The future is bright, the future is Levy
There can be no doubt money equals success, as we looked at in the last article yesterday (Levy has raised Spurs fans expectations) so how are Spurs doing financially?
To answer that would take a long article where individual points get lost in the overall picture, which is healthy by the way, thus to aid digestion I have split the answer into manageable bite size pieces.
Every fan wants a new bigger stadium to generate more income but that can't happen out of thin air, it will happen against borrowing to a large extent. Now you go to your bank with no collateral and you will get nowhere, it's the same for a business. To get loans a business must be able to support them with a sound business strategy mapped out that can convince the lender the loan is a sound proposition.
Spurs have to be in a very healthy state therefore to generate the loans to build the stadium, again that does not happen over night, it has to be prepared over time. We would all love football to be just a sport where the money doesn't matter, but sadly that isn't the case and clinging on to that fallacy will only cause heartache.
We have employed a manager who has never won anything, so what, most managers have never won anything because they are at clubs without the financial resources to be able to win anything. The so called top managers happen to be at the top clubs, how much have they won at clubs lower down the scale, it's not a world they inhabit any more.
We didn't get Louis van Gaal because a bigger club with greater financial resources said wait for us, we didn't get Carlo Ancelotti because a bigger club with greater financial resources won the Champions League with him at the helm. Our remit was building from within, youth development, not spending and buying success at the possible cost of a new stadium (success is not guaranteed) thus we chose Pochettino over Frank de Boer feeling he could deliver. I was in the Frank de Boer camp bit I'm fully behind Pochettino and what he is trying to achieve, shame all fans aren't.
For the 2013/14 season Tottenham reported record revenue of £181 million the clubs best ever profit figures of pre-tax profit of £80 million. Research suggests it is the best any Premier League team has recorded. Now before we jump on the Levy is making money for himself and ENIC bandwagon we need to look at why such amazing figures have been recorded. This brief series of articles will do that.
In a nutshell though, the answer is TV money.
The figure was also accomplished by an astonishing £104 million profit on player sales, mainly due to the sale of Gareth Bale to Real Madrid.
Profit before tax jumped from £4m in 2012/13 to £80 million in in 2013/14. This figure went down to £65 million after deducting £15 million for tax. After tax profits in 2012/13 were £1.5 million. Player sales figures jumped from £26 million to £104 million, a £78 million increase. Revenue rose from £147.4 million to £180.5 million, a £33 million increase, virtually all of which was due to increased TV revenue from the bumper Premier League TV deal.
Tottenham are an attractive side, they are a pull for the TV, thus we generated more than Everton who finished above us. The Europa League also helped as it moved our games to a Sunday, giving us a greater chance of being shown in one of the two afternoon slots.
No Europa League means less TV money, a reduction in prize money, commercial income, match day income, less attractiveness to potential incoming players and making it harder to hang on to someone like Hugo Lloris. Laurent Blanc has told his squad they must be playing European football to be picked, Lloris is the French captain so needs to set an example. He is happy at Spurs but no European football may give him no choice but to leave, do Spurs fans really want to take that gamble?
Champions League teams have to play twice a week the same as us so if we can't handle it in the Europa League, who says we can handle it in the Champions League? We don't have a Bale to bail us out.
On the other side of the coin, operating expenses were £13 million higher. The wage bill increased by £4 million, the first time it has passed the £100 million mark. Player trading costs rose by £23 million (player depreciation* £13 million, impairment* of player values £10 million). The club also recorded £5 million of exceptional items, the redundancy costs of Andre Villas Boas and his coaching staff, plus onerous employment contracts.
*Depreciation is practice of reducing the value of assets to reflect their reduced worth over time, a player is a club asset.
*An Impairment cost must be included under expenses when the book value of a non-current asset exceeds the recoverable amount. Impairment of assets is the diminishing in quality, strength amount, or value of an asset.
Depreciation fell £8 million, mainly because 2012/13 included a £5 million write-off for some of the professional fees that have been accrued with the Northumberland Development Project. There was also a £6 million profit from property sales. The net interest we had to pay was also £4 million lower. This year we have included higher notional interest* on deferred receipts for player sales.
*The notional amount (value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional.
Players are not bought and sold with one payment but are paid for over time. It is the same when we sell a player. The transfer figure you see quoted is not all, paid in one go, it is still owed but is paid usually in yearly instalments. The debt you owe a club for a player you then sell does not just then get wiped off as some I read think, but is still owed.
While the transfer value of bale has gone through the books we haven't actually received the money, only the first instalment of it. Should Real Madrid sell Bale, they still owe us the rest of the money. We agreed transfer values for Erik Lamela and Roberto Soldado agreeing to pay over the length of their contracts.
The add-ons will not have kicked in (add-ons can be for anything but usually appearances, goals scored, in our case Champions League qualification etc) but for Lamela for instance we will still have to pay £26 million (£26 million + £4 million add-ons). Daniel Levy like to include as many add-ons in a deal as possible to reduce the potential amount we have to pay should the signing not be a success, Valencia played hard ball and only allowed £2 million of add-ons I believe.
TV money has greatly improved the profitability of Premier League clubs and new deals will only assist that further. UEFA brought in Financial Fair Play (FFP) to stop owners pumping money in to buy players and pay their wages, basically using a football club as a toy, because if they left the club would be in ruins unable to sustain itself. Clubs must now support themselves as viable business concerns. A football club is simply a larger version of yourself financially, you have an income and know what you can and can't do with it, Tottenham are the same on a bigger scale.
Of the clubs that have published their accounts for 2013/14, 15 of the 20 have recorded profits with Tottenham being the most profitable for that particular financial year.
Post-tax Profit Table 2013/14
1. Tottenham Hotspur £65 million
2. Southampton £33 million
3. Everton £28 million
4. Manchester United £24 million
5. Newcastle United £19 million
Now we can all argue about football being about winning trophies but as I demonstrated in the last article (link at top of article) 44 out of the 49 trophies mentioned went to clubs with a vastly higher income than ours so we have to bridge that gap.
Under Daniel Levy we have forged clear of the competition, the stadium is the next step, then we can begin to increase the income and attract the best, supplemented with a conveyor belt of our own talent.
Daniel Levy is clearly the man to deliver the financial growth that is essential to the winning of trophies, something we all want. I understand and accept the footballing climate we are in (we can't change that) and agree with the club being run on the rational basis Levy mentions.
Planning strategy has been a part of my life, be it my own coaching business or planning multiple site growth. Everything doesn't always go according to plan and a strategy is a 'living document', alterations are made as events unfold. There remains though the long term objective you work towards.
Not everything is a success but the goal for Tottenham is clear. We have come a long way and there is a distance to go but until the stadium is built success will only ever be fleeting, we will not regularly qualify for the Champions League without it. We have to be financially sound with a business strategy and playing strategy that is sustainable.
Mauricio Pochettino is here to build a sustainable playing strategy within our means, bearing in mind the financial constraints the club will be under while preparing for, building and paying for the new stadium.
Daniel Levy deserves more support than he gets but people do so love to complain so you hear complaints even though they represent a tiny tiny fraction of our support. Perhaps these people want Randy Lerner, he's rich, perhaps they want Mike Ashley, no they want anyone who will plough money in, but there is no guarantee of that. It can't be pumped in for players or wages anyway, which is what they want, it's against FFP.
See you in the next article and we'll delve some more.
To answer that would take a long article where individual points get lost in the overall picture, which is healthy by the way, thus to aid digestion I have split the answer into manageable bite size pieces.
Every fan wants a new bigger stadium to generate more income but that can't happen out of thin air, it will happen against borrowing to a large extent. Now you go to your bank with no collateral and you will get nowhere, it's the same for a business. To get loans a business must be able to support them with a sound business strategy mapped out that can convince the lender the loan is a sound proposition.
Spurs have to be in a very healthy state therefore to generate the loans to build the stadium, again that does not happen over night, it has to be prepared over time. We would all love football to be just a sport where the money doesn't matter, but sadly that isn't the case and clinging on to that fallacy will only cause heartache.
We have employed a manager who has never won anything, so what, most managers have never won anything because they are at clubs without the financial resources to be able to win anything. The so called top managers happen to be at the top clubs, how much have they won at clubs lower down the scale, it's not a world they inhabit any more.
We didn't get Louis van Gaal because a bigger club with greater financial resources said wait for us, we didn't get Carlo Ancelotti because a bigger club with greater financial resources won the Champions League with him at the helm. Our remit was building from within, youth development, not spending and buying success at the possible cost of a new stadium (success is not guaranteed) thus we chose Pochettino over Frank de Boer feeling he could deliver. I was in the Frank de Boer camp bit I'm fully behind Pochettino and what he is trying to achieve, shame all fans aren't.
For the 2013/14 season Tottenham reported record revenue of £181 million the clubs best ever profit figures of pre-tax profit of £80 million. Research suggests it is the best any Premier League team has recorded. Now before we jump on the Levy is making money for himself and ENIC bandwagon we need to look at why such amazing figures have been recorded. This brief series of articles will do that.
In a nutshell though, the answer is TV money.
The figure was also accomplished by an astonishing £104 million profit on player sales, mainly due to the sale of Gareth Bale to Real Madrid.
Tottenham are an attractive side, they are a pull for the TV, thus we generated more than Everton who finished above us. The Europa League also helped as it moved our games to a Sunday, giving us a greater chance of being shown in one of the two afternoon slots.
No Europa League means less TV money, a reduction in prize money, commercial income, match day income, less attractiveness to potential incoming players and making it harder to hang on to someone like Hugo Lloris. Laurent Blanc has told his squad they must be playing European football to be picked, Lloris is the French captain so needs to set an example. He is happy at Spurs but no European football may give him no choice but to leave, do Spurs fans really want to take that gamble?
Champions League teams have to play twice a week the same as us so if we can't handle it in the Europa League, who says we can handle it in the Champions League? We don't have a Bale to bail us out.
On the other side of the coin, operating expenses were £13 million higher. The wage bill increased by £4 million, the first time it has passed the £100 million mark. Player trading costs rose by £23 million (player depreciation* £13 million, impairment* of player values £10 million). The club also recorded £5 million of exceptional items, the redundancy costs of Andre Villas Boas and his coaching staff, plus onerous employment contracts.
*Depreciation is practice of reducing the value of assets to reflect their reduced worth over time, a player is a club asset.
*An Impairment cost must be included under expenses when the book value of a non-current asset exceeds the recoverable amount. Impairment of assets is the diminishing in quality, strength amount, or value of an asset.
Depreciation fell £8 million, mainly because 2012/13 included a £5 million write-off for some of the professional fees that have been accrued with the Northumberland Development Project. There was also a £6 million profit from property sales. The net interest we had to pay was also £4 million lower. This year we have included higher notional interest* on deferred receipts for player sales.
*The notional amount (value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional.
Players are not bought and sold with one payment but are paid for over time. It is the same when we sell a player. The transfer figure you see quoted is not all, paid in one go, it is still owed but is paid usually in yearly instalments. The debt you owe a club for a player you then sell does not just then get wiped off as some I read think, but is still owed.
While the transfer value of bale has gone through the books we haven't actually received the money, only the first instalment of it. Should Real Madrid sell Bale, they still owe us the rest of the money. We agreed transfer values for Erik Lamela and Roberto Soldado agreeing to pay over the length of their contracts.
The add-ons will not have kicked in (add-ons can be for anything but usually appearances, goals scored, in our case Champions League qualification etc) but for Lamela for instance we will still have to pay £26 million (£26 million + £4 million add-ons). Daniel Levy like to include as many add-ons in a deal as possible to reduce the potential amount we have to pay should the signing not be a success, Valencia played hard ball and only allowed £2 million of add-ons I believe.
TV money has greatly improved the profitability of Premier League clubs and new deals will only assist that further. UEFA brought in Financial Fair Play (FFP) to stop owners pumping money in to buy players and pay their wages, basically using a football club as a toy, because if they left the club would be in ruins unable to sustain itself. Clubs must now support themselves as viable business concerns. A football club is simply a larger version of yourself financially, you have an income and know what you can and can't do with it, Tottenham are the same on a bigger scale.
Of the clubs that have published their accounts for 2013/14, 15 of the 20 have recorded profits with Tottenham being the most profitable for that particular financial year.
Post-tax Profit Table 2013/14
1. Tottenham Hotspur £65 million
2. Southampton £33 million
3. Everton £28 million
4. Manchester United £24 million
5. Newcastle United £19 million
Now we can all argue about football being about winning trophies but as I demonstrated in the last article (link at top of article) 44 out of the 49 trophies mentioned went to clubs with a vastly higher income than ours so we have to bridge that gap.
Under Daniel Levy we have forged clear of the competition, the stadium is the next step, then we can begin to increase the income and attract the best, supplemented with a conveyor belt of our own talent.
Daniel Levy is clearly the man to deliver the financial growth that is essential to the winning of trophies, something we all want. I understand and accept the footballing climate we are in (we can't change that) and agree with the club being run on the rational basis Levy mentions.
“Tottenham Hotspur have always been run on a rational basis. It’s one of the few clubs that has been consistently profitable.”
Planning strategy has been a part of my life, be it my own coaching business or planning multiple site growth. Everything doesn't always go according to plan and a strategy is a 'living document', alterations are made as events unfold. There remains though the long term objective you work towards.
Not everything is a success but the goal for Tottenham is clear. We have come a long way and there is a distance to go but until the stadium is built success will only ever be fleeting, we will not regularly qualify for the Champions League without it. We have to be financially sound with a business strategy and playing strategy that is sustainable.
Mauricio Pochettino is here to build a sustainable playing strategy within our means, bearing in mind the financial constraints the club will be under while preparing for, building and paying for the new stadium.
Daniel Levy deserves more support than he gets but people do so love to complain so you hear complaints even though they represent a tiny tiny fraction of our support. Perhaps these people want Randy Lerner, he's rich, perhaps they want Mike Ashley, no they want anyone who will plough money in, but there is no guarantee of that. It can't be pumped in for players or wages anyway, which is what they want, it's against FFP.
See you in the next article and we'll delve some more.
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