Finney Is Back
Luka Modric
Ah gross debt.... doesn’t really mean anything that. Net debt is all that is important really.
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Daniel Levy - Chairman
- Thread starter Howard Webb
- Start date
Bedfordspurs
Mark Falco
And profit, not turnover
Finney Is Back
Luka Modric
We were clearly using the cash received from much better than anticipated football revenues to put towards the significant overspend on the stadium. The £30m total net spend that Poch had to operate over the entire period from him joining to the start of the summer 2019 window proved that (not sure where else the record profits were disappearing to with such tiny transfer spend and a wage bill at around 40% of turnover?
Had we not had those years of over achievement compared to football investment or actually kept the two budgets separate and borrowed entirely separately for the stadium instead of diverting money from the unplanned football success then we’d be running at about £1 billion of net debt now.
Finney Is Back
Luka Modric
Ideally our profit would be a big fat zero.
Bedfordspurs
Mark Falco
Post transfers yeah
With the way, the money was spent Levy was able to show a well-run business living well within its means. Banks will see a loan to that type of business as low risk and therefore give better interest rates. If there wasn't that track record on how the club handles money it would've been more difficult to get the rates over 23 years that Levy did.
ricky2tricky4city
Steffen Freund
I'm sorry you are wrong. None off the football profits went into the stadium. (It may of years ago when we were in the drawn out planning phase). Once the stadium loans were structured and extended if necessary they were always going to be rolled into the final finance restructuring in completion. Levy retained football operations profit to cast our prudence in a favourable light. I think we were all surprised by the instant loosening of the strings with Ndombele, Lo Celso, Sess etc, and since, the funds found to back Jose. That all came from those successful Poch days, and sadly just about came too late for Poch. Once the restructuring loans were signed he could be more open to spending as effectively we don't have anyone to answer to. (In the short to medium term)
I can understand why Levy played the cards as he did.
If we spent extra (how much?) to chase the dream of getting some silverware, 3 things c.ould of happened.
1 We succeeded and won the league and maybe CL
2 We spent but still failed
3 We spent and it undermined the financial goals/parameters Levy had set
And remember 1 & 3 could still happen together.
It not like we weren't chasing a silverware dream anyway, and li.terally were 90mins away from the biggest pot. How in £'s do you even quantify how much it might cost to win that game. It's not like we hadn't beat them before.
Its pretty safe to say Levy is risk averse but you cannot underestimate the financial tiptoeing you have to do when you are a £200m a year turnover company looking to finance a £800m project.
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Do you have any evidence for that? As far as I can tell the profit from the Poch years went towards the stadium, and the profit from the last two seasons has been more than enough to cover our net transfer spend in that time. See Swiss Ramble graph on EBITDA below:
In the early years it was used in Land acquisition, we had to buy quite a lot of properties around the old stadium to fit the new footprint, can't remember if we paid for training ground outright as well.
The stadium is a masterstroke, just typical Spurs luck (or lack of) that the culmination of a decade of planning hits a once in millennia pandemic, but again work done. Chelsea, United, Pool haven't started their projects yet, would be hard to see those even starting for another few years in current environment.
Bishop
John Lacy
They don't necesairly need to commit to the same projects that we have. They also don't have the same financial restrictions either.
ricky2tricky4city
Steffen Freund
That graph is not net profit but regardless let's put it another way....
Any chairman/CEO/finance director worth their salt and tasked with continuing to guide us thru the next 10 years would NEVER of used surplus/unexpected income to pay down debt in the last 6 years. With interest rates at near zero it makes no sense.
Paying £100m back will save us £2.8m a year...what's the point? WE keep that money and for good reason.
Bedfordspurs
Mark Falco
They all have financial restrictions but they will be different to ours
United haven’t spent why money on OT for years and it shows. They have mixed plans but I don’t see them doing anything soon that would have an impact on their ability to do things on the pitch
Pool are doing things at clanfield and their happy with that
Chelsea won’t do a thing whilst Roman is persona non gratis to the UK
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Bishop
John Lacy
Yup.
It's not say what we did is any better or worse than others. We did what we needed to do infrastructure wise but each club's needs are different.
Bedfordspurs
Mark Falco
exactly
We’re also in a different position to those clubs due to our lack of success in the pitch to build up other routes to ££
All 3 of those clubs are highly successful on the pitch and we’re not. Sponsors abs commercials partners look at the revenue generation by association with a club. I guess associating with a club that wish things may be a bette return than one that competes and try’s to win things. Hence the value position is different
So taking very opportunity we can to bridge that gap is a great move. The stadium adds additional opportunities there
In Swiss Ramble's words it's "considered a proxy for cash operating profit", and the reason I shared it was just to show that it exceeds our recent net transfer spend i.e. we don't have to assume that our recent transfer spend must have come from previous seasons' profits, as I understood your post to be suggesting. (Then again I'm not an accountant (though my fiancee is), so I accept I don't really understand whether EBITDA or profit should be a more important guiding factor for our current transfer spending).
In any case, the article below says we borrowed £637m for the £1bn project - where are you saying the remaining ~£363m came from, if not from our own profits (which you can see in the graph below total ~£405m since 2011 before the last covid-hit season)?
https://www.theguardian.com/footbal...s borrowed £637m from,between 15 and 30 years.
Also didn't the cost of the project escalate way beyond the original budget? So isn't it possible or likely that Levy had to dip into some of that unexpected profit to cover the unexpected costs?
Bedfordspurs
Mark Falco
I dont believe anyone knows what the original budget was hence why the award to MACE took on the contract in a PM roleIn Swiss Ramble's words it's "considered a proxy for cash operating profit", and the reason I shared it was just to show that it exceeds our recent net transfer spend i.e. we don't have to assume that our recent transfer spend must have come from previous seasons' profits, as I understood your post to be suggesting. (Then again I'm not an accountant (though my fiancee is), so I accept I don't really understand whether EBITDA or profit should be a more important guiding factor for our current transfer spending).
In any case, the article below says we borrowed £637m for the £1bn project - where are you saying the remaining ~£363m came from, if not from our own profits (which you can see in the graph below total ~£405m since 2011 before the last covid-hit season)?
https://www.theguardian.com/football/2019/sep/20/tottenham-refinance-stadium-debt-purse-strings-not-loosen-daniel-levy#:~:text=Spurs borrowed £637m from,between 15 and 30 years.
Also didn't the cost of the project escalate way beyond the original budget? So isn't it possible or likely that Levy had to dip into some of that unexpected profit to cover the unexpected costs?
Don’t forget this was a unique project at the time especially with the increase in material items that happened very very quickly
Finney Is Back
Luka Modric
None of the football profits went into the stadium? Where exactly did they go then? We were making large operating profits and had a wage bill of around 40% of turnover. We were making vastly increased (unbudgeted) sums from competing in the CL (as well as increased sponsorships etc due to moving from being a Europa club to a CL club) yet our manager had a total of £30m net to spend on transfer fees over those 4 years. So where did the profit go and in what way were we 'retaining' those profits'? It wasn't as cash balance as our cash balance is comprised entirely our BoE loan. It wasn't on new players as our £30m total net spend over those 4 years shows. It wasn't on player wages as our 40% wage to turnover ratio shows. So where did that money go? It went into the stadium and that is fine. Indeed it had to go into the stadium because the stadium went horribly over budget. As I said before
The loans we have taken our on our capital projects are in addition to the money that has been pumped in out of ordinary club operations. I think you can actually see this happening in the accounts over the years. The stadium overall cost over £1billion (a lot, lot more than budgeted). We ended up with about £600 million of debt. I would say the a majority of the rest came from the unexpected revenue generated by the overperformance of the team over Pochettino's term.
Finney Is Back
Luka Modric
That's true only to a certain point. A business can only take on so much debt. As the debt level rises so does the risk of default on that debt. At present we have the largest debt in World football. Maybe we could've comfortably carried another 3 or 4 hundred million £s worth of debt? If we did though I don't think the charges on it would be as low as £2.8 million a year.
