Category Archives: Football Finance

The Spurs Report: Final Call

I’m calling time on The Spurs Report, and moving my writing to Medium.

It’s been a good run — with 117 posts over two and a half years, ranging from in-depth stadium reporting and financial analysis to rants about Jamie Redknapp. In total, there have been more than 332,000 views from 260,000 visitors — a drop in the ocean compared to bigger websites, but not bad for a tiny little blog way out on its own on the fringes of the Spurs internet community.

However, I’m now keen to focus on other things. I’ll still be writing about Spurs — with a focus on the business side of the club — but by moving my writing to my personal page on Medium, it will enable me to push out into other topics as well.

I will remain busy on Twitter, and look forward to keeping in touch with many of my regular readers on there. For those wanting to get in touch, my email is spursreport@gmx.co.uk.

I’ll keep this blog up — it’s a useful reference tool, and costs nothing. There’s loads in the archives — categories include the new stadium and the club’s finances.

If I’m proud of one piece above all, it’s the long read on Mauricio Pochettino from July 2016. We’re in great hands.

Thanks to everyone who has supported this blog — it’s been a blast.

Charles

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It’s time for Spurs to shatter the wage structure

By Charles Richards / @spurs_report

For the past three seasons, Spurs have been engaged in a high-wire act, trying to bridge the chasm between the Premier League’s financial elite and also-rans, on a far smaller budget while investing £800m in a shiny new stadium.

Thanks to the brilliant work of Mauricio Pochettino, the discovery of a superstar striker from within the academy and the assembly of a strong and cohesive core of players, Spurs have managed to defy gravity. But now, with the new stadium rising from the ground and the end within touching distance, Spurs have started to sway.

Much has already been written about Danny Rose’s uncomfortable (you can pick your own adjective) comments about the club’s strategy and ambition, and I don’t want rehash these arguments. I’d recommend this excellent piece by Daniel Storey on the context of the comments, and this piece by Alan Fisher captured a lot of my torn emotions about the summer Spurs have had.

Instead, I want to look at what Spurs can do to respond on one of the key issues raised by Rose: the club’s wage structure.

(I’ve recently looked at transfer spending, as well as stadium spending — for new readers, there’s plenty in the archives to get stuck into on the stadium and finances.)

For the past three years, the Spurs wage bill has been more or less flat, hovering around £100m. It is the sixth highest in the league, per the last set of financials. Arsenal have the fifth highest wage bill, and at £195m it is almost double Tottenham’s.

The wage structure at Spurs is widely reported as being a series of tiers. Hugo Lloris and Harry Kane are on top, earning around £100,000 per week. Then there is a tight band of senior players on a tier below, earning between £60,000 and £80,000 — the likes of Toby Alderweireld, Jan Vertonghen and Christian Eriksen — followed by younger players such as Dele and Eric Dier, who are regularly rolled onto new deals until they reach the second tier.

It has been a structure that has worked — the team has performed on the field, and seems to genuinely get along off it. It appears that Pochettino has wanted to maintain this balance for the sake of squad unity, rather than risk bringing in expensive players on higher levels that may disturb the status quo. Up until now, Levy and Pochettino have done a good job of persuading current players to sign new deals and buy into this structure, even if at a discount to what they could earn elsewhere.

The approach was always going to run its course eventually. The question now is: has that moment arrived?

Daniel Levy is a stubborn man, and his reaction to Rose’s interview may well be entrenchment. After all, Rose only recently renewed his contract — no-one forced him to sign it, and contracts should be honoured. Pochettino appears to genuinely be on the same wavelength as Levy on wages and spending, and in his pre-match press conference on Friday, made exactly this point.

As principled a stance as this is, it’s also a losing one — players invariably end up getting what they want.

If the frustration was limited to Rose, perhaps he could be quickly shifted up to Manchester United, the money banked, and a new left back sought. But, as widely reported, it seems that Rose’s views on uncompetitive wages are shared by many within the Spurs squad.

Here’s a simple chart of revenue vs wages. The figures are from club accounts, until financial year 2016. For 2017, I’ve estimated revenue conservatively, based on known changes to PL and UEFA money; wages is harder, but I’ve attempted to gauge the shift in total wage spend based on the comings and goings and contract renewals in past 12 months as reported in the media. The figure that came out was about £115m — it’s very rough, but I want to at least illustrate it.

Rev v Wages to 2017

As you can see, wages are starting to diverge a long way from revenue. It’s really quite a big gap now — too big, from the perspective of the players.

WHAT CAN SPURS DO?

A few ideas have been floated in terms of how Spurs can address the frustration within the camp, and see off any potential mutiny. A unilateral wage bump, a lifting of the ceiling, or an expanded bonus pot for on-field performance. But these seem reactive, like trying to stick something that is broken back together, knowing it’ll never quite be the same.

It may simply be time to accept that the status quo has changed, abandon the wage structure altogether, and deal with player contracts on a case-by-case basis.

It’s risky, but if players are complaining in public about being underpaid and about a lack of squad strength, they are less likely to be disappointed to see new signings or current teammates suddenly earning a lot more than them. Instead of the goal of the wage structure being unity, it becomes about ambition — players see teammates’ earnings jump, and accept it in the knowledge that the club is trying everything to win (and that their turn will come).

Levy isn’t stupid — he knows that he’s had the benefit of a relatively low wage bill for several years, enabling him to shovel money into the stadium project. There was always going to come a time when this ended. For several years now, we’ve been talking about Spurs being a “young” team, and they’ve been paid like it. Relatively, Spurs may still be quite young, but actually, this is a group of players in their prime. Of the core 15 or 16, only Winks and Dele are under 23. Kane is 24, Eriksen 25, Trippier 26 — these aren’t kids.

The wage structure has increasingly become a limitation. Players who could have strengthened the team — Sadio Mane for example — have gone elsewhere, forcing Spurs to settle for poorer alternatives.

How would this new approach work in practice? Next up on the contract list is surely Alderweireld — he’s one of the best CBs in the league, so pay him like it, even if it is more than Lloris and Kane. Toby isn’t stupid — he knows what he is worth, and simply isn’t going to accept that what should be the biggest deal of his career is far below market rate. After Toby, it is probably Eric Dier’s turn — again, pay him close to what he is worth, or at least match the highest earners. Spurs need to be realistic — to lose one of the best back five in the league last season is unfortunate, to lose three or four would be careless.

(BTW, I utterly disagree with the “he’s earning more in week than most people earn in a year so he should shut up” complaint — elite sportspeople have enormously valuable skills and very short careers that can end in an instant. They are also humans — people want to earn what they are worth.)

Spurs can never top what these players could earn at Man City — clubs fueled by petrodollars will always be able to outbid those run rationally. But Spurs can offer a competitive wage, in a team that can contend for the title, a manager they respect, London and the best new stadium in Europe from next summer. It’s not a bad pitch.

CAN SPURS AFFORD THIS?

“Hang on”, you’re probably thinking, “how on earth are Spurs going to pay for this?”

I was going to go into a big spiel here with numbers and projections, but ultimately, there is no accurate information for individual player wages, and it’s hard to see where stadium funding begins and ends in terms of football-related revenue vs debt.

But at a higher-level, in the last accounts, wage-to-turnover ratio was 47.4%. Under my projection of the next accounts, the ratio drops to 41.3% — that’s incredibly low. Manchester United are the only other club below 50 percent. Arsenal stand at 55%, while Liverpool are at 69%. With a stadium to finance, it’s not realistic to expect Spurs to stand spending in an unrestrained way — but it is realistic to expect Spurs to spend in a competitive way.

If Spurs were to maintain the current 47.4% ratio into the next financial year, that would mean a wage bill of about £133m — that’s £33m more than is currently spent. Spurs could offer nine players £70,000 per week wage increases, and still the wage-to-turnover ratio would drop in the next accounts. (Of course it’s more complex than that with bonuses and so forth, but you get the point).

Spurs have issued a raft of new deals in the past financial year, including many senior players, but it would appear there is still significant room for more, if the club chooses. And revenue is going to climb further in the next two years — for example, Spurs will have the new Nike and AIA deals showing in the FY 2018 accounts. There’s also the chance to sell huge numbers of tickets at Wembley — all those outrageous £3.50 booking fees will start adding up — and then hopefully we’ll be in the new stadium.

With concerns over growth of TV rights income, fears of stadium cost overruns and no naming rights sponsor, plus an inflated transfer market where value is hard to gauge, let alone find, there are a lot of factors weighing on the club’s decision making. The hope is that Levy doesn’t get seduced by the complexity — Spurs have a team that is good enough to win trophies, and appealing enough to help sell those swanky premium seats at the new stadium. More depth is needed, but the core was cheap to assemble — if the price of success is that it is a bit more expensive to keep together than planned, then so be it. It’s a pretty good problem, in the grand scheme of things. It certainly feels there’s significant scope to increase wages before getting into the territory of the club spending money that doesn’t exist. Hell may need to freeze over first, but it may be that Levy and Joe Lewis reach a point where they accept it’s time to push the envelope a bit on football spending to take that final step.

Is Levy prepared to swallow some pride, and some cost, to keep this squad together? Pochettino’s masterful handling of Friday’s press conference — his “disappointed dad” tone was pitch perfect — showed both firmness, and a little flex. The fact the agency and club were able to get together on a statement to de-escalate the situation beforehand helped, and suggested plenty of work is going on behind the scenes. Pragmatism may yet rule the day — contrast that to the situation with Liverpool and the timing of Coutinho’s transfer request, designed to make Jurgen Klopp look a fool.

Danny Rose, in his hopelessly unprofessional (and scorchingly honest) way, may have done Spurs a favour. It’s time to recognise that the environment has changed, shift strategy quickly, and take a sledgehammer to that wage structure.

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

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

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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.

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

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Charles Richards / @spurs_report

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

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

NAMING RIGHTS

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

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

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

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

WEMBLEY

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

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

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

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

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

WAGES

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

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

However, things change quickly.

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

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

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

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

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

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

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

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

OWNERSHIP

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

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

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

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

DEBT

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

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

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

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

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

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

NFL

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

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

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

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

TRANSFERS

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

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

REVENUE

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

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

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

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

ACCESS

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

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

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

The full section of the planning statement is here:

Screenshot 2017-05-22 at 9.48.24 PM

READINESS

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

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

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

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

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

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

Xtn4WT2

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.

Can Spurs afford to finish 5th?

wembley_monaco730

With 13 games to go in the 2016/17 Premier League season, just four points separate second place and sixth.

Only Chelsea have managed to pull away from this almighty scrap: eight points clear and with no European distractions, John Terry can surely start dusting off his full kit and boots in preparation for the trophy celebration.

Two of Spurs, Arsenal, Liverpool and the Manchester clubs are going to miss out on Champions League football next season — who it will be, however, is anyone’s guess.

An air of manufactured perma-crisis has haunted the top of the table, with one manager continually forced to be “the one under pressure”. Jurgen Klopp felt the heat in January, but in February the spotlight appears to have shifted to North London and Arsene Wenger.

After a dip of form since the hammering of West Brom on January 14, and the ongoing inability of his Spurs team to perform well in Europe even against modest opposition, Mauricio Pochettino has also experienced a frustrating month. But averaging two points a game over 25 matches and into the quarterfinals of the FA Cup, this hasn’t been a campaign where the bad moments have lasted long.

Thanks to the excellent work of Pochettino, Spurs are defying Premier League gravity in terms of the resources they can bring to bear. But in a long, attritional campaign where no team is showing signs of relenting, this may be a season where depth is more important than ever. When Man City lose Gabriel Jesus, they have Sergio Aguero and Kelechi Iheanacho able to come in; when Spurs lose Harry Kane, it’s either an out-of-position Son Heung-min or Vincent Janssen, who has yet to score for the club from open play.

Combining a club’s wage bill and annualized transfer costs (amortisation, FY 2015) gives an idea of the “real football spend” at the top six clubs, and how hard it is for Spurs to compete:

Man Utd — £302.3m
Chelsea — £285m
Man City — £264m
Arsenal — £244.1m
Liverpool — £227m
Tottenham — £139.4m

Spurs, quite simply, are in a different league to the other five in terms of the amount invested in football. While disappointing, it therefore shouldn’t be a surprise if Spurs were one of the the two teams that eventually slipped down into the Europa League spots. This isn’t trying to create an excuse for failure, but rather establishing context: when Pochettino talks about the limitations he faces, it’s all true.

Leicester have shown money doesn’t always equal success, but most of the time it does. Per analysis by Michael Caley, 80 percent of top four places from 2000/01 to 2014/15 were secured by teams with the top four wage bills at the time.

With a £750m stadium project to finance, can Spurs afford to miss out on UEFA’s Champions League millions at this crucial juncture in the club’s history?

With Premier League TV income soaring to unimaginable levels and Europa League income increasing, Champions League football is no longer quite the silver bullet that it once was.

Last season, Spurs earned £95.2m from the Premier League TV deal, while the club’s share of UEFA’s revenue distribution — the governing body’s mechanism for dishing out TV money — was £17.7m. In 2014, Spurs took in £88.8m of PL money, and just £5.5m in UEFA revenue — that’s a jump of £12.2m year-on-year under the BT Sport deal.

This season, Spurs should bring in around £140m from the new Premier League TV deal, while UEFA revenues will be approximately £36m. The exact numbers will be known at the end of the season — the UEFA number is based on what Manchester United earned last season, after crashing out of the Champions League in the group stage, and then making an early exit from the Europa League knockout stages. Spurs are on course for a similar performance — but the 3rd place Premier League finish in the prior season may mean a little more.

As a percentage of club revenue, here’s how UEFA revenue distribution income has varied in recent seasons:

spurs-uefa-rev

(Note: Currency conversion throughout this piece is at current rates)

As you can see, Champions League remains a huge financial incentive. However, while in previous season the Europa League has been an irritation with marginal financial benefit, under the current deal, participation is much more lucrative.

By way of contrast, when Spurs were forced out of the 2012/13 Champions League by Chelsea, this was a crushing blow. Spurs took in just £4.6m in UEFA revenue in the following season, while Chelsea scooped £26m for finishing 3rd in their group (and another £9m for going on and winning the Europa League).

Of course, UEFA revenue distribution is just one part of the picture. Matchday income is much higher for Champions League than Europa League — Spurs sold out Wembley for the three home Champions League ties, while Europa League matches are less of a crowd draw — plus there is the potential commercial uplift that comes with appearing in the more prestigious of the European competitions.

As regards the new stadium, this project is not contingent on Champions League football — in fact, the aim of the new stadium is to enable Spurs to put out a sufficiently strong team to qualify for the competition on a regular basis.

In the Viability Report for the project, “better than estimated on-field performance” is listed among potential factors that may increase return on investment in the scheme — alongside reduced construction costs, player costs dipping below 45 percent of revenues and the club securing an NFL franchise (eyes passim).

Spurs have been prudently run for years, and budgets are based on the expectation of Europa League football, not the hope of Champions League football. This refusal to gamble frustrates some segments of the fanbase, and pleases others — but as long as Daniel Levy is controlling the purse strings, this approach won’t change. There’s no gamble being made about Spurs being able to overachieve on the pitch through the stadium construction phase — two seasons of CL football in a row would be a tremendous bonus.

But this doesn’t mean there isn’t a price to be paid were Spurs to miss out on Champions League football next season.

For fans, it will mean missing out on Europe’s elite competition yet again. This year’s campaign never caught alight, starting with an extremely boring draw that meant no “big” team coming to Wembley in the group stages. Gareth Bale’s heroics against Inter Milan were six and a half years ago — even the most patient of fans need fresh inspiration to feed the soul.

For the players, the Europa League represents a step back. Pochettino has nurtured a hungry group with a solid core of Champions League calibre players. With so many key players signing new deals and a palpable sense of excitement at the club as the new stadium takes shape, there’s little danger of losing players this summer. But footballers who make the top level are by nature ambitious, and Champions League is the benchmark.

However, for both fans and players, there are other ways to square this circle — the FA Cup would give fans a moment to savour, and demonstrate to the players that it’s possible to win trophies at Spurs. Judging by the performance at Fulham, the team is focused on the competition, and lifting the trophy in May would represent an important yardstick for this group.

That’s not to say the FA Cup is a panacea — for the team, there’s still a development cost to missing out on the Champions League. In three years under Pochettino, Spurs have been consistently poor in Europe. It’s hard to put a finger on why: Squad limitations? Focus on the Premier League? Tactical issues? The only way Spurs are going to get better is by playing quality European opposition on a regular basis, and figuring it out. It took Manchester City several seasons to find their way in the Champions League after the club struck oil, but they reached the semifinals last season and it’s not impossible to see them going a step further this time.

Then there’s the cost of one of the other teams sneaking into the Champions League at Spurs’ expense. At every other club, a far greater sense of crisis will be felt if they miss out — another season of failure at, say, Manchester United, has the potential to have repercussions that could open doors to Spurs in years to come. Maybe that’s getting a bit tangential, but to put it another way, it sure is enjoyable making Jose Mourinho squirm.

Hopefully, this is all moot: Tottenham’s run since the West Brom win is simply just a dip in form, an inevitability in a long old slog of a campaign, and the team starts purring like the fine-tuned machine we’ve resembled at times this season. The performance at Craven Cottage suggests as much.

However, if Spurs do end up missing out on Champions League football next season, it’ll be disappointing, but not disastrous.

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

What is behind the great Premier League switch-off?

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Last Sunday, for the first time in as long as I can remember, I didn’t watch any football.

I wasn’t busy, it wasn’t an international break, and there wasn’t another major sporting event that I wanted to watch between 2pm and 6pm. Instead, I looked at the two Premier League games that were being shown by Sky Sports — Middlesbrough vs Watford, followed by Southampton vs Burnley — and thought: “Nah, I’ll pass.”

The uninspiring choice of Sunday games came at an awkward moment for Sky, following a report by the Daily Mail’s Charlie Sale that viewing figures were down 19 percent year-on-year. The broadcaster will have pinned hopes on Monday’s game between Liverpool and Manchester United, the clubs with the two biggest fanbases, to quell talk that the Premier League bubble is starting to burst.

So, how real is the dip in Premier League audiences? And what are the factors that could be behind Sky’s audience dropping so dramatically?

First, it should be noted that the season is still young, and normally viewing figures increase as the evenings draw in, particularly in the Sunday 4pm and Saturday 5.30pm slots. But, as someone who tracks audience figures for Spurs matches out of personal interest, there are signs that the numbers tuning in are indeed low.

The most-watched Premier League game so far this season (excluding Liverpool v Man Utd, which isn’t publicly available yet), by BARB’s “average audience” measurement, was the Manchester derby on September 10. This drew 1.18 million in the lunchtime Saturday kick off. The equivalent game last season, a Sunday 2pm kick-off, drew 1.98 million. The reverse fixture in March, in the Sunday 4pm slot, drew 1.82 million.

After the Manchester derby, by my count, the second most-watched match was Spurs vs Manchester City on October 2, which averaged 1.06 million viewers in the Sunday 2pm slot. This just pipped Chelsea vs Liverpool, a Friday night offering that averaged 1.04m.

While 1.06m is more than respectable for Spurs v Man City, it is below the average for televised Spurs matches last season, which was 1.13 million. When Spurs travelled to Manchester City in February last season, that drew 1.78m in the prime Sunday 4pm slot.

One area in particular where Sky is apparently hurting is the Sunday 4pm slot, normally the prime selection of the week. The last four matches — Swansea v Chelsea, Spurs v Sunderland, West Ham v Bournemouth and Burnley v Arsenal — all failed to crack the 1 million mark. In the equivalent fixture block last season, these matches averaged over 1 million.

(BARB’s average audience measure isn’t perfect, and the broadcasters prefer to refer to the “peak” audience figure. However, the average audience is the only one that is made public, and it serves a purpose of enabling comparisons. More explanation in my previous piece on the subject.)

So, what could be behind it?

There have been some interesting explanations raised, from the tedious football being played by some of the Premier League’s lesser lights, to piracy, cost of subscriptions and crap coverage.

These explanations are all, no doubt, true to an extent.

I watched Burnley v Watford a few weeks ago, or rather started watching it and switched off and watched a couple of old episodes of Elementary for the third time instead. The standard was abysmal, but not entertainingly so, and anything was better than watching that.

Piracy continues to advance in terms of quality and accessibility, through streaming services like Kodi and other new technology. I subscribe to both Sky Sports and BT Sport, but last Saturday at 3pm I was forced to find a stream to watch Spurs. I have zero sympathy with the Premier League (and yes, there are a number of parties that would need to agree to a change) on this score. In 2016, there is simply no justification for viewers in the UK not getting the same choice as fans everywhere else in the world. It borders on cruelty and has created a market for piracy.

When the pirated offering is better — or at least, more comprehensive — than the paid offering, it’s going to mean less people pay. How you measure this, however, I don’t know — Sky’s revenues continue to climb, but subscriber growth is growing, per the last quarterly report.

Cost is undoubtedly a factor too, especially given broader economic trends that have seen a divergence in incomes both geographically and generationally. Football on TV is incredibly expensive now. A full subscription to BT and Sky will cost over £1,000 for a household, and this doesn’t even get you 2/3 of the matches. It doesn’t feel like great value now.

I’d add here, an argument gets made that we are experiencing “overkill” due to too much football on UK TV — personally I think it is the opposite, with too many fan bases getting too small a selection of games, meaning limited incentive to subscribe. Leicester, for example, were only shown eight times in total in the season before their miraculous title-winning campaign — hardly a huge incentive to subscribe to both Sky and BT. This season, with many more Premier League games and Champions League football, it is much better value for a Leicester City fan, and you can be sure that Leicester’s audiences have crept up somewhat as a result.

Rising prices, and advances in illegal streaming, may have led to a reduction among rated audiences. But it’s impossible to know how many, and it’s not like streaming sites have only sprung up this season. Also, while it seems like many, many people must be doing this if you judge by Twitter, it’s useful to remember that Twitter is a small sample and generally a terrible reflection of reality.

As for punditry, I’m not sure how much of a difference that makes. While Jamie Redknapp and Thierry Henry are dreadful, Sky still boast three of the best of the business in Gary Neville, Jamie Carragher and Graeme Souness. Sky’s coverage certainly hasn’t gotten worse compared to last year. But either way, it is fairly inconsequential — most fans tune in for the game, not the talking.

However, there are also some other explanations for Sky’s poor ratings that are worth a mention.

First, swapping their Saturday slot with BT was always going to be bad for Sky’s audience figures.

The Saturday 12.30pm kick-off routinely draws a low audience, as people have, well, life to be getting on with at that time of a weekend, whereas by 5.30pm you are far more likely to be ready to put your feet up and watch a game. The Saturday 12.30pm kick-off, however, is excellent for fans in Asia, so the Premier League will still want its big guns in that slot even if it doesn’t suit Sky.

Second, the Premier League is missing some “big” clubs this season, and this is harming ratings.

When Aston Villa played Newcastle last month, an average of more than 500,000 tuned in — that is the first time that I’ve seen a Championship match on BARB’s Top 30 weekly ranking.

The 2016/17 Premier League must feature the smallest number of “big” clubs of any edition to date.

That’s not to say the likes of Bournemouth, Swansea and Watford don’t deserve to be there, while Leeds, Villa and Newcastle should automatically be in the top flight in some Charlie Stillitano-inspired ratings stitch-up. But when you have big fanbases out of the top flight and not engaged with the Premier League, this may have an impact on TV ratings.

There are a couple of ways to quantify this idea.

Of the Top 30 club stadiums in England, just 13 are hosting Premier League football this season. Huge stadiums like Villa Park, St James’ Park, Elland Road and Hillsborough host Championship football. Stadium size is a historic measure of how big clubs once were, rather than still are, but it’s still a decent gauge. I watched Sheffield Wednesday’s Championship playoff semi-final last May at sold-out, 39,000-capacity Hillsborough. The atmosphere was extraordinary, and it sure as hell felt “big” as a TV viewer.

Further to this, there are demographic factors that may be having an impact on Sky’s ratings. While Greater London (9.8m) and Manchester (2.5m) are well represented, the West Midlands (2.4m) has only one club — and arguably its smallest in West Brom — in the top flight, while West Yorkshire (1.8 million) has none. Tyneside (774,000/7th largest in England, and that it excludes Sunderland), Nottingham (730,000/8th), Sheffield (685,000/9th) and Bristol (617,000/10th) are all major urban areas without a Premier League club.

To make a comparison, this would be like a US major league such as the NFL not having teams in Miami, Houston, Washington, Atlanta and Boston. Ratings would surely suffer.

It doesn’t mean no-one is watching Premier League football in these urban areas, but given the local nature of the majority of football support in England, this may have an impact on how many are tuning in. With all due respect to Burnley (149,000/54th) and Swansea (300,000/27th), they can’t drive the audience numbers in the same way.

(Obviously, football in Yorkshire has been struggling for a long while with Leeds and the Sheffield clubs a long way from the Premier League, but the loss of Newcastle and Aston Villa is sure to have an impact this season.)

More subjectively, how we view teams changes very slowly. I still see Leeds and Sheffield Wednesday as “big” clubs in a way that Swansea or Watford will never be, or at least not be for a long time.

To me, Newcastle, Villa, Leeds, Wednesday, Forest and Wolves still rank ahead of Watford, Burnley, Stoke, Swansea, Hull, West Brom, Middlesbrough and Bournemouth, and I suspect I’m not alone in that. There are too many games that just lack that “big match” aura — and when an early-season encounter between lower-ranked teams like Burnley vs Watford is so abysmal, it hardly encourages you to watch them again.

The final theory, that I’m still collating data for but want to throw out there, is that Manchester United’s audiences aren’t quite what they have been in previous years. Doing my weekly checks last season, the United average audience outside the derbies against City and Liverpool was often somewhat on the low side. Understandable, really, given the dross that was played by Louis van Gaal’s team.

Liverpool still carry massive audiences as a legacy of their two decades of success, and United will continue to be a draw even as a similar dynastic decline sets in. I’m sure, in 20 years, articles will be written about whether Tottenham’s dominance is starting to wain and if broadcasters should start diversifying away to other rising teams.

But seriously, with all six of United’s opening slate of games selected for coverage (by Sky and BT), there is an argument to be made that broadcasters need to be a little more imaginative. Quite how Spurs v Leicester, the two title challengers last season, has escaped live broadcast on October 29 is truly baffling.

The Premier League’s decline comes at the same time as a sharp drop in NFL viewership, bringing the issue to greater relevance. However, trying to connect the two would be yet more conjecture, although US audiences for the Premier League are also down. Here’s a good read on the NFL issue. It should also be noted that this is only Sky’s ratings, we don’t know what is going on at BT Sport. BT Sport’s ratings for live football are routinely so low they fail to crack BARB’s weekly top 30 of non-terrestrial channels, so even though Sky’s ratings are down, at least they aren’t so low they can’t be tracked in this way.

In conclusion, in all likelihood a combination of factors are in play here. More commonly discussed factors such as cost and piracy, combined with poorly chosen matches, the absence of a number of big teams and the loss of the Saturday evening timeslot have combined to harm Sky’s ratings.

Has the bubble burst? It’s way too early to say, but I’ll be keeping an eye out, for sure.

It’s also been a very dry, warm September and October, so you never know, it may just be down to that, no matter how silly it sounds.

Thanks for reading. Please follow me on Twitter for more chat about Spurs and other things.