Tottenham make world-record £113m profit despite costs of new stadium

[Buggsy61]

Yes but until we refinance they have to be paid by 2022. All £637m.

It is only the interest that goes in as a deduction to profits. The loan is on the balance sheet as a liability against the asset ( the stadium).
You are right that we will have to refinance in 2022 and I am sure the Board will be looking to pay off a fair chunk of that debt before then and to take advantage of the cheap finance.

 

[Lilbaz]

It is only the interest that goes in as a deduction to profits. The loan is on the balance sheet as a liability against the asset ( the stadium).
You are right that we will have to refinance in 2022 and I am sure the Board will be looking to pay off a fair chunk of that debt before then and to take advantage of the cheap finance.

From the link i posted above.

At the time of reporting, Spurs had taken £537m in financing for the stadium from a consortium of banks, drawing £445m of it. However, it should be noted after the reporting period, Spurs obtained a further £100m in financing, bringing the total debt to £637m, which is currently due to be paid in 2022.

 

[davidmatzdorf]

From the link i posted above.

At the time of reporting, Spurs had taken £537m in financing for the stadium from a consortium of banks, drawing £445m of it. However, it should be noted after the reporting period, Spurs obtained a further £100m in financing, bringing the total debt to £637m, which is currently due to be paid in 2022.

As I posted in detail a few pages ago, this is short-term development finance, because it's difficult-to-impossible to secure [cheaper] long-term money if you secure it against an uncompleted development. No one will fund developers on that basis.

That's why @Buggsy61 and I keep going on about refinancing. It's the standard thing to do when you've completed your project and there is a residual debt (there isn't always, e.g., if you're a residential developer and have sold off all the flats at a profit). No one would expect the club to pay off £637m (or whatever) in 2022 by writing a cheque. They'll refinance the debt at lower interest rates, over a longer term, with less punitive terms for early redemption.

The big question is whether they'll have to do that before capital receipts start to arrive from the sale of the residential and hotel development (Phase 3). Ideally, they'll want to reduce the residual debt using these receipts and refinance a much smaller debt. If they can't do this, because the housing isn't finished by the 2022 date, then that's where the penalties for early redemption come into the discussion: they need to refinance using a facility that will permit them to pay off chunks of the debt without being required to forward-pay a high percentage of the interest that otherwise would have been charged. Banks don't like you paying off your mortgage early, because they've budgeted for the long-term interest they expect to receive.

I don't know what the market currently has to say about early-redemption penalties. It changes from year to year, depending on expectations about future interest rates and other factors.

 

[TottenhamMattSpur]

Yes, "revenue" is receipts, which is not the same as "profit".

"Income" is something else again. And "money made" isn't really a definable concept, except in terms of the others.

Finally, I think you're getting your use of "gross" and "net" a bit confused.

These accounting terms have very specific meanings and when people just sling them around, confusion results.

No confusion. Gross = all monies received not accounting for any expenditure. Net is the actual sums of money after all expenditure accounted for.

My point was, why big us up for making the biggest ever net profit of any club ever anywhere, then go on to say "but we're still only 6th in the gross income"

What are clubs measured on? The team don't care about either. They just want results. The stakeholders, board etc, they probably care about net income. I guess anyone being paid by the club cares about the gross income as that's where their wages will be coming from.

We all know this stat is useless anyway. The only reason for us making this so called work record profit is because we didn't sign a single player at the point in time when our gross income was higher than ever before.
If we'd signed 2 or 3 players we'd not even make the top 10 this year let alone top team ever.

 

[davidmatzdorf]

No confusion. Gross = all monies received not accounting for any expenditure. Net is the actual sums of money after all expenditure accounted for.

My point was, why big us up for making the biggest ever net profit of any club ever anywhere, then go on to say "but we're still only 6th in the gross income"

What are clubs measured on? The team don't care about either. They just want results. The stakeholders, board etc, they probably care about net income. I guess anyone being paid by the club cares about the gross income as that's where their wages will be coming from.

We all know this stat is useless anyway. The only reason for us making this so called work record profit is because we didn't sign a single player at the point in time when our gross income was higher than ever before.
If we'd signed 2 or 3 players we'd not even make the top 10 this year let alone top team ever.

True as far as it goes, but don't forget that any players we had signed on (say) a five year deal would only have one fifth of their transfer value written off in the first year. So it wouldn't make as much of a difference as you are implying.

By contrast, if we buy a young player for £1m and then sell him for £10m, we'd write back the full sale value, less the unexpired value of his original contract, in the year of the sale.

 

[Lilbaz]

As I posted in detail a few pages ago, this is short-term development finance, because it's difficult-to-impossible to secure [cheaper] long-term money if you secure it against an uncompleted development. No one will fund developers on that basis.

That's why @Buggsy61 and I keep going on about refinancing. It's the standard thing to do when you've completed your project and there is a residual debt (there isn't always, e.g., if you're a residential developer and have sold off all the flats at a profit). No one would expect the club to pay off £637m (or whatever) in 2022 by writing a cheque. They'll refinance the debt at lower interest rates, over a longer term, with less punitive terms for early redemption.

The big question is whether they'll have to do that before capital receipts start to arrive from the sale of the residential and hotel development (Phase 3). Ideally, they'll want to reduce the residual debt using these receipts and refinance a much smaller debt. If they can't do this, because the housing isn't finished by the 2022 date, then that's where the penalties for early redemption come into the discussion: they need to refinance using a facility that will permit them to pay off chunks of the debt without being required to forward-pay a high percentage of the interest that otherwise would have been charged. Banks don't like you paying off your mortgage early, because they've budgeted for the long-term interest they expect to receive.

I don't know what the market currently has to say about early-redemption penalties. It changes from year to year, depending on expectations about future interest rates and other factors.

I have also said it will be refinanced.

 

[TottenhamMattSpur]

True as far as it goes, but don't forget that any players we had signed on (say) a five year deal would only have one fifth of their transfer value written off in the first year. So it wouldn't make as much of a difference as you are implying.

By contrast, if we buy a young player for £1m and then sell him for £10m, we'd write back the full sale value, less the unexpired value of his original contract, in the year of the sale.

Well now we're into the realms of assets and liabilities. As far as I know, we haven't seen that level of data?

 

[Buggsy61]

Well now we're into the realms of assets and liabilities. As far as I know, we haven't seen that level of data?

Players are treated like assets as David Matzdorf pointed out further up.
If for example we buy a player for £10m on a 5 year contract he will be amortised(depreciated if you like) over those 5 years so there will be a charge against profits of £2m a year.
If after the end of that year we sell him for £20m then we will recognise a profit of £12m in the books under player trading (£20m less his residual value (£10m - £2m = £8m)

A lot of moving parts in these numbers, but the main reason we are posting these kinds of profits is due to the control of costs, and particularly the control of wages, so there is some link to the player trading i.e if we bought a £50m player on £500k a week those profitability numbers would start moving south pretty quickly unless he was bringing in extra merchandising income etc to compensate for it.

Apologies if I am telling you something you already know, but its not that easy to understand for those that have not had much exposure to the murky world of accounting.

 

[TottenhamMattSpur]

Players are treated like assets as David Matzdorf pointed out further up.
If for example we buy a player for £10m on a 5 year contract he will be amortised(depreciated if you like) over those 5 years so there will be a charge against profits of £2m a year.
If after the end of that year we sell him for £20m then we will recognised a profit of £12m in the books under player trading (£20m less his residual value (£10m - £2m = £8m)

A lot of moving parts in these numbers, but the main reason we are posting these kinds of profits is due to the control of costs, and particularly the control of wages, so there is some link to the player trading i.e if we bought a £50m player on £500k a week those profitability numbers would start moving south pretty quickly unless he was bringing in extra merchandising income etc to compensate for it.

Apologies if I am telling you something you already know, but its not that easy to understand for those that have not had much exposure to the murky world of accounting.

I'm not an account but have (had to) studied some accountancy for insurance exams. They sucked, but I managed to pass.