Financials 17/18

[Lilbaz]

I think revenue will definitely hit £450m. The latest £380m figure doesn’t include:

ST hike £20m
Naming £20m
16 events £20-30m

Not sure if NFL been included already but will lots of other bits and bobs we might even push £500m. Also not mentioned is we will make a fair whack from the flats. There’s no social hosing in the flats we could easily make £150-200m from the development.

It does include the season ticket hike though. That's why people are getting refunds for the games at wembley.
Also we haven't got a naming rights deal.

 

[Graysonti]

It does include the season ticket hike though. That's why people are getting refunds for the games at wembley.
Also we haven't got a naming rights deal.

It doesn’t - this is to June 2018 when we was at Wembley with comparable tickets to WHL.

The ST hike will come part 2019 (or 20 if we don’t get in this season).

 

[am_yisrael_chai]

Just a small note on the "passionate" side of this... I've seen you truly piss off at least three different posters over the last week or so with your posting technique in relation to club finances. Hopefully you will appreciate that it can't just be everybody else that is wrong and/or inept at understanding money - there might be some culpability on your side as well.

But on to the finances, as I believe it your main grumble is that whilst our revenues have increased over the past 18 months and we have drastically closed the gap to our rivals, we aren't reflecting that by spending as much as our rivals do in terms of the playing squad. I hope I have that right.

Firstly, I totally agree that our revenues have been increasing at a higher rate and that we have closed the gap to the lower earners (Liverpool and Chelsea) to a negligible level. Liverpool obviously had a huge CL run last year so they maybe stretch the gap somewhat, but we're probably talking less than 30m difference now.

However, we are going through the stadium costs which will have an impact on our spending ability. We don't have an excuse for spending like a mid-table club for sure, but hopefully we can agree that if our spending is a touch below that of the other top six it would be understandable. Or at least wouldn't indicate a complete lack of ambition.

I made a point to you before about player wages which I think got lost in the fog somewhat so I'll have a go again to see what your opinion is of the wage side of things.

When we look at the top earners for the top six clubs we have de Bruyne and Sanchez on 350k, Ozil on 300k, then Kane/Salah/Hazard on 200k each. We could assume that if Salah and Hazard were to sign new contracts their wages would increase, but is it fair to say that we are at least getting in the mix in terms of our top earner?

I also took a look at the top three earners at the club (due to our new contracts for Kane/Son/Lamela) and compared that to club revenues as a percentage. I did this before the latest THFC statement and the Alli contract btw. I also ignored Chelsea and City in this regard because they are often considered the "doped" clubs. So not completely on point but the numbers were:

Spurs: 7.6% (Kane, Son, Lamela)
United: 7.9% (Sanchez, Pogba, De Gea)
Arsenal: 7.5% (Ozil, Auba, Laca)
Liverpool: 7.5% (Salah, Firmino, VVD)

Like I say, that Spurs number would go down in relation to the newer revenue figure, but then that would be offset if Alli is on something like 150k. I would also imagine that if the other clubs released interim revenue figures their revenues would increase as well. Would you say that we are at least starting to compete with the other top six in terms of the new contracts we are awarding?

A final thing I thought might be interesting whilst writing this post was what the managers are earning. Finding solid info for this seems to be more of a crap shoot but after scanning the net for a bit I came up with the following:

Mourinho: 15m
Guardiola: 15m
Poch: 8.5m
Klopp: 7m
Sarri: 6.5m
Emery: 6m

We can caveat this again by saying that if Klopp were to re-sign I would imagine him at equal or higher levels than Poch. But again this must be an indication that we are prepared to pay top six money on wages where it makes sense. Would you agree with that?

PS. I'm not trying to say that Spurs spend more than our rivals and I'm not trying to paint a picture of this having been a long-running thing. We have traditionally trailed our rivals in terms of wage spending for many years and this level of spending is completely new. I'm also not trying to kill the debate by claiming I'm right - I would be really interested to hear some alternative takes on those numbers and whether they represent sporting ambition or something else.

I completely accept other points of view but when you come to debate something technical like financials then sadly you need to be competent with the technicals, it would be like trying to debate a goal ruled offside without understanding anything about the offside rule. Would anyone on this site have any patience for a poster who was just emotional about a goal ruled offside or started making up new aspects of the rule that don't actually exist ? I've tried to be as dispassionate as possible and as polite as possible but sadly I don't feel that has been reciprocated. If that leaves others feeling exasperated then that is a shame but c'est la vie.

You have broadly speaking captured the brunt of my frustration. I could accept for many years being behind our rivals in terms of transfers and wages because clearly we were behind in revenues. I could also accept a policy of zero net spend to try and accumulate the necessary equity for the capital projects as it seemed our manager could perform miracles and outperform our spending power. However, what I can't accept, and it seems clear that neither can our manager, is that having made these sacrifices that at the point we see our revenues increase dramatically that we don't start competing on a level playing field with those who have similar revenues to us. It can't be that we had massive positive cashflow from operations in the period prior to the stadium build, supposedly to facilitate the stadium and then we need to also be austere in our spending once the stadium is up and running. I have no doubt that the reason for all of this is the issues surrounding the delivery of the stadium but quite frankly when Daniel Levy is the highest paid chairman in the league I really don't have any sympathy for him and feel he should have not hampered the progress of the playing squad due to his incompetence or misfortune with respect to the stadium delivery / naming rights. I would add that I feel this way not just a passionate fan but I also think it is really stupid from a business perspective as it risks the future tenure of the best manager I have seen at Spurs.

As to your specifics, yes of course we have increased the wages of some players but that in of itself isn't enough and still won't bring us anywhere close to the wages/revenue ratio of our competitors. Not that I'm advocating we reach Chelsea or City levels but we clearly have quite a lot of room to do more.

Of course as others have said ENIC own the club and so ultimately this is all nothing other than hot air however my annoyance is heightened by the very clear "evidence" that they have funded the capital projects through free cashflow i.e. fan money into the club, not through any equity injections themselves. If you are a fan of City or Chelsea you really can't have any complaints about how their owners spend money at the club because at the end of the day they are inviting you along to their party for free. That isn't true at Spurs, we as fans are paying 100% for the party and we are being very short changed by the quality of what is being served up.

I'm most encouraged by Poch finally venting on this subject as I don't think ENIC give a fig for what we as fans feel but I hope that they do care about his feelings and realise it would be near on impossible to replace him with another manager who could deliver the same results with the same resources.

 

[LeParisien]

Mate these are old old numbers and we have gone over this.

We are now turnover with Pool, Arse and Chelsea

Firstly, I totally agree that our revenues have been increasing at a higher rate and that we have closed the gap to the lower earners (Liverpool and Chelsea) to a negligible level. Liverpool obviously had a huge CL run last year so they maybe stretch the gap somewhat, but we're probably talking less than 30m difference now.

Revenue was £55m behind Chelsea (our nearest top 6 competitor) in 16/17.

If Chelsea and Liverpool both earned more last year from CL than us then they have extended the gap in that regard.

Commercial revenue in 16/17 was £60m behind Chelsea and Liverpool.

On the other hand Wembley was presumably a big plus for us compared to our rivals.

What other reasons are there for thinking the gap is now negligible compared to our rivals? There still seemed to be a lot of ground to make up in 16/17 compared to our rivals.

Also, Is there any benefit to the other clubs in having had largely superior revenues over the previous decade?

Profit after tax is irrelevant - it will include lots of non cash accounting entries like dep and amortisation.

What is important is EBITDA and cash generation.

We are and will further be, huge revenue generators.

EBITDA is looking very healthy. Is the crux of this debate about whether more of this money should go towards financing the stadium or towards improving the playing squad?

 

[thebenjamin]

I'm most encouraged by Poch finally venting on this subject as I don't think ENIC give a fig for what we as fans feel but I hope that they do care about his feelings and realise it would be near on impossible to replace him with another manager who could deliver the same results with the same resources.

If they gave a toss what Poch thought they would've signed players in the summer. Presumably, post the 'be brave' comments, what made him turn down Real and sign a new contract was some kind of guarantee of money / ambition. So if they cared much about losing him, they would've acted in the summer rather than, it seems, breaking promises and deliberately antagonising him.

 

[Graysonti]

Revenue was £55m behind Chelsea (our nearest top 6 competitor) in 16/17.



EBITDA is looking very healthy. Is the crux of this debate about whether more of this money should go towards financing the stadium or towards improving the playing squad?

Yes - that’s correct

 

[LeParisien]

Yes - that’s correct

I can see why you think more money should go to the playing squad.

What costs do you think there are of this approach?

 

[vegassd]

What other reasons are there for thinking the gap is now negligible compared to our rivals? There still seemed to be a lot of ground to make up in 16/17 compared to our rivals.

Also, Is there any benefit to the other clubs in having had largely superior revenues over the previous decade?

The figures I was going off were from this article on the Guardian website that summarised club finances for 16/17. That article gives a revenue figure of £368m for Chelsea and £364 for Liverpool. The recent THFC statement gave our revenue to June 2018 as £381m.

We would obviously be guessing at the specific revenues for both Chelsea and Liverpool in that same time period but I think it would be fair to say that the gap could well be less than 10% now, which must be the smallest it's been for many years.

I do think that the previous years of high revenue for other clubs helps them, of course. The reason I said that the gap is now negligible is because I wanted to make it clear that I wasn't using the old excuse of "we don't earn as much" that has often been used to defend Levy. I was trying to defend our spending position in a different way and just wanted that clarification.

The overall financing of a football club is obviously a very complicated thing which is why it's so easy for these debates to spiral into ranting and name calling. I was hoping to narrow down the argument to just player wages for a moment to hopefully dispell the myth of "no sporting ambition" from the owners.

 

[Lighty64]

I completely accept other points of view but when you come to debate something technical like financials then sadly you need to be competent with the technicals, it would be like trying to debate a goal ruled offside without understanding anything about the offside rule. Would anyone on this site have any patience for a poster who was just emotional about a goal ruled offside or started making up new aspects of the rule that don't actually exist ? I've tried to be as dispassionate as possible and as polite as possible but sadly I don't feel that has been reciprocated. If that leaves others feeling exasperated then that is a shame but c'est la vie.

You have broadly speaking captured the brunt of my frustration. I could accept for many years being behind our rivals in terms of transfers and wages because clearly we were behind in revenues. I could also accept a policy of zero net spend to try and accumulate the necessary equity for the capital projects as it seemed our manager could perform miracles and outperform our spending power. However, what I can't accept, and it seems clear that neither can our manager, is that having made these sacrifices that at the point we see our revenues increase dramatically that we don't start competing on a level playing field with those who have similar revenues to us. It can't be that we had massive positive cashflow from operations in the period prior to the stadium build, supposedly to facilitate the stadium and then we need to also be austere in our spending once the stadium is up and running. I have no doubt that the reason for all of this is the issues surrounding the delivery of the stadium but quite frankly when Daniel Levy is the highest paid chairman in the league I really don't have any sympathy for him and feel he should have not hampered the progress of the playing squad due to his incompetence or misfortune with respect to the stadium delivery / naming rights. I would add that I feel this way not just a passionate fan but I also think it is really stupid from a business perspective as it risks the future tenure of the best manager I have seen at Spurs.

As to your specifics, yes of course we have increased the wages of some players but that in of itself isn't enough and still won't bring us anywhere close to the wages/revenue ratio of our competitors. Not that I'm advocating we reach Chelsea or City levels but we clearly have quite a lot of room to do more.

Of course as others have said ENIC own the club and so ultimately this is all nothing other than hot air however my annoyance is heightened by the very clear "evidence" that they have funded the capital projects through free cashflow i.e. fan money into the club, not through any equity injections themselves. If you are a fan of City or Chelsea you really can't have any complaints about how their owners spend money at the club because at the end of the day they are inviting you along to their party for free. That isn't true at Spurs, we as fans are paying 100% for the party and we are being very short changed by the quality of what is being served up.

I'm most encouraged by Poch finally venting on this subject as I don't think ENIC give a fig for what we as fans feel but I hope that they do care about his feelings and realise it would be near on impossible to replace him with another manager who could deliver the same results with the same resources.

but what you don't understand is we needed to get at least 4 players off the wage bill, because of the amount of players we already have. we also need to start topping up the HG, and I'd expect Grealish was 1 to help a bit as we was 1 short, and was also hoping to off load Rose, which would of made us 2 short.

we was told by ITK that we had £150m to spend, but expected to get in the region of £120m back on sales. in those figures wages had to be taken into consideration. to sign 4 and keep the extra 4 means £38m in wages but £15m of that on players that couldn't even be involved in the CoC.

we also over the years have been buying the plan "B"'s and "C"'s, but this season with the failure to sell our unwanted, the last thing we needed was more plan "B"'s and "C"'s. so we went in for, de Ligt his club or Raiola upped he fee by over 20m, and the same club refused to sell De Jong. none of us know, not even the ITK's for certain why other of Pochettino's targets didn't sign, but because they didn't the hate for ENIC from you and others has gone through the roof. Pochettino didn't want plan "B"'s and "C"'s, and was also rumour someone many on here wanted, he never rated as high NDombele.

the only thing out of any of the arguments you have formed with anyone that I totally agree with is we need to up the youth side of our game, and hopefully now we are upping contracts we can match others in that department

 

[vegassd]

As to your specifics, yes of course we have increased the wages of some players but that in of itself isn't enough and still won't bring us anywhere close to the wages/revenue ratio of our competitors. Not that I'm advocating we reach Chelsea or City levels but we clearly have quite a lot of room to do more.

The numbers that I gave were looking at our most recent player contracts as a percentage of revenue and we were matching United, Arsenal and Liverpool. It's only for the top 3 contracts and I agree that we need to do this throughout the squad - or the players who deserve it at least - but can you agree that we are beginning to do what needs to be done?

I just did a quick check on City and Chelsea for completeness and whilst City are a whopping 9% Chelsea's top 3 contracts are 7.8% of revenue based on the 16/17 figures I was using. So I think we are right in there in terms of these new player contracts we are signing.

Wages is just one part of the overall equation, and us signing four decent deals doesn't instantly make us world beaters or anything, but it feels unfair to still be labelling ENIC as never paying the market rate for player salaries.

Of course as others have said ENIC own the club and so ultimately this is all nothing other than hot air however my annoyance is heightened by the very clear "evidence" that they have funded the capital projects through free cashflow i.e. fan money into the club, not through any equity injections themselves. If you are a fan of City or Chelsea you really can't have any complaints about how their owners spend money at the club because at the end of the day they are inviting you along to their party for free. That isn't true at Spurs, we as fans are paying 100% for the party and we are being very short changed by the quality of what is being served up.

Definitely agree on the hot air thing!

Again though, I think this is an unfair characterisation of the investment strategy. We've both discounted the investment model of City and Chelsea before and I think we should continue with that. It's highly unusual in any business for an investor to come in, purchase an expensive capital asset with their own money (outside of share purchase capital) and then essentially gift that asset to the business.

If the expectation of ENIC (and let's say Joe Lewis) is that he would spend £1bn of his own money to build the new stadium then I think you will be permanently disappointed with him. Perhaps your expectation is just that he would personally contribute a part of it. In that case it would be interesting to know how much (real term or percentage) would be a suitable figure for an owner with sporting ambition.

From what I understand of investment plans (which is primarily from fund managers) it is very usual for a business to pay for capital investments with their operating cashflow and loans leveraged against both the asset and the business itself. The loans are then paid back with the increased revenue that the asset is expected to realise. It's a perfectly normal thing to do and does not indicate greed or a lack of ambition.

We could look at the redevelopment at Anfield as a comparison. Fenway provided the money to undertake the redevelopment of their main stand, but it was as a loan and not a gift. Now I'm a big fan of FSG myself and I think their record of investment in player purchases puts ENIC to shame, although there are certainly caveats to that debate. But when it comes to financing of the stadium I cannot see anything unusual about the ENIC approach... not with my limited experience at least.

Personally I like the idea that all of the money for the stadium will come from Spurs itself. It's going to feel more like our own I think, and nobody will be able to turn round and say that we only have success because a private investor came to bail us out.

I'm very happy to be proved wrong about what the "norm" is when it comes to financing something such as a football stadium - like I said, my knowledge in this area is limited to reading about fund managers and how they identify companies which have the potential to make these sorts of investments.

But my direct point to you is that using our stadium financing as a reason to criticise ENIC is unrealistic. There are plenty of reasons to criticise ENIC, but of late it feels like many are grabbing literally anything associated with the club and pointing to it as "evidence" that ENIC are terrible owners and are only interested in taking fans' money.

 

[Shadydan]

You guys have a lot of patience.