Category Archives: New Stadium

Spurs, Chelsea and two very different stadiums

Chelsea moved closer to joining London’s “60,000” club on Wednesday night after Hammersmith and Fulham councillors approved plans for their extraordinary new stadium.

While the meeting for Tottenham’s new stadium in December 2015 stretched on until 12.29am and culminated in a fingernail-biter of a vote, Chelsea’s stadium breezed through this critical planning hurdle with a unanimous vote of approval at a distinctly civilized 10.22pm. Decisions over new conservatory extensions have taken longer.

Ultimately, the Herzog de Meuron design swept all before it and meant approval was an inevitability. It was simply too spectacular a piece of architecture to be rejected, no matter the deep inconvenience about to be inflicted on local residents during four years of construction, the land grab over public infrastructure, and the loss of housing and hotel rooms.

Chelsea have work to do before construction can begin: Mayoral and other consents are required, agreement is needed with Chelsea Pitch Owners, the fan group that owns the Stamford Bridge freehold, and deals must be reached to buy out any remaining apartment owners in Chelsea Village. Fortunately money isn’t a problem for Chelsea, as that will be an expensive business.

Chelsea acknowledged that the timeframe had “slipped” in the planning documents, and they won’t be ready to leave Stamford Bridge for Wembley until the end of the 2017/18 season. Provided work is completed on time at New White Hart Lane, this means Spurs and Chelsea should avoid the world’s most uncomfortable houseshare.

The two stadiums will inevitably draw comparisons, but these are two very different projects, and each speaks volumes about the club and its situation.

For Spurs, the new stadium has always been about levelling the playing field. Constrained by the size of White Hart Lane, Spurs have slipped further and further behind wealthier clubs in financial strength. Spurs have clung onto the coattails of the big spenders with admirable tenacity and some Mauricio Pochettino magic, but it’s been a gruelling business and you can only defy gravity for so long.

This need to maximise the opportunity a new stadium presents has shaped the project, from the moment the early designs were released with the words “Naming Rights” emblazoned on the roof in giant letters.

The newly released stadium promotion video demonstrated this: it’s a home for Spurs, but also for the NFL and for concerts. The club ensured it can hold up to 16 non-THFC major events per year — it is likely that AEG, operators of the O2 and would-be partners in the failed Olympic site plan, may be involved to ensure every one of those 16 events slots is used. Concerts, rugby (European champions Saracens are based just down the road in tiny Allianz Park), boxing, T20 cricket and UFC — you name it, the stadium will host it and Spurs will take their cut.

Daniel Levy knows that Spurs have to make this stadium count — this is the silver bullet, and it can’t be wasted. No effort is being spared on the interior details, and the fan experience should be unrivalled in European stadia. The design is modern, but not flashy and certainly not “signature” — the real investment is being made inside, not on the exterior. Above all, it is about money — Spurs have been fighting with one hand behind their back for years, and now it’s time to punch back.

For Chelsea, Stamford Bridge isn’t so much a commercial project as a personal one: The stadium is both a monument to Roman Abramovich, and his personal legacy to Chelsea.

If his first decade as owner was about buying Chelsea’s way into the elite — the club technically “owes” him more than £1 billion — the second is about cementing it. The project makes less commercial sense than Spurs with a smaller capacity increase and more recent development of Stamford Bridge, although Chelsea had precious few options for further growth without abandoning west London altogether.

The sheer audacity of the design, with its lattice roof and columns drawing inspiration from Westminster Abbey, takes the breath away. It’s not just a stadium, it’s a symbol — of Abramovich’s extraordinary wealth, of Chelsea’s ambitions, of the sheer magnitude of football now. These aren’t stadiums any more, they are cathedrals.

Perhaps it’s just the name Roman, but rather than visions of London — Westminster Abbey, Battersea Power Station, the Tate Modern — to me the design harks back further, the huge exterior arches and vaunting brick walls bringing to mind the original sporting stadium, the Coliseum. It’s Roman the Emperor, on a Triumph through London, erecting a vast monument to his own glory; all that’s missing is the white horse and vanquished rival Premier League kings in chains.

It won’t be for everyone: there are hints of Albert Speer and Welthauptstadt Germania in its epic scale and Teutonic coldness, and questions will linger about whether Abramovich has really earned the right to redefine London’s skyline in this way.

While Chelsea will surely take on significant financing, the suggestion is that Abramovich will personally fund the bulk of it; it’s unlikely Chelsea will have to engage in something as grubby as naming rights sponsorship. The stadium will host football only. Say this about Abramovich: like him or not, his commitment to Chelsea has been unwavering. He’s the ultimate oligarch, still there week-in week-out nearly 15 years later, still bankrolling his favourite toy.

The law of London football means Spurs fans and Chelsea fans will find ways to undermine, mock and goad each other. The new stadia will be no exception. New White Hart Lane is shaped like an egg, New Stamford Bridge like some sort of novelty vegetable shredder; you get the drift. I hope the ill-feeling continues at boardroom level and on the pitch — it’s surely the best rivalry in the Premier League at the moment, by a distance.

The same one upmanship that made Spurs trump Arsenal in capacity will be in play — stadium development is linear, and Chelsea will learn ruthlessly from Spurs to make sure their’s is “better”. But ultimately, the more you compare these projects, the greater the contrast becomes.

Here’s one thing we can agree on: Spurs and Chelsea are both going to have world-class stadiums within a few years, and thousands more fans are going to be able to see their team live. So a bit like West Ham — except without the need for binoculars, taxpayer subsidies and riot gear.

Thanks for reading. Please follow me on Twitter for more articles and general Spurs chat. See more of my stadium pieces by searching in the stadium category in the right-hand navigation, or in the Deep Dives link above.

New stadium update: ‘More or less’ on time and budget, 500 White Hart Lane, the NFL gamble explained, and more

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Given the recent flurry of news and public comments, it is high time for another update on where things stand with the Spurs stadium project.

In recent weeks, the installation of dozens of giant “rakers” have started to finally give the structure that unique stadium shape, while along the High Road the stadium is starting to rise up high above the hoardings.

In this post, I’ll talk timelines, the NFL, training centres, housing and various other things. My last stadium update, from June, is here.

Timeline and costs

The regular board-to-board meetings between the club and the Tottenham Hotspur Supporters Trust have proven useful in gaining insight into the state of the project.

Per the minutes of the last meeting, released on Friday, Daniel Levy confirmed that the project is “more or less” on time and budget.

Crews are working seven days a week, with the aim of being ready to move out in the summer and ensure that only one year away at Wembley is needed.

Cost-wise, “the financial model is in good shape”, Levy said, but he noted the impact of the weakened pound and 7-day work schedule. “All possible resources” were being put into construction to ensure deadlines were met, Levy said, a hint the project is currently at the higher end of its budget.

What does “all possible resources” mean, in practice, beyond extending the hours worked on site to the permitted maximum?

Earlier this month, industry website Building.co.uk published a story stating that Spurs had purchased the five cranes that are being used on the site, as they were unable to hire any when required. Obviously the increased cost of purchasing cranes, rather than waiting for rented cranes to come available, was something the club was prepared to bear in order to ensure deadlines were met.

Given the fact that crews are on site seven days a week, and are even working during matchdays when there are 32,000 fans in the vicinity, it is safe to assume the pace of work is at the absolute maximum, and there is little to no leeway for delay.

Less positive are “considerable” delays to the rebuilding of White Hart Lane station, as well as Haringey’s High Road West regeneration plan. I’m not immediately clear what impact this will have on the club and matchgoing fans when the new stadium opens. Presumably insufficient public transport capacity may require some alternative arrangements on matchdays to ensure safety, but I am speculating. I’d welcome any insight on this.

The NFL explained

Earlier this month, ESPN published the rarest of things: a Daniel Levy interview.

It was fascinating as finally, among other things, Levy’s rationale for building a stadium with NFL facilities was revealed.

Previously, I’ve had fun trying to divine what the rationale may be, but now we know — there is no clear commitment from the NFL, just a considered gamble from Spurs that ultimately, when the NFL is ready for a London franchise, the league will select New White Hart Lane as its home.

“If it ever got to a stage where the NFL decided it wanted to have a permanent team in London, this stadium could literally be, whatever the team was, it would be their stadium as opposed to an NFL team feeling they’re renting Tottenham’s stadium.

“We would welcome very much close cooperation with the NFL and a dedicated team. Obviously a decision is entirely theirs whether they do bring a team to the UK, and where it would be located is something that would be talked about. But yes, we would be very much welcome to that scenario.

“Clearly we wouldn’t both be putting all this into this stadium if there wasn’t the prospect of one day a team eventually coming to London. But there are certainly no guarantees that A) a team comes to London, and B) they have to use our stadium. I think we’re all putting the effort in in the hopes that they will do it.”

Of course, there may be more to the 10-year, two-game agreement that can be currently disclosed, but these comments are the clearest indication of the state of affairs so far.

As far as I have seen, there have been no new comments from senior NFL figures since my last piece on the subject of a permanent London franchise. New London mayor Sadiq Khan expressed support for the idea after a trip to the US, where his meetings included one with Shahid Khan, the owner of the Jacksonville Jaguars, widely seen as the most likely franchise to relocate.

However, Spurs are finding other ways to make themselves useful to the NFL.

In subsequent excerpts of the interview, Levy essentially pitched the club’s services in providing training facilities for the NFL should a team be relocated.

“The NFL, a number of times when they’ve come to the UK, has used our training facility and, when a foreign organisation goes to another territory, I think being in partnership with a local operator brings enormous benefits.

“We’re going into this, hopefully the intention is our relationship will expand over time and we’re working very closely together. But I think in terms of training facilities and things like that, we have discussed that with the NFL, but again that’s something for the NFL to decide upon.”

The training facility of a London NFL team will be one of the knottiest issues for the NFL. It’s not like in most US cities where facilities can be thrown up very quickly — in London, it takes years to acquire land and gain consent. Spurs have a huge training facility, and there may be ways of reconfiguring what is there for NFL use, or even expanding slightly such has been done with the new player accommodation. See this thread for more details:

Spurs have a chance to make themselves very useful to the NFL here, and are smart to exploit this angle. It should be noted, NFL commissioner Roger Goodell visited the facility last autumn so will know just how impressive it is.

One final thought: this was a great interview, and Daniel Levy should do more.

I’m not saying he should take to tweeting like an idiot or start Kardashianizing himself like Jose Mourinho, but rather in a targeted way, get out there a little bit.

Raising the profile of the club now may have benefits in the search for stadium sponsors. So go and have “Lunch with the FT”, talk to AdWeek, get Gary Lineker around for some multi-channel PR schmoozefest as he does so effectively with his Goal Hanger productions.

The football media narrative is stuck on Jose, Jose and more Jose, with an occasional bout of Klopp-itis or Pep-worship. Mauricio Pochettino, when he’s not going rogue and comparing academy prospects to Lionel Messi, is circumspect in his dealings with the media and his English is still limited in terms of expressing himself fully.

There’s a great story to tell about Spurs at the moment, and it’s not really being told, in my opinion.

The club is producing more homegrown talent than anyone and is the major contributor of English players to the national team. It is building a world-class stadium without any assistance from the taxpayer. In general terms, the club is punching wildly above its weight in on-field performance, as the recent Manchester United financial statement highlighted.

If ever there was a time to talk about Spurs, it’s now.

Pictures — then and now

Construction is advancing rapidly, but what is it going to look like come the final farewell to old White Hart Lane in May next year?

I first saw this picture posted by @HotspurSam, and it is well worth showing again. It’s just an impression, but you can see how progress will need to be seriously rapid over the next seven to eight months. The picture in the top-right corner is the most eye-grabbing — that’s what we should see in May.

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As I’ve said previously, it is going to look absolutely bizarre.

On the subject of progress, here are a couple of photos. The first is from June 2015, and the second is the latest aerial shot from the club (with blue lines and tint, but you get the picture).

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Pretty cool, huh?

The other White Hart Lane development

On September 12, Spurs received approval for its 500 White Hart Lane development, subject to a Section 106 agreement.

The industrial site was bought for the relocation of Archway Sheet Metal, but they did not take up the offer and ultimately moved elsewhere. The club then marketed the site to other occupants, unsuccessfully, before deciding to turn it into housing. It is a major project, with 144 residential units and (some) retail space.

The vote by the Haringey planning sub-committee was a close one — a motion to reject the proposal was lost by five votes to six, and then the project was approved by six votes to four with one abstention. There was noisy opposition to the project, per video of the event.

This is an interesting project in so much as Spurs are doing it at all. After Archway opted against taking the site, the easiest thing to do would have been to sell it on (no doubt at a nice profit given ever-rising land values in London). But, clearly, Spurs have a taste for property development and opted for the more ambitious option.

What Spurs do with 500 White Hart Lane — develop it themselves, or sell on a consented scheme to another developer — may offer hints for what will happen to the final stage of the stadium project.

Once the stadium itself is completed in (hopefully) the summer of 2018, attention will turn to the “Southern Development Land”. This in itself is a huge development, including a 180-room hotel, 585 housing units and other facilities.

While the stadium itself will cost around £500 million, this final phase will take the bill for the project to the £675m-£750 million figure. It is a huge challenge, and the general assumption is that Spurs will ultimately sell this off as a consented scheme and allow someone else to take the risk on it. It may not be that easy, though, as the scheme has a low “internal rate of return” — a measure of the appeal of a potential development to investors.

Either way, it’s one to keep an eye on — the focus at the club now will be firmly on getting the stadium done on time.

Until a decision is made, I am going to keep using the £675m-£750 million figure for the project. Ultimately, the hotel and housing has to be built, and currently the obligation to do so lies with the club.

And finally

I’ve written a couple of pieces recently related to the stadium — this one on naming rights, and this one on the challenge of balancing spending between the stadium and the team.

Do have a read if you’ve not already done so — they are detailed pieces, and should be of interest to those following this project.

Meanwhile, over at Chelsea, the club is now in a second period of public consultation due to changes to its plan to redevelop Stamford Bridge.

There’s a Twitter thread here with various links.

I wrote in May that this second consultation would be required — so I’m pleased that what I reported proved to be accurate.

However, from my initial reading of Chelsea’s changes, I’m not entirely clear how the concerns raised by Network Rail about safety and access to the railway that will run under the West Stand have been assuaged.

Any journalists or bloggers interested in a story could do far worse than give Network Rail a call — this stadium simply won’t be built until they sign off, and they were far from happy with the initial plans. My blogging time is limited now so I can’t follow this project as closely as I have done previously.

Thanks for reading, please follow me on Twitter for more stadium chat. Comments welcome, in particular on issues concerning delays to public infrastructure and the plans for the Southern Development Land.

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.

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.

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

 

stadium screenshot

Image by @ACEinBEDFORD

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

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

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

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

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

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

You can read my previous reporting on the stadium here.

Attention to detail

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

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

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

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

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

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

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

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

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

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

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

So there you have it.

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

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

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

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

Tight timeline

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

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

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

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

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

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

Money and Naming Rights

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

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

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

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

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

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

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

Spurs and the NFL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LaCanfora connected the dots:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The formula is as follows:

MMM variate

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

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

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

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

But what happens once the new stadium is built?

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

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

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

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

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

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

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

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

My calculation: £968.5 million to £1.105 billion.

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

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

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

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

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

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

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

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

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

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