Category Archives: Football Finance

Naming rights and wrongs: Tottenham begin the search for stadium sponsorship deals

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Earlier this month, Spurs began the process of securing sponsorship for the new stadium. The deals struck in this phase will form a key pillar of the project’s funding strategy, and also come to define how fans see and discuss the team’s new home when it opens before the 2018/19 season.

Per reports, the club, or those acting on behalf of the club, will be approaching around 300 entities ranging from multinational corporations to government investment funds in the course of the tender.

The figures being talked about vary from report to report. While the Standard stated the club was seeking £400 million over an unspecified period, The Times reported that the club was scaling back its ambitions and was seeking £150 million for the core naming rights over ten years.

These wildly divergent figures can be confusing, and in this post I want to clarify where things currently stand. Spurs going to market has created plenty of chatter, and we can expect more stories in the weeks to come.

The key agreement will be for the naming rights to the stadium, and this will attract most of the headlines. But in addition, there are a myriad of other sponsorship possibilities available, ranging from ticket booths to corporate suites and fun elements of the project like the Sky Walk.

These will have, in the most part, been designed into the stadium by the club and the architects, Populous. This graphic by Adweek on the Levi’s Stadium in San Jose, home to the NFL’s 49ers, shows how it can be done.

Obviously, excessive commercialisation will appear tacky, but I think most fans can accept the need for at least some sponsorship. Ultimately, £675m-£750 million will have to be found from somewhere, and you can pick your poison — whether that be naming rights, public funds, selling players, high ticket prices, massive debt or ownership largesse.

The club has made clear, from the outset, that it will seek a naming rights sponsor. However, in its financial modelling for the project, this will have been one of the hardest aspects to gauge. Simply put, there are few comparable projects which means establishing a “market” value will be hard.

The Standard report referenced Manchester City’s £400m, 10-year deal with Etihad as the ambition for Spurs, but this is wildly optimistic. The Etihad deal was part of a concerted, and unsuccesful, effort to dodge Financial Fair Play regulations, and did not in any way reflect the market value of the rights to the old City of Manchester stadium.

More relevant to Spurs is Arsenal’s deal with Emirates. Under a 2012 agreement, Arsenal received £150 million from the airline, which covered shirt sponsorship until 2018/19 and naming rights sponsorship until 2028. This was an increase of the initial Emirates deal from 2004, which earned Arsenal £90 million, split again between a shorter-term shirt agreement and longer-term naming rights deal. The Guardian estimated the naming rights in this agreement at just £2.4 million per year.

If Manchester City’s deal is inflated, Arsenal’s is widely seen as undervalued. I’d add, we’ve gone through a spike in shirt sponsorship in recent years which makes the Emirates deal look poor for Arsenal, but it probably wasn’t so bad when it was signed.

After Arsenal and Manchester City, there are few comparisons in the UK. A sponsorship agreement has not yet been reached for the Olympic Stadium, while Chelsea are still mired in the planning process for their new stadium. Liverpool failed to secure a sponsor for the new stand at Anfield — but it was only a stand, not the whole naming rights package.

Generally you have to look across the Atlantic for other potential comparisons. Here are the top 10 naming rights deals for US stadia. The data is from Forbes, and I’ve added the annual value.

naming-rights-us

As you can see, there is nothing that comes close to the £40m per year that Manchester City have from Etihad, while only two deals break the annual $20m mark.

But the comparison only goes so far. If you look at the sponsors, most are companies or brands with a local connection — eg U.S. Bank in Minnesota. This reflects the introspective nature of US sport — the NFL and MLB don’t have nearly the same global audience as the Premier League.

And while we’re on the subject of the NFL, Spurs are in unchartered territory by building the first combined Premier League/NFL stadium. Spurs will, I’m sure, leverage this in its negotiations and it will enable the club to pitch the stadium as a truly global offering. But what is it really worth? Spurs will be offering just two games a year initially and no clear connection to an NFL franchise, which may limit the extent to which Spurs can monetize this aspect.

Ultimately, there are few good comparisons for what Spurs are offering, meaning it is hard to estimate what a “fair” market price would be. There may be a company out there that sees the stadium as a perfect vehicle for its global ambitions, but there may not be. If not, Spurs will be forced to readjust. There are no guarantees, no matter what the marketing gurus — a ceaselessly optimistic species — claim.

The piece in The Times by Matt Hughes hinted that a degree of realism was starting to sink in, with the initial £25 million per year target being reduced to £15 million. No doubt, this would be somewhat disappointing to the club, but as I’ve said previously, this will have been a hard part of the funding strategy to model.

(For what it’s worth, I would expect Spurs to borrow against future naming rights income — this will enable more money to be piled into the project through the construction phase, at a cost of commercial revenues received later on. Likewise for “debentures” — long-term options for corporate seats and even ordinary season tickets, an approach also used by Arsenal when funding the Emirates. We’ll have to wait for future accounts to know if this has actually taken place or not, but it isn’t unreasonable to speculate here.)

In the Viability Report for the scheme, Spurs identified the amount of additional commercial income expected from the stadium as being approximately £30m.

“Key drivers of commercial revenue growth in the new stadium are expected to be stadium and cornerstone naming rights, and income in respect of increased merchandising and conference events, which together will give annual incremental income of approximately £30 million per year.”

Ultimately, Spurs will be looking to land a naming rights package that is greater than that achieved by Arsenal. A £15 million per year package would put Spurs in the right sort of territory, with a further £15 million per year to be raised from other sponsorship opportunities and an increase in stadium-related commercial activities in order to hit that £30 million target. It seems feasible to me.

While it may be disappointing not to smash through the £20 million mark, we’ve shown in recent days that we have other ways of setting records. Certainly, any potential sponsors watching on Wednesday night will have been left in no doubt about the potential Spurs have as a club and partner.

 

A couple of other points by way of post-script.

On Nike

Whenever the subject of naming rights comes up on my Twitter timeline, I get someone saying “Duh, it’s already agreed with Nike”. There was some ITK to that effect a while ago, and it has stuck. The news last week that the rights have just gone to tender prove that this ITK was wrong. If Spurs had a naming rights deal with Nike, it wouldn’t be going to tender.

My guess is that chatter about kit supplier negotiations got confused with naming rights negotiations. Or someone just made it up.

Of course, it may end up being Nike — I’m sure they are being asked — but it would be a surprising move by the company, as it has shown little interest in being a stadium naming rights partner. It focuses on athletes and teams, not buildings. There is a Nike stadium in England already though — the John Nike athletics stadium in Bracknell.

From what I’ve read, Nike will be the next Spurs kit supplier, replacing Under Armour. But the fact that Nike immediately went out and offered Chelsea more than double what they’d just agreed to pay Spurs hardly suggests the start of a close and wide-ranging partnership. I just hope Spurs put a break clause in it and play this market far more aggressively in future. There’s no value in loyalty, and if you’re excited by what Nike will do for Spurs kit design, just look at the England shirts. Eesh.

On Qatar

Both The Times and the Standard reported that Qatar Sports Investments, the owners of PSG and a subsidiary of the Qatar Investment Authority, the emirate’s sovereign wealth fund, were amongst the many hundred entities being approached over sponsorship. Per The Times, these talks have “intensified” amid reports Qatar Airways may not renew its relationship with Barcelona.

This caused some disquiet among Spurs fans, to put it mildly. On my timeline, I had people complain about human rights, labour practices and Qatar’s support for terrorist organisations. Charmingly, one person countered by accusing those making reasonable criticisms of “100% zionism”. A taste of what is in store, no doubt.

As The Times pointed out in a very reasonable way (and shoddy, theft-based sites such as 101greatgoals and HITC highlighted in distasteful, garbage-click-inducing ways), there is also the question of the club’s Jewish heritage.

I won’t go into all the arguments here. If you want to read more about this subject, I’d highly recommend A People’s History of Tottenham Hotspur by Martin Cloake and Alan Fisher. It offers a detailed and nuanced explanation of the club’s Jewish roots and current image as “the Jewish club”.

But three points:

First, chants of “Yid Army” in the “Qatar Airways Stadium” would appear problematic, for a variety of reasons. The club and QSI will be aware of this.

Second, Spurs will absolutely want Qatar in the conversation when negotiating with other entities as it will drive up the price. Qatar basically has a blank cheque at the moment as it prepares for the 2022 World Cup, and that’s useful to Spurs right now.

Third, I was curious about fan views on this, and did a quick Twitter poll before publishing this piece. The final result was as follows:

So out of nearly 600 votes, not a disastrous sample size, a third said they were unhappy with a Qatar Airways deal, while two thirds were either fine with it or not bothered either way. This surprised me slightly as I thought most would be against it. There were certainly some very strong opinions against Qatar, but these views weren’t the majority.

My personal view is that I’m not wild about Qatar Airways being the sponsor, and would rather someone else. But I’m also a deeply cynical person and I know that my irrational love for all things Spurs will ultimately trump my dislike for Qatar. A bit like before the Olympics when I swore I’d not watch following the IOC’s cowardly surrender to Russia over doping, and then watched every moment as Team GB’s gold rush hit full speed. I’m terrible, I know.

Who’s it gonna be?

I often get asked who I think the stadium sponsor will be. I normally reply “I have no idea”, as I don’t have any particular knowledge. But it’s a fun guessing game, so let’s play it.

I think Qatar Airways is a strong possibility, as they’ve got loads of money and surely want to keep up with their competitor Middle Eastern airlines in the global branding race.

Also high on the list will be companies in the financial services sector. Just like Nike prefer athletes and teams, banks and insurers like sponsoring solid, long-term things like stadiums. It just kinda fits the image.

You can bet that Barclays, previously the name sponsor for the Premier League and with a marketing budget that needs spending, will be getting a call. Barclays sponsors the new NBA arena in Brooklyn, and may have an interest in the NFL aspect as it seeks to develop its brand in the US.

I’m sure almost every major global insurance company will be approached too. Two major recent deals in the US — the MetLife Stadium and SunTrust Stadium — have been with insurers. Current shirt sponsors AIA may have an interest.

(German insurer Allianz had attempted to sponsor the new NFL stadium in New York several years ago, but ran into trouble with the local Jewish community due to its war-time connections with the Nazi regime. MetLife swooped in at a lower price after Allianz withdrew.)

The one other possibility that has sprung to mind is EE. The mobile network is owned by the BT Group, which is pushing aggressively into the sporting rights market and sees synergies everywhere. BT is sitting on a gold mine as it owns most of the UK’s broadband infrastructure, and has so far avoided being broken up by regulators. EE has shown interest in this sort of deal through its agreement with Wembley.

I’m throwing out names — 300 entities are being approached, so it may take some time. Ultimately, it’ll be who it’ll be.

Some of us will be OK with it, others will hate it; most of us will get used to it, others will want to keep on calling it White Hart Lane. We’re fans, we get to be like that.

For the club, the most important thing is building a new stadium, and the naming rights is a key part of ensuring that the money is in place to do that. “How much” will trump “who”, within reason.

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

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

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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.

Tottenham’s most expensive signing, relative to revenue

“Has English football gone mad?”

With Manchester United set to smash through the £100 million barrier with their deal to bring back Paul Pogba, and Manchester City considering spending £50 million on a relatively unproven John Stones, the sentiment is frequently expressed by journalists and fans.

No doubt, similar questions about the game’s financial sanity were asked 20 years ago when Newcastle spent £15 million to bring favourite son Alan Shearer back to the northeast from Blackburn.

Of all the transfer deals I can remember, it was the Shearer one that stood out and made me think: How much?!?

It seemed an incredible amount of money for Newcastle to spend on a single player in 1996. By contrast, huge fees paid by Real Madrid, for example for Gareth Bale, have always seemed more understandable given the vast wealth and global reach of the Spanish club.

This got me wondering, how expensive was Shearer for Newcastle at the time? Adjusted for inflation, £15 million would now be £25.4 million. But more, my question was how big a deal was Shearer for Newcastle at the time, compared to its total revenue as a football club back in the very early days of the TV boom?

For the 1996/97 season, Newcastle’s revenue, according to club accounts filed with Companies House, was £28.97 million. The deal for Shearer, at £15 million, was equivalent to 51.77 percent of the club’s total revenue.

Newcastle’s total revenue, according to the last accounts, now stand at £128.8 million. If you fired up the time machine and did the same deal today, Newcastle would be spending £66.8 million on Alan Shearer.

As Newcastle fans will be painfully aware, Mike Ashley is more likely to offer his Sports Direct slaves permanent contracts than spend that much on a footballer.

Using the same 51.77 percent figure, this would be equivalent of Manchester United spending £204 million on Pogba, or Manchester City spending £182 million on Stones.

For Spurs, it would be the equivalent of spending £101.5 million on a player. Can you imagine Daniel Levy sanctioning that?

This in turn got me wondering, who is Tottenham’s Shearer? While Erik Lamela is the club’s record signing, at £30 million (£25.8m plus clauses), who was the most expensive Spurs player, relative to the club’s revenue at the time?

I dug out some data* and created the following chart.

TransferRevenueHistory

As you can see, the most expensive, at the time, and by quite some margin, was Sergei Rebrov. His £11 million move from Dinamo Kiev was equivalent to nearly 23 percent of the club’s annual revenue that year.

Rebrov is followed by Les Ferdinand (19.4 percent) and Chris Armstrong (18 percent). In fourth is Lamela.

When I first thought about this, my guess was Darren Bent, but his transfer was funded by one of the biggest jumps in revenue (with a new TV deal kicking in), so he is only in fifth place on the all-time list. I daresay Sandra Redknapp would have been higher.

Of course, this is just a snapshot and not to be taken too seriously. As a club that has been run for a profit, rather than as a plaything, what Spurs spend is a reflection of what has been received.

But nonetheless, as a snapshot, it is an interesting one. Some of those names — Fazio, Bentley, Reid, Vega and Rebrov himself — are a reminder of what a massive crapshoot the transfer market is. Which is why spending an amount equivalent to 51.77 percent of your revenue is a crazy idea, and one unlikely to be repeated any time soon.

English football may well have gone mad, but it went mad a long time ago. If anything it has become a little more sane, but as the numbers get bigger, it just doesn’t seem that way.

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

*Revenue data from Companies House. Transfer data from @ztranche

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

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

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

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

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

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

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

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

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

The formula is as follows:

MMM variate

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

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

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

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

But what happens once the new stadium is built?

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

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

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

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

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

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

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

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

My calculation: £968.5 million to £1.105 billion.

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

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

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

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

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

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

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

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

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

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

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.

West Ham’s stadium deal: Brady’s hollow veto threat, naming rights information, local ticketing and more

KarrenBrady_22_532_1476450a

After a long campaign, the deal between West Ham and the London Legacy Development Corporation (LLDC) for the Olympic Stadium has finally been published.

The agreement, and the expensive attempt to keep it secret, has sparked considerable debate over how much value for money has been gained for the British taxpayer.

The BBC report covers the agreement, and controversy, in great detail. What I want to do is talk about some of the provisions that specifically relate to Spurs and our own stadium project.

West Ham do not have a veto

In 2014, West Ham vice-chairman Karren Brady poured cold water on the possibility of a ground share with Tottenham while we rebuild White Hart Lane.

“No-one has asked us for our permission (to ground-share) and if they did we would probably say no, depending on who it is – if you get my drift,” she said.

“We are the anchor tenant for the winter matches and nothing else can happen in that time without our permission. Our football matches take priority over everything else.”

When an LLDC official earlier this year said that a ground share could happen, West Ham doubled down on the position:

“As anchor tenant we have primacy of use during the football season and our contract gives us overriding priority to use the stadium, ensuring our fixtures and events are ring-fenced and will always take priority over all other events. It would therefore be impossible to accommodate the fixtures of another Premier League club without West Ham agreeing, a position which was fully supported at today’s hearing.”

The publication of the full agreement shows that Brady and West Ham are, shall we say, mistaken.

At no point in the agreement does it specify that West Ham have a veto over another football club leasing the stadium, and the grounds on which they may object to such an agreement are limited.

The key section is as follows:

(The LLDC) will not grant a concession, lease or licence to any Other Concessionaires to use the Stadium as its home ground for the playing of Football on the Pitch during the Football Season if:

(i) the Grantor, acting reasonably, believes the quality and condition of the Pitch may
be materially impacted; and

(ii) use by the Other Concessionaires would conflict with the Overriding Priority
Principle or any Governing Body Requirement,

The “Overriding Priority Principle” is what it suggests: West Ham get priority in using the stadium (outside of a one-off window for the World Athletics Championships in 2017). However, there is a big difference between priority use, and exclusive use.

The clause concerning the state of the pitch may prevent the LLDC from leasing the stadium to a rugby team, true. But, given how many stadiums around the world are happily shared, not another football team.

If Spurs were to take it, West Ham would have “first dibs” in terms of when matches were played — that is unquestionable. But given that fixtures are decided by the Premier League, the FA and UEFA, it would be up to the governing bodies to decide when the games were played.

West Ham’s concerns about accommodating another set of fixtures are immaterial if the governing bodies are able to agree on a scheduling arrangement. Given that the FA are reportedly happy for Spurs and Chelsea to share Wembley, there appear to be no concerns on that front.

There would be questions over logistics — ticket booths, hospitality and the like. But it is a multi-purpose stadium, and West Ham are just tenants.

In the 203-page document, I can see no further provisions preventing the LLDC from offering the stadium to another team. In fact, the agreement requires West Ham to “take into account the requirements of any other concessionaires to the extent reasonably practicable”.

I would welcome any further insight in case I have missed something. (Which I did — see the update below)

Spurs would now appear to have three clear choices for our temporary home — Wembley, Stadium MK and the Olympic Stadium. None are perfect — we are investing hundreds of millions in somewhere that is.

A poor deal for local residents?

In the S106 agreement with Haringey Council, it was agreed that Spurs would provide 10,000 tickets for residents of Haringey and Enfield (5,000 season tickets and 5,000 matchday tickets) in the new stadium, per league match.

With 19 home matches, that means 190,000 tickets for local residents per year.

In West Ham’s agreement with the LLDC, the club is required to offer up to 100,000 tickets for residents of Newham, and none for other boroughs. There is no specific language on season tickets or pricing limitations.

Residents of East London have been given a poor deal compared to those in North London.

West Ham revenue streams cut

The one area where the LLDC appear to have struck a fairly good deal is over naming rights. Under the deal, West Ham must hand over the first £4 million of a deal, and then split the rest 50-50 each year.

To me, this seems fair. Of course, while taxpayer money built the stadium (twice), a Premier League club will be able to attract far more in sponsorship than an athletics venue ever would.

For West Ham, the amount lost in naming rights income will surely exceed the annual rent of £2.5 million.

For catering, the LLDC keeps 70 percent, as well as the first £500,000. Again, this may mean some lost income for West Ham compared to teams that own their stadiums (who may outsource catering contracts anyway).

Overall, this is still an incredible deal for West Ham. Compared to what Spurs will have to be paying in annual finance costs, they are way ahead. But there are some downsides — beyond the fact that the stadium looks a poor venue for football — to not being the outright owner.

One strange little detail

West Ham agreed to pay £15 million towards the reconstruction costs of the stadium, a sum widely agreed to be derisory.

However, there is a curious reference to this payment in the agreement. Instead of the club (either the umbrella company WH Holdings or West Ham United Limited), David Gold and David Sullivan agreed to provide personal guarantees for this money.

Mr David Gold and Mr David Sullivan providing personal guarantees for the
Concessionaire’s obligation to pay the One-Off Usage Fee or the obligation to pay the One Off Usage Fee in accordance with Clause 20.4 (Usage Fee for Use of the Stadium and Other Payments) has been irrevocably discharged;

I’d welcome any explanation for this — it certainly seems quite unusual, no?

A final thought

Having read this document in full, as well as much of the reaction to it, I think it is important to make one thing clear: West Ham haven’t done anything wrong.

If the deal represents poor value for the taxpayer, that is the fault of the LLDC. Karren Brady’s job was to negotiate the best possible deal for the company she runs. It is fair to say, she has done that. I can hardly blame her for trying to throw Spurs off the scent in terms of ground sharing, given the history between the clubs.

Could the LLDC have struck a better deal? Possibly. That £15 million contribution from West Ham towards refit costs, in particular, seems deeply unambitious in light of what Arsenal, Spurs and Chelsea have spent, or are planning to spend, on their stadium projects.

But this stadium was a white elephant waiting to happen — a vast arena, built for a sport most people only care about for a week every four years, in a city already full of them. The 2012 Olympics was great fun, but also a mind-blowing waste of money. Gradually, cities such as Boston are wising up to the IOC scam and telling them to get stuffed. Sadly, the egos of our politicians were sufficiently stroked, and we will be paying the bill for a long time to come.

We shouldn’t forget Spurs also wanted the stadium — or rather, we wanted the site. We would have knocked down the existing stadium to build a dedicated football facility (in conjunction with our new NFL friends, no doubt). I’m sure Daniel Levy would have been just as aggressive in his negotiations with the LLDC as Brady was. Under the Spurs plan, the taxpayer would surely be no better off.

A few Spurs fans, myself included, had fun tweeting to the European Commission about potential illegal state aid. This is certainly something that warrants further investigation — undeniably, West Ham have received a huge leg up from the public purse here. This is a list of competition cases in the sports sector — there are a fair few.

I’d be surprised if the challenge came from rival clubs though. I daresay the likes of Spurs and Chelsea, who are yet to finalise funding for their own stadium projects, are cautious about this in case they need to seek any form of public funding if money runs short. Much better just to build a better stadium, and beat West Ham on the pitch.

If I was a West Ham fan, I would be excited about the future of my club and no doubt pleased with the work done by Brady. I’m sure, I’d also be enjoying the angst it is sparking among rival fans.

But I’d also be apprehensive about the quality of the stadium and the matchday experience. Upton Park may be small, but it is a fine and atmospheric football ground, and bigger isn’t always better.

Thanks for reading. Please follow me on Twitter for more Spurs chat. If you’ve spotted anything of interest, or think I have misinterpreted something, please do get in touch.

 

Update (16/04/2016): As was pointed out on Reddit, there is one other clause of importance that I missed first time around.

Clause 20.5 states that, if another “concessionaire” uses the stadium for football, West Ham get 50 percent of their £2.5mln annual rent back, plus 50 percent of the £15mln one-off fee if it is within the first 10 years of the agreement (it drops to 25 percent in the following ten years).

So, if Spurs were to want the Olympic Stadium in 2017/18, it isn’t as simple as just matching West Ham’s rent. To make LLDC “whole”, Spurs would have to cover the £7.5 mln lost in one-off payment, and £1.25mln lost in rent. So, in total, £8.75 mln. After that, it becomes about paying enough that it makes it worth LLDC’s while. Note, it would hard for LLDC to turn down anything that offers the taxpayer more money back after such a huge cost.

For Wembley, the rent is likely to be in the region of £20mln per year, and Spurs would have to have it at a limited capacity, for most matches, of 50,000. Let’s say Spurs offered the same as West Ham in basic payment for the Olympic Stadium — £100,000 per day for 25 event days, and covered the LLDC’s lost one-off fee in full: that would be £10 million for a year. With a capacity of 60,000, and half the rent, this may be a better deal financially for Spurs.

Of course, it may be that there are more premium seats, corporate facilities and other revenue-generating goodies at Wembley than the Olympic Stadium. That, coupled with the ball-ache of having to work with West Ham and deal with all the logistical hurdles Brady has thrown up in the agreement, no doubt means Wembley remains the preferred and more likely option. But my broader point stands: West Ham don’t have a legal veto, and Spurs do have another option — at least something the club can use in its negotiations.

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

Spurs head into a crucial Premier League weekend seven points off Leicester with six games to play. If the Foxes win four more games — and they have deeply winnable fixtures against Sunderland, Swansea and Everton ahead — they win the title no matter how Spurs finish.

The fat lady isn’t singing yet, but she’s in her dressing room and she’s warming up.

Looking the other way, we are nine points ahead of Manchester United in fifth, and we play them on Sunday. They also have a game in hand — if they win both, well….gulp. And then there is the small matter of finishing above Arsenal. There is an awful lot still to play for and no excuse for Spurs to ease off, even if Leicester march on relentlessly.

But forget glory, local pride and enjoyment — we all know what really matters in modern football is money. And where we finish this season will make an enormous difference to the bottom line.

How big a difference? I’ve done some quick and dirty calculations to show how much Spurs can expect to bring in, depending on final league position.

Here’s how it works:

Premier League payments

For the Premier League, 50 percent of the TV money is split equally among teams. After that, 25 percent is paid out in “facility fees” — payments every time a team is picked for a televised UK game. The other 25 percent is the “merit payment”, which is paid out depending on where you finish.

Last season, Spurs were shown 18 times on TV, earning £14.8 million. This time, Spurs will be shown 21 times. Essentially, each game broadcast live above the minimum 10 (everyone gets paid for 10 games, even if some teams, like Leicester last season, aren’t shown that many times) earns a team an additional £747,176. So for Spurs, we will be bringing in an extra £2.24 million regardless of where we end up.

The merit payments are very simple: They increase by £1.25 million (or as close as) per place. First place receives £24.9 million, last place gets £1.25 million.

UEFA payments

For UEFA funds, the principle is similar, but it is harder to project. It is often assumed that teams qualifying for the Champions League receive the same share of the TV money (before being paid for how they progress). This is NOT true — it varies, and quite considerably.

Champions League money is divided into two pots — the “market pool” and the prize money. The prize money can be seen here: quite simply you get a guaranteed EUR 12 million (£9.66 million) for reaching the group stages, and then the money rolls in depending on how you do.

The market pool is the share of the TV money that is awarded to clubs from different associations, depending on how much their TV deal brings in. This is divided into two equal pots, the first of which is awarded based on Premier League position, and the second based on how far the clubs progress in the Champions League itself.

Per football finance blogger Swiss Ramble, these two pots were each worth EUR 46.8 million (£37.85 million) in the 2014/15 campaign. For the first pot, the team that finished first in the Premier League receives 40 percent, the team that was second receives 30 percent, and so on.

With the huge new BT Sport deal kicking in, the share of the market pool that goes to British clubs is going to get a lot bigger from the 2015/16 season. How much? A reasonable estimate is that the TV money will jump by around 50 percent.

With the actual amount not yet known, for the purposes of this article I’ll use a 50 percent increase — at the very least, it makes the maths straightforward.

And now, some tables

In the table below, you can see how that revenue breaks down. As you can see, the difference between finishing 1st and 4th could be almost £17 million — for the initial market pool share alone. On top of this, you have the other half of the TV money to dish out depending on how well you do against Messi & Co.

Market Pool

By way of reference, Spurs brought in £4.73 million from our Europa League campaign last season, including both TV money and bonuses. The season before, when we reached the last 16, it was £5.27 million. It is very hard to project the market pool share, particularly as not every English team that qualifies wants to reach the group stage. Let’s take last season’s amount as the “baseline” amount, with anything that comes in on top of that considered a performance-related bonus.

So, including Premier League merit payments, UEFA market pool payments and minimum bonus payments, what sort of money are we talking about for Spurs this season? I’m talking purely the performance-related elements of the TV money — the part that varies depending on how well, or badly, we finish the season.

Performance Related

As you can see, we are talking about a difference of £7 million per place for the top four positions.

If the music stopped now, and Spurs finished in 2nd, we’d be on course for £25 million* more in performance-related payments than we earned last season for our fifth place finish.

That’s a lot of money for a club with total revenues of £196 million. By way of comparison, per our latest set of financials, we receive about £16 million per year from our new sponsorship deal with AIA. And that’s before any UEFA bonus money, extra gate receipts and shirt sales.

If we contrived to swap places with Arsenal — and let’s be honest, we have form in this department — that would cost us £7 million in performance-related cash. And possibly a bit more in therapy costs.

Of course, we want to finish above Leicester because we want to be champions for the first time since 1961, not because it means a bigger slice of the UEFA market pool. We want to finish above Arsenal, because it’s about f**king time we did.

But when the pundits call this “the business end of the season”, this is why.

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

*Update 17.15, April 8: An old version of this article stated that the difference between 2nd and 5th place amounted to about £15 million. In fact it is closer to £25 million.