Spurs new investment

[Lilbaz]

Sorry i should are said in part due. But when the players wages were 95% of turnover it was a hell of a part.

Their out goings are A) players wages. B) transfer fees (these are mostly paid in installments these days, not a lump sum). C) day to day operations of the club. D) servicing the debt.

If they can't afford to meet their outgoings. Or renogitiate. Then they can't meet their obligations. Administration beckons.

A and b have a massive part of the reason they are in trouble. As the commission report stated. Some of theloans they got were used to buy/pay players. It's why the interest on those loans was counted towards psr. (Not as everton fans would hsve you believe for the stadium. Stadium spending/debt has nothing to do with the psr).

Also much of the loans for the stadium were from mishiri and interest fee. So they're not an issue.

 

[Finney Is Back]

Well this is it

I assume if they were to sell 40% I would assume that money would be taken out by the Lewis family as thats 40% of their stake (or a variation there of)

Unless those investing wanted to put money in above that investment (I don't see it as they are also ROI merchants) then its not the golden dawn people think

I don't think ENIC are selling their stake (though of course I could be completely wrong on that).

I think instead they are instead looking to sell a 40% stake in the club to raise liquidity. I suspect they will issue new shares to raise capital, diluting their own holding. I suspect the capital will then largely be used to fund the hotel and housing projects that are in the pipeline) and perhaps even pay some of the near term debt on the stadium (as refinancing that will be far more expensive now).

I say this because the level of debt that we have at present will very likely carry a bunch of covenants regarding the level of working capital we must retain and the overall level of debt that we are allowed to take on. Therefore the only likely way that the next set of capital projects can be undertaken is by introducing more capital into the business as taking on even more debt probably isn't an option.

 

[Lilbaz]

I don't think ENIC are selling their stake (though of course I could be completely wrong on that).

I think instead they are instead looking to sell a 40% stake in the club to raise liquidity. I suspect they will issue new shares to raise capital, diluting their own holding. I suspect the capital will then largely be used to fund the hotel and housing projects that are in the pipeline) and perhaps even pay some of the near term debt on the stadium (as refinancing that will be far more expensive now).

I say this because the level of debt that we have at present will very likely carry a bunch of covenants regarding the level of working capital we must retain and the overall level of debt that we are allowed to take on. Therefore the only likely way that the next set of capital projects can be undertaken is by introducing more capital into the business as taking on even more debt probably isn't an option.

If they do that. Then spurs spend the other £50m of enics £150m investment. Will enics ownership increase (as per the original agreement)?

 

[Grays_1890]

I don't think ENIC are selling their stake (though of course I could be completely wrong on that).

I think instead they are instead looking to sell a 40% stake in the club to raise liquidity. I suspect they will issue new shares to raise capital, diluting their own holding. I suspect the capital will then largely be used to fund the hotel and housing projects that are in the pipeline) and perhaps even pay some of the near term debt on the stadium (as refinancing that will be far more expensive now).

I say this because the level of debt that we have at present will very likely carry a bunch of covenants regarding the level of working capital we must retain and the overall level of debt that we are allowed to take on. Therefore the only likely way that the next set of capital projects can be undertaken is by introducing more capital into the business as taking on even more debt probably isn't an option.

I thought the money for the future projects was factored into the original loans for the stadium hence they were already higher than expected for the standard build? I am sure someone posted that on here previously?

 

[Finney Is Back]

Because the shares they are buying would be coming from a smaller pot
The shares not owned by Enic are still worth 25% of the club and they won’t want theirs dilluted

It doesn't really matter what the minority shareholders want.

If ENIC think THFC is worth (say) £2b then they can issue new shares equating to 40% of the new total number of shares and sell them for £800m of equity injected into the club. ENIC and the minority shareholders would all have their own holdings diluted by 40% but on the flip side the value of the business would effectively be increased (due to the £800m liquidity injection).

 

[johnola]

It doesn't really matter what the minority shareholders want.

If ENIC think THFC is worth (say) £2b then they can issue new shares equating to 40% of the new total number of shares and sell them for £800m of equity injected into the club. ENIC and the minority shareholders would all have their own holdings diluted by 40% but on the flip side the value of the business would effectively be increased (due to the £800m liquidity injection).

There will be a rights issue and the minority holders can preserve their total share if they chose to do so.

 

[braineclipse]

We've not been financially frugal though. We just spent a lot of money over the years on infrastructure rather than playing squad. Which has changed in recent years. We are now one of the biggest spenders on players in europe (net). Year on year.

Agreed.

It's not like we're leaving money unspent.

Levy will seemingly not put us in a position where we won't have room to manouver in the next window/summer, even if we don't get CL football for example.

Pushed that a bit more during covid arguably, going for more loans with an obligation to buy. But even then we were still left with the possibility of making other transfers when the next summer arrived. But mostly the approach seems to be that we're spending what we can reasonably spend without risking that a relatively poor season leaves us in a really tight spot the next summer.

If that's being frugal I think that's a good frugal. And our spending post stadium build and covid has been solid. Expect that to continue this summer too based on recent years and Levy's track record, but we'll see.

 

[Bedfordspurs]

I really, really don't think Lewis cares about 'cash in'. I suspect the last thing that somebody as rich as Lewis wants cash that merely inflates away. Investments that achieve growth in asset value are far more attractive.

But he isn’t gonna be here for much longer so why wouldn’t he want the money now

 

[Bishop]

Winning is the motivation factor. But it's a very long game with multiple phases. First you stabilize the finances, then you try to establish yourself in the the top 5-6 teams, then you build out the finances (e.g. stadium, commercial agreements), and then you invest more for success on the pitch. We have just entered what I believe is the final phase. But just because we entered it, doesn't mean we will be successful overnight. It's a phase that might take anywhere from 3-10 years to come to fruition, because the rest of the league isn't standing still. I get it we all want success now, but it's going to take a little bit longer. And anyone who thinks that the current regime is satisfied to just get into the final phase and not see it through, is just reacting to what has happened in the past 20 years and not looking forward.

I agree with the greater part of your post but not on the motivation part. Winning would be great and a nice bonus but if ENIC can continually increase the value of the portfolio via external factors such as ancillary events at the stadium and returns from property investments such as the hotel then I don't think they will stress about not be the top team in the country. Getting to that next level is risky and frankly from their POV not financially sensible. Note I'm talking about ENIC not Daniel Levy. He might desire being successful but I don't believe ENIC as an entity does, there have just been too many missed opportunities for that to be the case.

The issue is context, because even the self sustaining statement is a little misleading/disingenuous

Levy & ENIC's true investment in the company has to be seen in some calculation of club profit (their money), lack of dividends taken over the 22+ years of ownership, somebody could do the math but I'd suspect it's probably an additional £1B of money put back into club.

Is that enough? different conversation and I think even Levy realizes it isn't, Arsenal has spent a lot of money in last 4 years to "get top 4" this is a game of diminishing returns (you spend a lot of money to move a very little bit), hence the looking for investors

The problem is, the new investors are no longer the sportswashing/vanity project types, they are the American PE types, and they want their money back with interest, in my opinion if that's what we end up with, we will wish for the days of Levy/ENIC ..

You do realise that we made profits over the years due to ENIC's frugality and the lack of spend on the playing squad. To then credit them for not then taking that profit borne out of an undercooked squad out as a dividend is a bit of a back handed compliment.

 

[Lilbaz]

But he isn’t gonna be here for much longer so why wouldn’t he want the money now

It's in a family trust. So it's his families. Not sure he's going to get cash and go on a £2bn bender. He already has money.

 

[Bedfordspurs]

It's in a family trust. So it's his families. Not sure he's going to get cash and go on a £2bn bender. He already has money.

I agree

But what interest do they have in growing a fortune they already have

We don’t know

 

[Bishop]

I agree

But what interest do they have in growing a fortune they already have

We don’t know

That's what the super wealthy tend to do. There is no limit to how much money they actually want to have.

 

[Finney Is Back]

Sorry i should are said in part due. But when the players wages were 95% of turnover it was a hell of a part.

Their out goings are A) players wages. B) transfer fees (these are mostly paid in installments these days, not a lump sum). C) day to day operations of the club. D) servicing the debt.

If they can't afford to meet their outgoings. Or renogitiate. Then they can't meet their obligations. Administration beckons.

A and b have a massive part of the reason they are in trouble. As the commission report stated. Some of theloans they got were used to buy/pay players. It's why the interest on those loans was counted towards psr. (Not as everton fans would hsve you believe for the stadium. Stadium spending/debt has nothing to do with the psr).

Sorry, but your original point was in direct response to a point made by Bishop regarding owners who directly invest money into improving the football squad (you even bolded that part of his comment which I have pasted in below):

"In an ideal world I don't want an owner who desires profit from Spurs, someone who was just happy breaking even on costs would be great. Someone who was willing to invest money directly into improving the footballing squad would be even better, but I'd definitely settle for even just a bold daring owner, who doesn't view Spurs as means of increasing their net worth."

So you were definitely linking having an owner invest directly on players to administration. I was merely trying to point out that this is only a problem when debt is used (as Everton have done) whereas I think Bishop was advocating the exact opposite (i.e. owner investment as opposed to debt).

 

[Finney Is Back]

If they do that. Then spurs spend the other £50m of enics £150m investment. Will enics ownership increase (as per the original agreement)?

From what I can tell the £150m liquidity injection ended up becoming a £100m injection with the last £50m not being put in.

 

[Lilbaz]

Sorry, but your original point was in direct response to a point made by Bishop regarding owners who directly invest money into improving the football squad (you even bolded that part of his comment which I have pasted in below):

"In an ideal world I don't want an owner who desires profit from Spurs, someone who was just happy breaking even on costs would be great. Someone who was willing to invest money directly into improving the footballing squad would be even better, but I'd definitely settle for even just a bold daring owner, who doesn't view Spurs as means of increasing their net worth."

So you were definitely linking having an owner invest directly on players to administration. I was merely trying to point out that this is only a problem when debt is used (as Everton have done) whereas I think Bishop was advocating the exact opposite (i.e. owner investment as opposed to debt).

You missed the first part of my post.

"Uefa have new financial stabilty rules. The prem are bringing in new squad cost controls. So owner can't invest in players anymore."

Everton are in the mess they are in because they overspent with the owners money. When he stopped spending. They covered with loans that need to be repaid.

If they had been run sustainably (the reason financial rules were voted in) they wouldn't be in the trouble they are.

We know they overspent on players as they've been docked points.

Bottom line. A new owner will not be able to invest heavily on players or the club will be deducted points. Relying on owners for investment is a dangerous game. Because anything can happen and that money can dry up. If it does the club can be in serious financial trouble.

 

[Finney Is Back]

But he isn’t gonna be here for much longer so why wouldn’t he want the money now

I'd inverse the question. Why would he want to convert hundreds of millions of dollars worth of equity (with decent growth) into hundreds of millions of dollars of cash?

 

[Finney Is Back]

You missed the first part of my post.

"Uefa have new financial stabilty rules. The prem are bringing in new squad cost controls. So owner can't invest in players anymore."

Everton are in the mess they are in because they overspent with the owners money. When he stopped spending. They covered with loans that need to be repaid.

If they had been run sustainably (the reason financial rules were voted in) they wouldn't be in the trouble they are.

We know they overspent on players as they've been docked points.

Bottom line. A new owner will not be able to invest heavily on players or the club will be deducted points. Relying on owners for investment is a dangerous game. Because anything can happen and that money can dry up. If it does the club can be in serious financial trouble.

Yes they can. We haven't got particularly close to our spending cap over the past several years. Our owners easily could've invested money directly on players. Note that I'm not saying they should've, I'm just saying they could've.

 

[Finney Is Back]

I thought the money for the future projects was factored into the original loans for the stadium hence they were already higher than expected for the standard build? I am sure someone posted that on here previously?

Don't think so (the clubs accounts show clearly the debt and cash positions).

 

[Lilbaz]

Yes they can. We haven't got particularly close to our spending cap over the past several years. Our owners easily could've invested money directly on players. Note that I'm not saying they should've, I'm just saying they could've.

We'll be limited to spending 70% of turnover on wages and amortisation (85% if not in europe, but as turnover would fall it equates about the same).

 

[Finney Is Back]

We'll be limited to spending 70% of turnover on wages and amortisation (85% if not in europe, but as turnover would fall it equates about the same).

Yes, but we haven't been close to that number.... and that is before even considering the 'allowed overspend' on top of that.