Tag Archives: New Stadium

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.

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: 

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

Railways and delays

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

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

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

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

MAPCOMP

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

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

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

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

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

East Stand Long Section

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

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

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

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

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

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

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

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

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

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

Right to light and other issues

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

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

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

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

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

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

NS Long Section Comp

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

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

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

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

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

Blank slate, blank cheque

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

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

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

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

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

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

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

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

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

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

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

Safety concerns

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Final thought

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chelsea Pitch Owners (CPO)

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

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

Network Rail

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

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

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

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

Nuclear trains

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

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

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

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

Rebuilding Chelsea Village

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

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

 

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

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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.

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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 stars align for Pochettino and his swaggering Spurs

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Those six minutes on Sunday when Spurs brought Manchester United’s house of cards crashing down were pure footballing joy — relief, jubilation, and finally delirium as Erik Lamela stroked home the third.

Cancel the demolition crew at the end of next season — another moment like that and the old roof of White Hart Lane will be lifted clear off.

In many ways though, with the match won and Spurs toying with a beaten United like a cat with a freshly caught mouse, I enjoyed the final 15 minutes more. It had the air of a changing of the guard — a young, ambitious pretender, snatching the crown from an old-timer who has grown tired and complacent after years on the throne. There was a swagger to Spurs in those closing moments, the like of which I can’t ever recall.

In previous years a tight game, such as it was for the first 60 minutes, would have only broken one way. United would have worn Spurs down, the mere presence of Sir Alex Ferguson enough to convince United players that they were going to win, and Spurs players that they were going to lose. The truth about the “Lads, it’s Tottenham” story is that, back then, Ferguson didn’t need to say anything at all — United would have beaten Spurs if he’d danced the Macarena.

Not any more. It was Spurs who found the resolve to win. It was Manchester United who shrunk.

Barring some surprising results, Manchester United are set to miss out on Champions League football, and the millions that come with it, for the second time in three seasons. It appears likely they will start the fourth year of the post-Ferguson era with a third manager, although Louis van Gaal does have a way of clinging on.

All about the club, there are signs of dynastic decline. The owners are pure carpet-baggers, shamelessly milking money without even the pretence of putting something back in. The directors failed miserably to recognise that no one man could replace a force like Ferguson, leaving a vacuum of football knowledge and placing far too much pressure on first David Moyes then Van Gaal. Transfer business has been all-but outsourced by arch noodle-sponsorship negotiator Ed Woodward to Jorge Mendes. Even the youth development, a sole bright spot, has had an air of randomness about it, a series of battlefield promotions rather than carefully planned pathways.

United still have an incredible advantage in their commercial reach, but this will shrink like territory on a map as the results deteriorate. They may be able to turn it around, but at this point, it seems far from certain. The stench of institutional drift, the same footballing virus that has laid low Aston Villa and Newcastle, is wafting out of Old Trafford with every week that goes by. “Doing a Liverpool” now seems a distinct possibility — a slow and painful fall from grace, and a fanbase that struggles to accept that the future may not offer the same guaranteed glory as the past.

There exists, right now, an extraordinary opportunity for someone to seize the mantle as English football’s next ruler.

The spike in TV money, coinciding with United’s decline, has created an illusion of a new equality, but all that is really happening now is flux. Leicester aren’t a new dawn, they are a glorious fluke. In the past 40 seasons, Liverpool and then United have won 23 of the titles — this is how modern English football works. One powerhouse, and an ever-changing cast of challengers.

The scary part: Is there a team that is better equipped, across the board, to be the next dynasty than Spurs?

I’ll let that sink it for a moment.

Of course I am biased, but I don’t think this is merely bravado. There’s a chance here, an aligning of the stars, that every Spurs fan has been sensing for the past 18 months. Increasingly it is being felt by those outside the fanbase.

In every facet, right now, Spurs are moving in the right direction.

In Harry Kane, Dele Alli, Christian Eriksen and Eric Dier, we have the strongest young core of players in the league. In Toby Alderweireld and Jan Vertonghen, we have found our defensive rocks for the next five years. Hugo Lloris is a world-class keeper in his prime, and the strong leader every great team needs. The academy is producing elite-level talent, with a route to the first-team squad. We have one of the finest training facilities in Europe. There is a footballing identity that will guide recruitment and reduce the buy-low, sell-high crapshoot that has been the transfer policy of the past. The new stadium, once built, will be state-of-the-art.

And then there is the manager. Mauricio Pochettino, in less than two years, has fundamentally altered the future of our club.

In his first year, he won the “Game of Thrones” contest with the likes of Franco Baldini, Emmanuel Adebayor and the Kaboul cabal. This year, he has laid the foundations of his vision for how the team should go about its business on the field. Spurs may not win the league this time — the squad is still missing one or two crucial pieces of a title-winning jigsaw — but we are going to take some stopping next season.

Based on everything we know about Pochettino at this point, do you think, for one second, he is the type of man who is going to settle for one good season, and then take the foot off the gas? Not a chance.

All this — the young team, the stadium, the manager, the training centre — have been built on sustainable foundations. Spurs have never been reliant on a sugar daddy or speculation: Daniel Levy has never had a problem making Spurs profitable. Levy’s issue throughout his chairmanship has been recruiting the right people to execute his vision. He got lucky with Pochettino, having instead wanted to appoint Van Gaal, but you watch him sit back now and ride this stroke of good fortune for all its worth.

At no other club is there such an alignment, across so many aspects.

At Manchester City and Chelsea, their success was bought, not earned. There is no sustainability in that, just the need to keep on pumping in millions after millions, until eventually the owners decide to stop. Chelsea, in particular, are anarchic with Roman Abramovich still treating the club as a plaything.

A Manchester City fan recently described the emptiness at the Etihad (and how he too thought Spurs could be the next big thing). It was in full view on Tuesday night in a limp contest against PSG when the only time the crowd was remotely roused was in the booing of the UEFA anthem. How big a step down are European nights at the Etihad going to feel for Pep Guardiola after Barca and Bayern? This lack of passion and identity inevitably drifts down to the players.

Furthermore, both clubs also face similar issues with their squads in years to come — ageing cores, too many mercenaries, and no clear route for the imported kids lured to the lavish academies.

At Liverpool, the dreams of a second dynasty, and a sense that they are entitled to it, will never dim. In Jurgen Klopp, they may have recruited a future-altering figure of their own, and the owners, despite the flak, put their money where their mouth is. Funds are always available for players, and when it came to expanding Anfield, they just wrote a cheque. But Liverpool rival Spurs in the “false dawn” stakes. There is no consistent proof, yet, that Klopp is able to shape a disparate team to his liking. And where are the young Liverpool kids? Liverpool haven’t produced a Scouse hero since Steven Gerrard.

At Arsenal, the mood is bleak. In the early 2000s, it looked like Arsene Wenger would be the man to break Ferguson’s stranglehold. He built one great team, the Invincibles, but never managed to build another. The 2006/07 squad, the first in the Emirates, is a who’s who of disappointments: Abou Diaby, Denilson, Alex Song, Johan Djourou, Emmanuel Eboue, Mathieu Flamini, Philippe Senderos, Emmanuel Adebayor, Cesc Fabregas and Gael Clichy. This was meant to be the next super team, Wenger’s vision of a homegrown crop hand-reared in his philosophy, but few made the grade and those that did were sold. The next generation, built around the likes of Jack Wilshere, Theo Walcott and Aaron Ramsey, has also never hit the heights and looks set to be dismantled in turn. Wenger has been forced to go against every instinct and buy stars, rather than create them.

The fan base now is mutinous, losing faith in the manager and unable to process the sight of Leicester (and Tottenham) above them. Nothing stings as much in football as the feeling that you have wasted an opportunity. Arsenal will eventually have to replace Wenger, one way or another, and can only look at the succession-planning debacle at Old Trafford with apprehension.

Can you see what I’m getting at? Spurs may not win the league this season, but for the next five years at least, with modest improvements in the transfer market and a bit of luck, there is no reason why we shouldn’t be challenging. That’s a dynasty in the making, all right.

What could go wrong?

Well, a bunch of things. Real Madrid or Barcelona could come calling, and they are very hard to turn down. Players could get injured, new buys could flop, the team could become complacent. The stadium may be delayed, or over budget, or fail to replicate the feeling of home. The club ownership could change, the youngsters may stop coming through, and worse of all, Pochettino may be tempted away.

There’s also the chance that another of the teams gets it together like Spurs. I fear Man City the most, with Guardiola and an unlimited budget. Liverpool seem like that finally have a perfect match of manager and club.

What comes next will be formidably difficult. Nothing is guaranteed. But you can sense a togetherness and hunger at Spurs the like of which I can’t recall.

Us Spurs fans have been remarkably measured about this season: there is little frustration that Leicester appear to be heading for the title instead of us. That is because we know that this is just the start. But we are Spurs fans, scarred by years of false dawns, and there is a fear of tempting fate by articulating what we feel inside.

To hell with that. Spurs are on the march, and the rest of the league had better watch out.

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