildings, which delayed the project and created risk in securing all of the required approvals.

There is a one conservation issue to overcome. Running parallel to the Southern Mainline is a “cutting”, a sliver of green — so precious in London — called the Billings and Brompton Cutting Conservation Area. The planned decking on the eastern side will cover this.

Chelsea’s planning statement identifies the line of argument that the club may take. It cites a previously consented scheme (since renewed) to construct a railway station for Chelsea Village where the cutting stands. The club will be hoping that no-one has identified any new bat colonies or rare newts in the intervening years.

Blank slate, blank cheque

Having read through Chelsea’s planning statement, nowhere does it mention how much the scheme will cost, or how the club intends to pay for it.

A vague figure of £500 million has been put about, but quite how this was arrived at is not clear. The club has provided no details of how it will secure the funding. The assumption is that Roman Abramovich will ultimately fill in any gaps in the financing, but even for someone worth many billions of pounds, we are talking potentially large amounts of money.

As I have previously mentioned, the Spurs scheme will cost between £675 million and £750 million in total. Spurs chairman Daniel Levy has put the cost of the stadium itself at about £500 million.

For Spurs, the main cost beyond the construction itself was securing the necessary land. For Chelsea, depending on the deal struck with Chelsea Pitch Owners, the biggest cost may come from needing to rebuild Chelsea VIllage.

The two hotels on site will be demolished and not rebuilt — the planning statement notes that “it is assumed a proportion of hotel employees will be redeployed elsewhere in the proposed development” but makes no promises, potentially undermining the arguments that the redevelopment will boost the local economy through creating jobs.

But you can’t simply demolish housing. Chelsea Village has 38 apartments with total floor space of 4,005 square metres, and Chelsea must find an alternative site and rebuild it. This will be both difficult and enormously expensive in Hammersmith and Fulham.

As for the build itself, construction over railways sounds expensive and difficult, but this isn’t my area of expertise. I’d welcome any suggestions.

For Spurs, clear plans on financing the stadium were required to secure compulsory purchase orders, from my understanding of the court documents in the Archway case. The club needed to demonstrate that it had viable plans for completing its planned scheme, and wasn’t merely using the stadium proposals as a pretext to acquire the land.

Chelsea may need to demonstrate a similar viability to reach a deal with Chelsea Pitch Owners, who may be concerned that such a grandiose scheme is a merely a ruse to secure the freehold.

One other area of additional cost will be compensation to Network Rail for building over the Southern Mainline, if maintenance and safety concerns can be assuaged (likewise TFL for construction over the District Line).

A Network Rail spokesman told me that each development that requires construction over a railway is treated on merit. But, if Chelsea are given the go-ahead, Network Rail will surely require significant compensation both to cover any foreseen future costs, and also to extract a sufficient “pound of flesh” to discourage other well-heeled individuals or expanding businesses from seeing a precedent in Chelsea’s plans to build over its land.

Safety concerns

As previously mentioned, the Southern Mainline is a major freight route as well as a route for passenger services. Having used West Brompton station frequently, I can attest to how often these massive freight trains rumble through.

There is one particular type of freight that travels along the line which may give the planners pause before giving Chelsea permission to build a stadium over the top of it — nuclear waste.

Trains operated by Direct Rail Services carry nuclear waste on the Southern Mainline, from the defueling work at the Dungeness B nuclear power station in Kent, through west London to Willesden Junction, and then onwards to wherever the hell it goes.

In 2006, Greenpeace published a schedule of these “nuclear trains” — if the same schedule remains in place, the trains rumble through West Brompton at 7.15pm on Monday, Wednesday or Thursday evenings. You don’t have to be Frederick Forsyth to envisage the potential — however microscopic — for Europa League nights Chez Roman to suddenly become a lot more interesting.

Trying to establish whether these trains still run, and whether there is any serious risk here, is pretty hard — after all, the schedule is supposed to be a secret.

I checked in with David Polden, an anti-nuclear campaigner who follows nuclear train issues closely, and he confirmed that the trains do indeed still run, and will continue to do so until Dungeness B is shut down (initial target date 2008, latest target date 2028).

The risk from these trains is threefold: fire, radiation leaks and terrorism.

According to Polden, the design of the decking above the railway — with an opening at one side, rather than a standard tunnel — reduces the risk of an intense fire that would burn above the 800 degrees C that the nuclear “flasks” carrying the spent fuel rods are tested to withstand (an oil fire in a standard tunnel can burn at 2000 degrees C). The risk from radiation is insignificant from passing trains — this is only a problem when nuclear trains, which leak continuously, spend time in sidings.

However, concerns over terrorism have been considered in relation to sporting events in London. Trains carrying spent fuel from the Sizewell A nuclear station in Suffolk, which normally pass through the Olympic park, were stopped a month before the 2012 games, and for its duration, per Polden.

“Having nuclear trains running under a Chelsea grandstand would surely also constitute a tempting target for a terrorist wanting a high-publicity, perhaps high-casualty, target,” Polden said.

I contacted Direct Rail Services, which operates Britain’s nuclear trains. They said they had not yet been notified by Network Rail. In this type of situation, plans first have to be approved by Network Rail, and then train operators get the chance to raise concerns. Network Rail said it doesn’t anticipate any significant issues with operators. The Nuclear Decommissioning Authority — and this is a sentence I never envisaged writing as a football blogger — did not respond to requests to comment.

How real a problem is this? I have tried to contact various experts or organisations without success — funnily enough, when you ask people about this sort of thing, more likely than not they think you are nuts.

(Greenpeace, who published the original research, should have been the exception and have proven particularly frustrating to deal with — they have certainly lived up to their reputation as being more interested in celebrity campaigns than answering legitimate questions on environmental issues.)

Evidently, we are talking a tiny percentage of a tiny percentage in likelihood that anything goes wrong. The same trains have been running under Earls Court Two quite safely since it was constructed. Halting nuclear trains, if done from a security perspective, was just one of a number of elaborate security measures taken during the Olympics. Authorities also put surface-to-air missile on top of tower blocks in anticipation of… well, whatever crazy scenario they had gamed out as an excuse to show off their toys and reassure the public.

But, looking at things from another perspective, does running trains carrying nuclear waste under a 60,000 seater stadium seem like a remotely sensible idea?

If this all feels far-fetched, even running standard passenger trains through a tight space under a crowded stadium poses a risk.

The terrorist attacks targeting the Stade de France last year underscore the issue of stadium security. Any new development that creates a security issue of any kind, no matter how microscopic in likelihood and crazy sounding, will draw scrutiny from authorities in the current environment.

Final thought

The issues I have outlined are just a few of those in play, What Chelsea are attempting is both hugely ambitious, and fraught with risk. Chelsea only need to look at Spurs to see how many obstacles they will need to overcome before they can begin work. If even one link in the chain is weak, that could mean years of delays as legal cases crawl through the courts. There is nothing about building a 60,000 seater stadium in London that is easy — and frankly, it should be hard.

Chelsea originally planned to begin work in the 2017/18 season, but with Spurs close to announcing an agreement with the FA for Wembley and reservations over the ability of the stadium to host two teams at the same time, it would appear likely that Chelsea are already aware that the timetable is slipping.

Per journalist Dan Levene, there are other indications that Chelsea will still be at Stamford Bridge in 2017/18:

The first indications were well-sourced suggestions that corporate hospitality at The Bridge was still being sold on a two and three season basis – suggesting that a move to Wembley, or some other location, may be further off than anticipated. There is also intelligence leaking out that matchday ancillary staff, whose service would almost certainly not be required during any period at Wembley, have been told their jobs will remain safe beyond the end of next season.

I am certain, when Chelsea set out on this plan, they would have done so expecting a detailed back-and-forth with planners and the need to make alterations. Spurs went through the same process in getting approval from the planners in Haringey.

In a club statement in December, Chelsea hinted at exactly this:

“The planning process will last beyond the end of the season; if the application is granted planning permission there will still be a lot of work to do before redevelopment can start, including obtaining various other consents.”

As I said at the top of the story, I have no objections to Chelsea building a bigger stadium — as far as I’m concerned as a Spurs fan, bring it on.

Looking at what is planned, Chelsea appear to be going to quite extraordinary lengths and expense for a significantly smaller capacity increase than Spurs. While Spurs’ capacity will increase by 68 percent, for Chelsea it will increase by 43.5 percent. [Update: I’ve corrected these percentages, maths never my strongest suit…]

Your wonder, if Network Rail is ultimately unwilling to give approval to the plans, whether there are other ways to expand the stadium on the existing site without spilling over above the railway? It may not achieve a 60,000 capacity to match Spurs, Arsenal and West Ham, but Chelsea may be able to get closer.

As Chelsea note though, it isn’t just capacity that necessitates a new stadium, but also inadequate amenities and issues of access and egress that many supporters who travel to the Bridge will have experienced. There may be some alternatives in the new design with a smaller East Stand that doesn’t cover the railway tracks. It may not be quite the monument that Chelsea and Mr Abramovich desire, but it would fulfill the purpose of a new and better stadium.

Whatever happens, Chelsea fans will eagerly await further news of the redevelopment, as will local residents and businesses. In the meantime, as last Monday proved, Stamford Bridge is still a characterful and atmospheric football stadium, at least when Spurs are the opposition.

Thanks for reading. Please follow me on Twitter for more chat. Contact details in the About page.

 

Update: 10/05/16 10:00am.

In this piece I quoted journalist Dan Levene, who has covered the Chelsea stadium more closely than anyone . He sent a detailed response to my article — it fills in a number of gaps, and adds valuable perspective. As I said in the piece, there are bound to be things I have missed or misunderstood — the great pleasure of these “deep dives” is the quality of feedback they receive. Below is Dan’s response in full:

This is a very well researched and written article, rightly turning a critical eye to several aspects of Chelsea’s proposed major development.

However, as one who has spent a great deal of time researching and writing about some of the issues you raise, I felt a number of points needed addressing.

Chelsea Pitch Owners (CPO)

Chelsea Football Club does not need ownership of the freehold to demolish and rebuild Stamford Bridge. It was the general understanding that its owner did at least want this, hence the battle in 2011 to obtain it. However, the current intelligence is that this desire is cooling: framed, not least, by the knowledge that this may now be an unobtainable goal.

The desire to own the freehold was understood to be linked, in part, to the wish to access external funding streams: ie. a cash for equity swap. In recent weeks, there has been speculation that a major extension of the lease to, say, 999 years may provide the permanence in residence the club would need to attract a venture capital partner.

Network Rail

This article relies heavily upon the ‘major operational liability’ phrase used by Network Rail in its planning submission. Having previously worked in the area of Network Rail’s economic and safety regulation for some years, I have a reasonable understanding of this particular area of the project.

I can say with certainty that, following the Gerrards Cross tunnel collapse in 2005 (where a Tesco superstore was being built over the railway), Network Rail has been pushed to consider pretty much all such proposed development as a ‘major operational liability’. In part, this is because of a drive to re-evaluate it’s risk assessment procedures, biut it is also used as a bargaining tool at the planning stage of developments.

Network Rail is required to extract the maximum potential value from usable land, as a funding stream, at a time when the government is attempting to drive down its direct cost to the taxpayer. Thus, while the terms of any such deal to build over the railway will be a matter of commercial posturing, there will be an expectation there there will be a will to go ahead.

One issue that this article fails to address, and which has presented itself as a huge red flag (at least to me) from day one, is that the plans seem to require construction to take place over a live, working railway. I would be surprised if, with hindsight of the Gerrards Cross case, Network Rail’s risk management procedures would allow that to happen. If they do not, then that will significantly impact on the build times.

Nuclear trains

While I share the author’s concerns about the freighting of nuclear waste around the country by railway, there is a little context needed here.

This is a practice that has gone on for decades. It is impossible to say that any risk stands at precisely zero, but the extent to which waste in these trains is insulated, and the incredibly high safety bar employed these days in the nuclear industry, mean that the risks here are as close to zero as is practicable.

These trains pass in close proximity to large numbers of people practically every day. Stand on the platform at Willesden Junction from 7.30pm to 8.30pm on a weekday evening and you are almost guaranteed to see one pass by. (I am not raising any security risk by revealing this – timetables are well publicised online). While I have strong personal reservations about the use of nuclear power, and the environmental risks attached to the disposal of its unwanted produce, being aware of the risks I had absolutely no concerns standing by as one of these quarter-mile long trains passed within a yard of my nose last Thursday evening.

While nuclear freight movements were, indeed, halted for the period of the Olympics, they have been permitted to run without incident directly underneath concerts and other major visitor attraction events at Earls Court for many years.

Rebuilding Chelsea Village

While the plans include an undertaking to provide alternative residential accommodation, to the same standard and value, elsewhere within the borough for existing Stamford Bridge residents, they say nothing about ‘building’ these. While I have no particular intelligence in this area, it may be worth noting that the Earls Court Masterplan includes a proposal for 7,500 new homes of a similar style, and to a parallel (or higher) standard, at the other end of Brompton Cemetery. There have been plenty of recent column inches devoted to the saturation of the luxury apartment market caused by this, and the Battersea Power Station development, and the difficulty developers are now having in shifting these units.

I make these points on an entirely personal basis, and don’t seek to represent anyone else in doing so. It is right to scrutinise Chelsea’s plans here, and in my submission there are a number of areas in which they don’t entirely stand up to the most severe testing. However, particularly as I am quoted in your piece, I thought it important to address a number of misapprehensions the piece appears to promote.

 

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

ACF Fiorentina v Tottenham Hotspur FC - UEFA Europa League Round of 32

Where are they now? Spurs 2014/15 vintage. Via Getty Images

Tottenham Hotspur on Thursday published its accounts covering the 2014/15 campaign, and there are a number of points of interest for fans.

In the previous set of accounts, the club recorded a stonking £80 million pre-tax profit, in large part due to the sale of Gareth Bale to Real Madrid. This year’s financial statement marks a return to normalcy — Spurs is a fundamentally profitable football club, as the pre-tax profit of £12 million shows.

While healthy, the accounts reflect the transitional season the club had on the pitch in the 2014/15 campaign. It was yet another new dawn for Spurs, with Mauricio Pochettino taking charge after the debacle of the Tim Sherwood appointment.

For the first half of the season, it appeared like it could be another false dawn — once again, the big names in the squad, including some of those purchased with the Bale money, failed to contribute as much as they should. But then, things started to change — Pochettino turned to youth, Harry Kane emerged, we beat Chelsea 5-3, and the future of the club fundamentally changed.

With the accounts ending in June 2015, the good times are yet to show on the bottom line. Future statements will be boosted by our strong league campaign in 2015/16, Champions League football and whatever else is in store for this Tottenham 2.0 that has emerged.

This accounts speak to how far the club has come since last summer. It seems such a long time ago, doesn’t it? All that angst over the lack of a defensive midfielder, players like Erik Lamela and Mousa Dembele seemingly on the way out, a shortage of striking options (OK, so not everything has changed).

Meanwhile, flat match-day revenues and commercial income far behind the likes of Liverpool and Arsenal are a reminder of how far we still have to go. A season-ticket waiting list of 50,000 illustrates just how desperate the club is to get the new stadium built.

Below are a few notes from the accounts. I welcome feedback and any insight you can give me on some of the more technical aspects.

 

Revenue — AIA deal kicks in

Spurs revenue

The club has changed the way it accounts for revenues, making UEFA prize money a separate category and altering what is allocated as commercial income and match-day income. I’m sure there were good reasons for doing this, but it makes comparisons — both with previous years and to other clubs — harder.

Commercial revenue grew from £43.3 million to £59.9 million, in large part due to the start of the shirt sponsorship deal with AIA. This deal is reportedly worth £16 million per year, and runs for five seasons. Merchandising revenue grew from £11 million to £12.3 million.

Match-day revenues were £41.2 million, down slightly from £42.4 million in 2014. Premier League match-day revenues were £22.3 million — in 2014 they were £22.4 million. With season ticket prices frozen and White Hart Lane almost always sold out in the Premier League, this segment will remain flat until Spurs complete the new stadium.

Champions League qualification may allow the club to take in a little more on the gate — but that won’t show up until the accounts after next (so in two years).

The share of the Premier League TV pot was up by £1 million as we finished fifth, as opposed to sixth. Next season, that share should be considerably higher — we will be shown more on UK TV due to our involvement in the title race, which means more in “facility fees”, and our performance-related payment will be higher as we should finish at least third. The new Premier League TV deal kicks in next season, so again this won’t show up until the accounts published in two years time.

In both commercial terms, and match-day terms, Spurs remain an absolute mile behind some competitors. Liverpool, for example, reported commercial income of £116.4 million in their last accounts — approaching double what Spurs achieved. Liverpool’s matchday revenue was also considerably higher, at £59 million, compared to our £41.9 million.

We are punching above our weight, massively.

 

Player trading — a return to pragmatism

There was an “after the Lord Mayor’s Show” feel to the club’s transfer activity after the Gareth Bale sale and Franco Baldini’s trolley dash the previous year.

It many ways, it was a return to the “pragmatic player trading” that Daniel Levy has adopted throughout his tenure in charge of the club. Spurs hunted for value in the market, and sought to extract top rates when selling players.

The hunt for value is hard, and there will be hits and misses: it turned out Federico Fazio was cheaper than Mateo Musacchio for a reason, likewise Benji Stambouli vis-a-vis Morgan Schneiderlin. But there were also huge successes: Dele Alli and Eric Dier cost around £9 million combined, value for the bromance alone.

Outgoing, Spurs managed to bring in good fees for the likes of Jake Livermore, Michael Dawson, Kyle Naughton, Sandro and Zeki Fryers (Palace no doubt regret that one).

There is no detail on the deal that saw Michel Vorm and Ben Davies move to Spurs from Swansea, with Gylfi Sigurdsson and a certain amount of cash going the other way. FC Utrecht have referred Swansea to the Court of Arbitration for Sport over this deal, arguing they were due a sell-on fee.

Profit on player sales (or, disposal of intangible assets, as it is termed) was nominally £21.2 million, compared with £104 million in 2014. This figure isn’t however particularly helpful due to the way clubs account for transfers — I’ll explain this in detail at the bottom for those who are interested.

 

Wages — Keeping close controlSpurs wages

The amount spent on wages was virtually flat in the past year, at £100.8 million compared with £100.4 million in 2014.

With revenues up, this means Spurs spent 51.4 percent of its turnover on wages, down from 55.6 percent. This is the lowest it has been since 2008, when it dipped down to 46.1 percent. This “wages-to-turnover” ratio is an indicator of how efficiently a club (or any business) is run.

I will be interested to see how the wage bill develops in the next accounts. Per the post balance sheet events, a lot of high earners — Emmanuel Adebayor, Roberto Soldado, Paulinho, Aaron Lennon — will soon come off the books. The replacements have generally been younger, and therefore cheaper.

Wages-to-turnover is also an important number in the context of the financing for the new stadium.

In the Viability Report for the scheme, produced by KPMG, the club appears to set a target for wages-to-turnover of 45 percent. (It actually states “player costs”, which I read to be wages but not transfers). If the club can get below this, the “internal rate of return” — a measure for rate of return for investors — could increase.

How realistic is this? In 2008, Spurs came very close with wages-to-turnover of 46.1 percent — but since then, wages for Premier League footballers have soared. For Arsenal, the only other club to have gone through a similarly large stadium project, one imagines a similar target was in place. In 2007, the first year at the Emirates, their wages-to-turnover was 51 percent. This dipped to 49 percent in 2008, and 46 percent in 2009. But since then it has increased — it hit 64 percent in 2013, the last year of the “old” TV deal.

Next year, I’d expect Spurs’ wage bill to be lower, improving the ratio further. The following year, the next TV deal kicks and we should have Champions League football, so greater revenues offer more scope for wage rises and the addition of big contracts to the books. We may alse be playing in a bigger stadium, although any additional income may be offset by rent for either Wembley or the Olympic Stadium. The year after that, we (hopefully) will be in the new stadium, with far higher matchday revenue.

Nonetheless, a wages-to-turnover ratio of 45 percent is very low — most Premier League clubs are between 55 and 65 percent.

This isn’t to say Spurs will fall into the sea and disappear if the club doesn’t hit the 45 percent target — it’s just one number. But it is something to keep in mind, particularly during transfer windows when the clamour to add to the squad is at its strongest. There will be funds, and room in the budget, to add quality and make sure our rising stars are paid what they deserve. But there will be limits.

 

Stadium and staff — A holding pattern

In the previous financial year, the club spent £19 million on the new stadium scheme, bringing total spending to £59 million. The money was spent on professional fees and “enabling works” — preparing the site for construction.

A lot has happened since June 30th, and one imagines the next accounts will show a considerably higher spend. The club secured planning permission from Haringey Council in December, and is pushing ahead with groundworks while the project crawls through the approvals process.

Daniel Levy recently stated that the club was now functioning as essentially two businesses — the football club, and the stadium project. He also noted that there were now around 70 people working full-time on the stadium side.

The headcount does not fully reflect this. Staff employed has increased from 380 to 399 (this is measured as the average number of employees through the year). Administrative staff have increased by eight, commercial staff by seven, while football staff was up by four. The “stadium” team may have been expanded since June 30, or involves existing staff.

I recently wrote in some detail about headcounts at Premier League clubs — it appeared to offer another useful, if crude, gauge of how efficient some clubs were (or weren’t).

For example, Aston Villa’s headcount rose from 496 to 535 in the past year, and its wage bill rose 21 percent. Spurs kept its headcount below 400, and even though the number of staff did increase by 19, the wage bill remained flat. Spurs is a tight ship, in comparison to a lot of Premier League clubs.

It should be noted, one area where remuneration did increase was in the boardroom. The amount paid to directors rose from £3.60 million to £4.33 million. Daniel Levy (assuredly the highest paid director) saw his pay packet increase from £2.17 million to £2.61 million. In the world of executive pay, the only way is up.

 

One-off costs — higher than expected redundancy pay-outs

One area that has puzzled me is the amount paid out in “redundancy costs and onerous employment contracts”.

In the previous year, in which Andre Villas-Boas and his backroom staff was sacked, the amount paid out was £4.66 million. This year, the amount has risen to to £6.49 million.

“Tactics” Tim Sherwood would have been due a payout when he was replaced six months into an 18 month contract. The club also paid off the remainder of Benoit Assou-Ekotto’s contract. But I can’t see how that adds up to £6.49 million.

In the notes explaining why costs had risen from £154.1 million to £162.4 million, one of the reasons stated was “recognition of onerous contracts”. This is interesting phrasing, due to the fact that it didn’t state redundancy costs.

One wonders if, as well as Assou-Ekotto, some of the other players who were frozen out were treated as “onerous” — perhaps Emmanuel Adebayor? I would have expected Adebayor’s pay-off to be included in the next accounts as he left the club in September 2015, but perhaps the club had already begun the process of writing him off as an asset (as well as a footballer) before the end of June 2015, essentially taking the hit early in a profitable year.

I’d welcome any explanations for this — it may well be that I’m missing something obvious.

Some other notes

  • The club has net debt of £20.3 million. In the prior year, it had net cash of £3.2 million. This figure is going to look quaint in years to come, with borrowing of at least £350 million lined up for the stadium
  • There has been no significant change in ownership of the club. ENIC has marginally increased its stake, from 85.46 percent to 85.55 percent. As far as I am aware, the next largest shareholder remains Lord Ashcroft, who those interested in British politics will know…
  • The section explaining how costs rose from £154.1 million to £162.4 million contained another interesting comment. As well as “recognition of onerous contracts” and “underlying growth of the club as we move towards the new stadium”, it also points to “post-season tour costs”. I for one would be interested to know how much this post-season tour brought in revenue-wise, or whether it is part of the AIA sponsorship deal. It all felt very unnecessary, footballing wise.

Thanks for reading, comments welcome. A note on player trading is below, Please follow me on Twitter for more Spurs chat.

 

A guide to player trading in Premier League club accounts

When a player is sold, the full amount is booked immediately. But when a player is bought, that expenditure is spread over the length of a contract — this is known as amortisation.

So for example, take Paulinho: he was bought for £17 million and signed a four-year contract. Spurs sold him two years later for around £10 million.

Instead of booking a £17 million cost when they purchased Paulinho, Spurs will write down that £17 million over the length of his contract — so in Paulinho’s case, £4.25 million per year for four years.

In accounting terms, the “value” of Paulinho will decrease by that same amount through the course of his four-year contract. In his first year, his value in the accounts is £12.75 million (so £17 million less one year of amortisation), in his second year, its is £8.5 million. In his third year, it is £4.25 million, and zero in the final year.

When a club calculates profit from a player sale, it deducts the remaining value in accounts from the cash sale amount.

So when Spurs sold Paulinho after two years for £10 million, in cash terms Spurs have lost £7 million on the initial £17 million fee. But in accounting terms, you deduct the remaining value in accounts — in Paulinho’s case, £8.5 million — from the £10 million sale fee, and Spurs have actually made a profit of £1.5 million.

If that makes your head spin, join the club. But making £1.5 million is so much more fun that losing £7 million, so there we have it.

(Thanks to @sumeer1000 for checking my figures. As he points out, you also need to factor in agent fees, so Spurs may actually have capitalised more than £17 million. For more on this, read any of Swiss Ramble’s analysis of Premier League accounts — it is a repeated point of emphasis.)

The next accounts will make for interesting reading — four of the seven Bale money signings were sold, all for cash losses. However, with the magic of amortisation, all bar Roberto Soldado should show (agent fees permitting) an accounting profit. The profit on player sales may be somewhat higher than expected next season, even though, in cash terms, Spurs’ net spend has basically been zero.