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 club’s owners since 2001, have an 86.58 per cent controlling share but are seeking fresh investment to “capitalise on our long-term potential, to continue to invest in the teams and undertake future capital projects”.

That was the main takeaway from Tottenham’s financial statement which otherwise provided mixed results. The club announced record-breaking revenues of £549.6m from matchday income and lucrative TV and commercial deals. However, they also made a significant loss of £86.8m.

i spoke to football finance expert Kieran Maguire to assess the positive and negative aspects of the club’s financial position, the importance of Champions League qualification to their revenue streams and how attractive they could be to prospective investors.

Tottenham’s losses explained

Tottenham’s post-tax losses of £86.8m look stark considering it represents a sizeable jump from the £50.1m losses posted for the previous accounting year from 2021-22.

Player trading was a significant reason for that. Spurs spent approximately £152m on players during the 2022-23 season but only recouped around £27m from Steven Bergwijn’s 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 Postecoglou‘s squad.

“The losses do look high,” Maguire says. “Manchester City break even every year and they are really good at player trading which people don’t give them credit for.

“I think that’s an area that Spurs need to address. Their player sales over the past couple of seasons have been modest and that’s contributed towards the significant losses.”

They improved in that regard last summer with Harry Kane’s move to Bayern Munich bringing in £85m of “pure profit” in Financial Fair Play [FFP] terms.

Harry Winks, another academy graduate, also recouped £10m from his transfer to Leicester, while Davinson Sanchez was sold to Galatasaray. Those deals will contribute towards next year’s accounts.

“They’ll have £85m from the Harry Kane sale going into the 2024 accounts so I would suspect them to be substantially better,” Maguire says. “[Although] That will offset the downside of not being in Europe [this season].”

It brings Tottenham’s total post-tax losses over the past three seasons to £232m, well in excess of the £105m 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 “huge infrastructure costs” related to their stadium. Such costs do not count towards PSR as they are seen as being “in the general interests of football”.

Spurs are ‘spectacularly attractive’ to new investors

News that Spurs are exploring external investment is significant given Enic’s 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 chairman’s comments to financial website Bloomberg last September.

“I’ve got no real interest to leave Tottenham, but I have a duty to consider anything that anyone may want to propose,” 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 Levy’s announcement.

“I think they are spectacularly attractive [to investors],” says Maguire. “The infrastructure cost has already been incurred so it’s not like buying a house and needing to fit a new kitchen and so on.

“The training facilities are the best in the country, the stadium is the best in the country in my opinion. It’s 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.”

Stadium revenue ‘critical’ to competing for trophies

Besides the losses, Tottenham’s accounts make for promising reading. Their total revenue of £549.6m represents a 24 per cent increase from the 2022-23 financial year which stood at £444m.

Their commercial deals, which encompass sponsorship, merchandising and non-matchday stadium events including Beyonce’s record-grossing five-night concert in May and June last year, soared to £227.7m from £183.5m.

Spurs also have deals with Formula One and the NFL and have hosted rugby union and boxing matches. According to Maguire, they are “market leaders” when it comes to establishing commercial revenue streams.

The Tottenham Hotspur Stadium, meanwhile, is rapidly becoming a monumental money maker. The club’s matchday income rose to £117.6m from £106.1m, another record-breaking figure and almost 3.5 times more than they earned at their former stadium.

MUNICH, GERMANY - MARCH 5: Harry Kane of Bayern Muenchen celebrates after scoring his team's third goal during the UEFA Champions League 2023/24 round of 16 second leg match between FC Bayern M??nchen and SS Lazio at Allianz Arena on March 5, 2024 in Munich, Germany. (Photo by Harry Langer/DeFodi Images via Getty Images)
Harry Kane’s £85m move to Spurs will be documented in next year’s accounts (Photo: Getty)

According to Maguire, that equates to £95.53 per fan per matchday and could, in time, boost the club’s chances of silverware.

“If their ambition is to compete for trophies then it [matchday revenue] is absolutely critical,” Maguire says.

“If we go back to when the club was at White Hart Lane, they were generating around £35m from ticket sales. So that’s an increase in matchday revenue of £82m from what was a pretty mediocre season last year.

“I 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 you’ve got a chance of that turning into something more successful on the pitch.”

How important is Champions League qualification?

Tottenham’s accounts highlight the importance of Champions League revenue given they earned £56.2m 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.

Postecoglou’s squad are currently fifth in the table, two points behind fourth-placed Aston Villa, with eight games remaining following Tuesday’s 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 season’s 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.

“Even 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 what’s needed to convert a loss-making club into a profitable one,” says Maguire.

Levy’s bonus ‘raises eyebrows’ after season ticket hikes

An aspect of the club’s financial statement that caught the attention of eagle-eyed fans were details of Levy’s income. As the club’s highest-earning director, such information has to be disclosed.

Levy earned a base salary of £3.581m, an increase of £316,000 from the previous year, and also received a bonus of £3m.

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 weekend’s win over Luton, in solidarity with the club’s older fans.

“I think it’s fair to say it has raised eyebrows,” Michael Green, vice-chair of the Tottenham Hotspur Supporters’ Trust told i. “There’s a general issue in this country when it comes to levels of executive pay but that’s a wider political issue.

“The optics of a senior executive receiving a substantial increase in overall pay at the same time as fans are being asked to stump up – and particularly pensioners many of whom will find it very difficult to absorb the increased costs forced by the reduction of their concessions – it just looks very poor.

“We don’t see the components of that [Levy’s 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.”

“It does seem insensitive of the club,” adds Maguire. “It’s six per cent on top of a ticket price that was already at the top end in the Premier League.”

News of Tottenham’s 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 “a person with significant control” of the club.

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