Why Tottenham are ‘spectacularly attractive’ to new investors despite losses
Tottenham chairman Daniel Levy confirmed that the club have held talks with potential investors in their 2022-23 financial accounts.
Enic, the clubâs owners since 2001, have an 86.58 per cent controlling share but are seeking fresh investment to âcapitalise on our long-term potential, to continue to invest in the teams and undertake future capital projectsâ.
That was the main takeaway from Tottenhamâs financial statement which otherwise provided mixed results. The club announced record-breaking revenues of ÂŁ549.6m from matchday income and lucrative TV and commercial deals. However, they also made a significant loss of ÂŁ86.8m.
i spoke to football finance expert Kieran Maguire to assess the positive and negative aspects of the clubâs financial position, the importance of Champions League qualification to their revenue streams and how attractive they could be to prospective investors.
Tottenhamâs losses explained
Tottenhamâs post-tax losses of ÂŁ86.8m look stark considering it represents a sizeable jump from the ÂŁ50.1m losses posted for the previous accounting year from 2021-22.
Player trading was a significant reason for that. Spurs spent approximately ÂŁ152m on players during the 2022-23 season but only recouped around ÂŁ27m from Steven Bergwijnâs sale to Ajax.
Eight first-teamers were sent out on loan, including club-record signing Tanguy Ndombele, Sergio Reguilon and Giovani Lo Celso, who has since been reintegrated into Ange Postecoglouâs squad.
âThe losses do look high,â Maguire says. âManchester City break even every year and they are really good at player trading which people donât give them credit for.
âI think thatâs an area that Spurs need to address. Their player sales over the past couple of seasons have been modest and thatâs contributed towards the significant losses.â
They improved in that regard last summer with Harry Kaneâs move to Bayern Munich bringing in ÂŁ85m of âpure profitâ in Financial Fair Play [FFP] terms.
Harry Winks, another academy graduate, also recouped ÂŁ10m from his transfer to Leicester, while Davinson Sanchez was sold to Galatasaray. Those deals will contribute towards next yearâs accounts.
âTheyâll have ÂŁ85m from the Harry Kane sale going into the 2024 accounts so I would suspect them to be substantially better,â Maguire says. â[Although] That will offset the downside of not being in Europe [this season].â
It brings Tottenhamâs total post-tax losses over the past three seasons to ÂŁ232m, well in excess of the ÂŁ105m limit imposed by the Premier League in its Profit and Sustainability Regulations [PSR].
However, Spurs are in no danger of breaching PSR rules given their âhuge infrastructure costsâ related to their stadium. Such costs do not count towards PSR as they are seen as being âin the general interests of footballâ.
Spurs are âspectacularly attractiveâ to new investors
News that Spurs are exploring external investment is significant given Enicâs long-standing tenure in charge.
However, it also indicates that Levy and the rest of the board are not looking to sanction a full sale, which tallies with the chairmanâs comments to financial website Bloomberg last September.
âIâve got no real interest to leave Tottenham, but I have a duty to consider anything that anyone may want to propose,â Levy said.
It has been previously reported that Nasser al-Khelaifi, the president of Paris Saint-Germain and chairman of Qatar Sports Investments (QSI) met with Levy at the start of 2023 to discuss possible minority investment in the club.
There is currently no suggestion of Qatari interest in Spurs following Levyâs announcement.
âI think they are spectacularly attractive [to investors],â says Maguire. âThe infrastructure cost has already been incurred so itâs not like buying a house and needing to fit a new kitchen and so on.
âThe training facilities are the best in the country, the stadium is the best in the country in my opinion. Itâs a London club with history and heritage. I think we are looking at the international ownership market here. It would be very attractive to anybody that wants to make a mark.â
Stadium revenue âcriticalâ to competing for trophies
Besides the losses, Tottenhamâs accounts make for promising reading. Their total revenue of ÂŁ549.6m represents a 24 per cent increase from the 2022-23 financial year which stood at ÂŁ444m.
Their commercial deals, which encompass sponsorship, merchandising and non-matchday stadium events including Beyonceâs record-grossing five-night concert in May and June last year, soared to ÂŁ227.7m from ÂŁ183.5m.
Spurs also have deals with Formula One and the NFL and have hosted rugby union and boxing matches. According to Maguire, they are âmarket leadersâ when it comes to establishing commercial revenue streams.
The Tottenham Hotspur Stadium, meanwhile, is rapidly becoming a monumental money maker. The clubâs matchday income rose to ÂŁ117.6m from ÂŁ106.1m, another record-breaking figure and almost 3.5 times more than they earned at their former stadium.
According to Maguire, that equates to ÂŁ95.53 per fan per matchday and could, in time, boost the clubâs chances of silverware.
âIf their ambition is to compete for trophies then it [matchday revenue] is absolutely critical,â Maguire says.
âIf we go back to when the club was at White Hart Lane, they were generating around ÂŁ35m from ticket sales. So thatâs an increase in matchday revenue of ÂŁ82m from what was a pretty mediocre season last year.
âI think they do have a grand vision. It has not been converted as yet into success on the pitch but the fact that they have overtaken Arsenal in terms of their wage bill and there has been significant investment in the squad, eventually youâve got a chance of that turning into something more successful on the pitch.â
How important is Champions League qualification?
Tottenhamâs accounts highlight the importance of Champions League revenue given they earned ÂŁ56.2m in Uefa prize money for reaching the last 16 of the competition last season. Conversely, they will receive no such revenues this season given they are not in any Uefa competition.
Postecoglouâs squad are currently fifth in the table, two points behind fourth-placed Aston Villa, with eight games remaining following Tuesdayâs 1-1 draw with West Ham.
Spurs have plenty of tough fixtures still to play with away matches at Newcastle, Liverpool and Chelsea and home games against Arsenal and Manchester City coming up.
Their current league position could yet prove to be sufficient in qualifying for next seasonâs expanded competition, though, if the Premier League gains an extra place.
Ironically for Spurs, that depends on how well London rivals Arsenal and West Ham perform in the Champions League and Europa League, respectively. Aston Villa are also competing for the Europa Conference League.
âEven given where Spurs are today in terms of the success of the stadium and their ability to monetise it for more than just home matches, participation in the Champions League is probably whatâs needed to convert a loss-making club into a profitable one,â says Maguire.
Levyâs bonus âraises eyebrowsâ after season ticket hikes
An aspect of the clubâs financial statement that caught the attention of eagle-eyed fans were details of Levyâs income. As the clubâs highest-earning director, such information has to be disclosed.
Levy earned a base salary of ÂŁ3.581m, an increase of ÂŁ316,000 from the previous year, and also received a bonus of ÂŁ3m.
That bonus figure is roughly what the club stands to make from the six per cent increase in season ticket prices that will come into effect for the 2024-25 season.
Spurs have also slashed concessionary rates for senior citizens starting next season, a move that has led to a fierce backlash from supporters. Thousands turned their back on the pitch in the 65th minute of last weekendâs win over Luton, in solidarity with the clubâs older fans.
âI think itâs fair to say it has raised eyebrows,â Michael Green, vice-chair of the Tottenham Hotspur Supportersâ Trust told i. âThereâs a general issue in this country when it comes to levels of executive pay but thatâs a wider political issue.
âThe optics of a senior executive receiving a substantial increase in overall pay at the same time as fans are being asked to stump up â and particularly pensioners many of whom will find it very difficult to absorb the increased costs forced by the reduction of their concessions â it just looks very poor.
âWe donât see the components of that [Levyâs bonus] and how it is measured but the period it covered was one in which the club had one of its worst seasons in many years.â
âIt does seem insensitive of the club,â adds Maguire. âItâs six per cent on top of a ticket price that was already at the top end in the Premier League.â
News of Tottenhamâs openness to sourcing fresh financial backing comes in the same week that former owner Joe Lewis is due to be sentenced in the US for breaking insider trading laws. As of October 2022, Lewis has ceased to be âa person with significant controlâ of the club.