Let's talk about the wage bill

[Maxtremist]

Transfer dealings are one thing. Wages budget is another. You can't establish a wages policy based on money you might get it. You can only base it on money you know will come in. You could spend CL income on player purchases, but you can only agree wages over the next 5 years for that player based on commercial deals and known gate receipts over that period.

Not to mention how ridiculously transfers have changed just this summer alone. We've seen the world record fee change last season and again this season and players like John fucking Stones go for 50 mil. We sold walker for near 50. Do we think anyone expected stuff like that when we announced our stadium? Or two seasons ago? Did we think realistically asking for 50mil for Walker was possible at the start of last season?

 

[Hazardousman]

Transfer dealings are one thing. Wages budget is another. You can't establish a wages policy based on money you might get it. You can only base it on money you know will come in. You could spend CL income on player purchases, but you can only agree wages over the next 5 years for that player based on commercial deals and known gate receipts over that period.

And, in your opinion, do you believe we could not afford to increase wages in order to maintain or gain success on the field by keeping our best players?

Every business decision is a risk, sometimes you have to speculate to accumulate.

 

[Jimmypearce7]

We have to pay something approaching the going rate. Players will accept being paid slightly less than what they might earn but not half or much less. I would prefer the £50m for Walker was spent on putting all the salaries up a bit.

 

[Led's Zeppelin]

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If he understood the value of the success of the team in relation to the value of the company then we wouldn't be going into the season without a RB and numerous other signings that we need to strengthen our depth.

This isn't rocket science, Poch is practically begging for signings at this point, this isn't the first time this has happened, Levy has a track record with this stuff in regards to signings and managers and it hasn't made the company lose value yet has it?

The fact is this, since Poch has been here our value has increased, Levy has a problem understanding that with increased success, comes increased demands and standing still isn't showing ambition, it's doing the opposite.

So I am not sure what Daniel is trying to achieve but if he thinks a stadium is all that matters well, he is naive and whilst our level of success might not be truly impacting our value, losing this squad and Poch truly will impact it because it will be a bigger drop off going from our position now back to 5th-7th than it ever was before.

So you believe he doesn't understand the very basic simple facts about business. It's not rocket science, as you say, so why not try to think of more plausible reasons for his strategy than simply assuming that he doesn't know what he's doing?

 

[Maxtremist]

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If he understood the value of the success of the team in relation to the value of the company then we wouldn't be going into the season without a RB and numerous other signings that we need to strengthen our depth.

This isn't rocket science, Poch is practically begging for signings at this point, this isn't the first time this has happened, Levy has a track record with this stuff in regards to signings and managers and it hasn't made the company lose value yet has it?

The fact is this, since Poch has been here our value has increased, Levy has a problem understanding that with increased success, comes increased demands and standing still isn't showing ambition, it's doing the opposite.

So I am not sure what Daniel is trying to achieve but if he thinks a stadium is all that matters well, he is naive and whilst our level of success might not be truly impacting our value, losing this squad and Poch truly will impact it because it will be a bigger drop off going from our position now back to 5th-7th than it ever was before.

Well to counter that, Levy's sees our success can be achieved in other ways, like investing in our youth programmes and training facilities as much more of a long term thing.

I'm very neutral to Levy generally speaking but to assume he doesn't understand the value of our success? Really?
He just has a different way of approaching it. It might not be the 'best' way but what is the best way? Is there a best way?

 

[TH1239]

Why has this notion taken hold here among many that there will be some sort of inevitable collapse in television revenue? It would be completely unprecedented for the next television deal, which will negotiated in the coming season, to be less than the last deal (which is guaranteed through 2019). The simple fact of the matter is that sporting events represent the last type of content that people will watch live. Irrespective of a one-season domestic ratings drop, the Premier League is experiencing unprecedented international growth and is a prime commodity that has seen television revenue increase at every turn the last three decades.

Already, there are projections that international television revenue will massively expand through 2022 (see this: http://www.dailymail.co.uk/sport/fo...ue-earn-billions-thanks-foreign-TV-deals.html). Furthermore, if you look at television deals for comparable billion pound professional sports leagues worldwide (MLB, NFL, NBA), NONE of them have seen any kind of serious retraction in recent decades, but have seen robust growth. The NFL is the only other league that has had a period of explosive growth like the Premier League and despite a major ratings slide last season, remains a golden brand among advertisers (https://www.forbes.com/sites/kurtba...billion-despite-drop-in-ratings/#5feca4d3525b).

By the way, if you want evidence from this week that there will be yet another bidding war for the domestic 2019-2022 television rights, please note that the Football League just doubled their television deal revenue and there are talks that Amazon, with their unlimited funds, could compete with BT and Sky in an upcoming auction for EPL television rights: https://www.theguardian.com/footbal...ve-football-league-rights-in-180m-a-year-deal

With all that said, one thing that is missing from this thread and this general debate among Spurs fans is raw numbers. I wonder how many people know how little our staff costs have moved since the beginning of the decade. Let's look.

YEAR/TURNOVER/WAGE BILL/WAGE BILL TO TURNOVER RATIO (FIGURES THROUGH 2016 VIA OFFICIAL CLUB RELEASED FINANCIAL REPORTS)

2011/2012--144.2/90.2= 62.55% (television income 59.2 million)

2012/2013--147.3/96= 65.1% (television income 57.3 million)

2013/2014--180.5/100.4= 55.6% (television income 89.5 million--new television deal begins this season)

2014/2015--196.3/100.8= 51.3% (television income 90.5 million)

2015/2016--209.8/100.4= 47.85%% (television income 94.8 million)

2016/2017--There has been no financial report released for this past season, but let's make some rough projections. To begin with, television income rose substantially to 145.5 million pounds per http://www.bbc.com/sport/football/40125394, as a new television deal through 2018-2019 went into effect. The club also earned Champions League football for the first time since 2010/2011. In 2015/2016, the club earned a little over 15 million pounds via Europa League payouts per the official financial report, so let's be conservative and say that we only earned a total of 30 million pounds from our CL exploits, which would mean a 15 million pound increase on that front from the previous season, on top of the 50 million pound television revenue increase. Setting aside any new commercial deals, our revenue likely grew by roughly 65 million pounds last season (note that the Nike kit deal, by numerous reports, represents a dramatic rise in annual payout over the previous Under Armour deal, but let's ignore that for now). That rise in television and CL income would see our total turnover around an estimated 275 million pounds for 2016/2017. Now, on the wage bill front, it's harder to project what costs the new contracts handed out to a near dozen players placed on staff expenses for last season. Let's say we've been ultra aggressive in providing pay rises since the summer of 2016 and have handed 12 players an average pay rise of 35K a week, each (I can't recall the exact number of players who got fresh contracts from the first team). That would mean a wage bill rise of 21.8 million pounds and put Spurs at roughly 275 million in turnover to 122 million in wages (44.3% wage to turnover ratio). If someone wants to challenge that and thinks 35K a week average increase for say, 12 players, is too little, go ahead and make your own projections for last season. But I think I'm being pretty aggressive in that projection. The bottom line is this: our revenue has massively increased the past 5 years and our wage bill has almost surely not kept pace.

I believe we need to substantially up our wage bill to at least meet the previous threshold of 55% wage to turnover ratio. Given our new commercial deals and CL football the coming season, our revenue may very well break 300 million pounds. Our wage bill should be at least half that. If it was, you could potentially give the 10 most important players in the squad something like a 50K a week bump in salary, which I think would be pretty fair and put the players pay in line with the market and many of our competitors. Right now, it seems clear to me we are operating well below our capabilities on the wage front, unless Levy MASSIVELY increased the wage bill in the last year, which doesn't seem the case given the Rose outcry. Now, I understand stadium expenditures, but that is debt that will be paid off incrementally over time and covered partially by yet to be finalized naming rights fees. The owners of the club have also seen their initial 25 million pound purchase of the club turn into a near billion pound windfall, as Forbes placed Spurs recent value at well over 800 billion pounds (this number almost certainly will increase with a new stadium and increasing revenues).

In conclusion, we know we have one of the best squads in the history of the club RIGHT NOW. Why should we risk many of the players leaving due to an ultra lean wage bill, only to hypothetically spend vigorously in 5 years time on wages when the stadium debt is paid down on players who are gambles to ever reach the current squad's level? Why not invest NOW in the squad we know can take the club to the top (at a most crucial moment when on the pitch results are vital to ensuring a filled new stadium), instead of spending later on players who could far more easily flop? Furthermore, there is NO ironclad guarantee that once the stadium is built and paid for, that Levy will massively increase spending. He has no binding obligation to do so. I think the pressure in the next year is going to be too great for him not to make a decisive choice on whether to break our current structure to keep our squad and manager in tact. If he doesn't do it, and we have a mass exodus (which is likely, in my opinion), it could set the club back a decade. If he does do it, I think he'll be rewarded with regular Champions League football and trophies. Watch in 6-8 months when the next television deal is negotiated. If, as I believe, the television money keeps pouring in, the excuses of an imminent collapse will fade really quickly and player/fan pressure to up the wage bill substantially will increase massively by next summer.

 

[Archibald Leitch]

And, in your opinion, do you believe we could not afford to increase wages in order to maintain or gain success on the field by keeping our best players?

I don't believe we can afford to double Walker and Rose's wages. That would inevitably lead to a significant number of other players (quite reasonably) wanting theirs doubled too. We don't have the income to double the entire wage bill. Sad fact, but true.

Every business decision is a risk, sometimes you have to speculate to accumulate.

 

[Hazardousman]

So you believe he doesn't understand the very basic simple facts about business. It's not rocket science, as you say, so why not try to think of more plausible reasons for his strategy than simply assuming that he doesn't know what he's doing?

I know he knows what he is doing, he isn't stupid.

It's his reasoning behind it that I question, I question his motivations because from where I am sitting, on the face of things with the new stadium it looks "ambitious" but our recruitment policy and wage structure says otherwise.

So it's one of two things as far as I am concerned, Levy thinks he can have success with this current team and keeps things exactly as they are and rely on the promise of a better future (naive) or, success and ambition is a secondary concern and the main motivator is making this stadium and gaining as much profit as possible for the people in charge and himself whilst maintaining a reasonable position in the league (anywhere from 1st - 6th.)

 

[DJS]

Wages are out of control and there really should be a wage cap.

But in regards to our own situation, I'm under the assumption that once we move into new stadium and get massive revenue increase due to much larger capacity that we'll be able to pay higher wages.

Or am I too simplistic in my view?

 

[sussexyid]

People keep saying we should put money into our existing players wages. How exactly are we to do this?

If we gave our 10 best performers a £10k a week pay rise we'd be paying out an extra £50m on wages a year.

Considering the likes of Utd, City and Chelsea are paying players well over double our current players this wouldn't be enough to keep players should money be their determining motivator anyway.

I don't think there is a short-term option. If we pay the same wages as our rivals then we will be operating well over budget.

I think we just carry on as we are. We are doing well and competing where it matters, on the pitch.

Continue to do that and in time our finances will improve further and we'll competing in other areas too.

Dude, you need to improve your math skills

10x£10k = £100k
52 weeks per year x £100k = £5.2m

But... The problem here is not your math, the problem is the going rates. Our best are on circa £70k - £100k per week.

Once the new stadium is open, we have 25k more fans coming in, 19 league games a season, £60 per ticket = £28.5m increase in turnover. Put that into a weekly wage to our top 10 players and its another £55k per week so the top bracket players can go to circa £120k - £150k per week. Granted, we will have cup runs, europe etc to increase that, but also higher overheads to make a dent in it so the point is still valid.

Huges amounts of money, but nowhere near the £250k Rooney commands, £340k for Sanchez or Ozil and the list goes on.

Without a massive cash injection from somewhere (Im looking at you, Rothschilds foundation) we are screwed.

 

[Shadydan]

Every business decision is a risk, sometimes you have to speculate to accumulate.

Thank God you're sitting at home ranting behind a computer screen and not running a multi million pound company, Mr Ridsdale

 

[Archibald Leitch]

Right now, it seems clear to me we are operating well below our capabilities on the wage front, unless Levy MASSIVELY increased the wage bill in the last year, which doesn't seem the case given the Rose outcry.

As I recall, most of the players signed new contracts in the last 12-18 months all getting substantial increases.

 

[Hazardousman]

I don't believe we can afford to double Walker and Rose's wages. That would inevitably lead to a significant number of other players (quite reasonably) wanting theirs doubled too. We don't have the income to double the entire wage bill. Sad fact, but true.

But what are you basing this on? Is there any financial numbers that prove this to be the case?

Also, I am not suggesting we double the entire wage bill, I am merely suggesting we pay players what the market would dictate their value to be or we will eventually lose them and by doing so, we will regress, it is inevitiable.

 

[dontcallme]

Dude, you need to improve your math skills

10x£10k = £100k
52 weeks per year x £100k = £5.2m

But... The problem here is not your math, the problem is the going rates. Our best are on circa £70k - £100k per week.

Once the new stadium is open, we have 25k more fans coming in, 19 league games a season, £60 per ticket = £28.5m increase in turnover. Put that into a weekly wage to our top 10 players and its another £55k per week so the top bracket players can go to circa £120k - £150k per week. Granted, we will have cup runs, europe etc to increase that, but also higher overheads to make a dent in it so the point is still valid.

Huges amounts of money, but nowhere near the £250k Rooney commands, £340k for Sanchez or Ozil and the list goes on.

Without a massive cash injection from somewhere (Im looking at you, Rothschilds foundation) we are screwed.

Yeah I started thinking ahead then got my numbers mixed up when I actually wrote the post.

I was thinking about the amount of players earning over £100k a week more than our stars and how this increase could lead to an extra £50m in wages.

Then wrote about giving players a £10k a week increase but stuck to my original calculations.

 

[dontcallme]

But what are you basing this on? Is there any financial numbers that prove this to be the case?

Also, I am not suggesting we double the entire wage bill, I am merely suggesting we pay players what the market would dictate their value to be or we will eventually lose them and by doing so, we will regress, it is inevitiable.

But this is the problem, the market is fucked.

For a long time now the top clubs have been paying average Prem players over 100k a week. With the new influx of money this is getting even more ridiculous.

PSG haven't paid for Neymar with the club's earnings, just their boards money.

If every club was simply living off their turnover we could offer a competitive salary in comparison with our competitors. We are consistently in the top 20 richest clubs in the world list after all.

But sadly that is not the case anymore. Talking about market rates is becoming irrelevant.

 

[Hazardousman]

Thank God you're sitting at home ranting behind a computer screen and not running a multi million pound company, Mr Ridsdale

It's all well and good giving passive aggressive retorts on a message board but I have yet to see any evidence from you or others that are defending our approach in the market that we cannot increase our wage bill, I have yet to see any reasonable logic for us not signing a player, especially a RB as a replacement for Walker.

All I am seeing is excuses and shit flinging to people who refuse to go along with the consensus that Levy is infallible or is "doing the best he can for the club."

Which I simply refuse to believe.

Unless of course he proves me otherwise in the coming weeks and strengthens us and manages to keep our current players and manager happy.

Frankly, Levy is secondary to my concerns, keeping Poch and this team motivated and giving Poch the tools to allow him to provide us with more success on the pitch is my only concern because if this team falls apart no stadium in the world will fix the damage.

Also, the same could be said for you Shady, you know just as much as I do on the matter so let's not pretend like you are more sagacious when it comes to these matters because you are not criticizing our business model in the way that I am.

 

[Graysonti]

Not all players are on £100k plus a week.

Real Madrid (largely considered the biggest club in world) only have 8 players on more than £100k (I will dig out article).

THe same will run true through Man U and Chelsea.

 

[smallsnc]

I actually think it is our wage structure and not the transfer fees that has kept us from signing someone this summer. Players are willing to go and fight for playing time know they may not get it if they are paid significantly more than what they were making at their old club. We offer a player no assurances about making our starting 11 because of the qualities of the team and do not offer the significantly higher wages. Not sure what we can do about that right now.

 

[Archibald Leitch]

But what are you basing this on? Is there any financial numbers that prove this to be the case?

Yes.

Also, I am not suggesting we double the entire wage bill, I am merely suggesting we pay players what the market would dictate their value to be or we will eventually lose them and by doing so, we will regress, it is inevitiable.

But what are you basing this on? Is there any financial numbers that prove this to be the case?

 

[Graysonti]

I've no problem receiving a 'WTF?' rating @Graysonti but I don't quite understand the question. Care to elaborate?

Fat fingers