This article analyses Tottenham finances in respect of the 2020/21 season.
Season review
It was a challenging season for Tottenham despite a strong start to the season. The club led the Premier League in December but things then took a turn. As things soured this resulted in the sacking of Jose Mourinho in April before a Carabao Cup final defeat to Manchester City.
Tottenham finances took a hit as the club participated in the UEFA Europa League (UEL) and the club were heavily impacted by the loss of matchday revenue at its new stadium. Due to this Tottenham recorded a second successive loss, with Spurs making losses of £148m over the past two seasons.
Tottenham Finances – Revenue
Revenue fell from £392m to £360m (8%) as the club saw its matchday revenue fall by over £90m.
Matchday
Matchday revenue fell from £95m to £2m (98%) as 17 of its 19 Premier League games were played behind closed doors. The remaining two were played with restricted capacity.
The return of fans at 100% capacity in 2021/22 should see matchday revenue rocket back up to 2020 levels.
Broadcast
Broadcast revenue rose from £134m to £207m (52%). This was driven by revenue from the 2019/20 Premier League season being recorded in the 2021 financial year (seven games). This is due to the end of the 2019/20 season falling into July and August, with Tottenham’s 2020 financial year ending in June.
UEFA distributions however halved from £51m to £26m. This was due to the club participating in the UEL and not the UEFA Champions League (UCL).
With Tottenham competing in UEFA Europa Conference League (UECL) in 2021/22 and the absence of any deferred broadcast revenue, broadcast revenue will fall significantly.
Commercial
Commercial revenue fell from £162m to £152m (6%) as the club were unable to host NFL games again and games were played behind closed doors, reducing commercial opportunities. The return of fans and the NFL will boost commercial revenue in 2022.
In addition, a sleeve sponsorship deal with Cinch should drive some commercial growth.
Tottenham Finances – Revenue summary
Tottenham’s revenue took a significant hit in 2021 but this was covered up in part by deferred broadcast revenue. The return of fans in 2021/22 will boost matchday revenue significantly, however this growth will be at least partly offset by the absence of deferred broadcast revenue and no UCL football.
Tottenham Finances – Operating costs
Operating costs fell from £358m to £340m (5%) as the club managed to make some costs savings to absorb some of the fall in revenue.
Wages
Tottenham’s wage bill rose from £181m to £205m (13%). this was due to investment in the first team squad but also some bonuses associated with the 2019/20 season falling in 2021.
This resulted in its wages to revenue ratio rising from 46% to 57%. Tottenham run a tight ship and this ratio is still well below the recommended maximum of 70% stated by UEFA.
Other costs
Other operating costs fell from £177m to £135m as the club saved matchday costs from games being played behind closed doors.
Tottenham Finances – Operating costs summary
Daniel Levy operates Tottenham with a tight purse with well managed costs and wage structure. This has resulted in consistent operating profits (before player trading) which is likely to continue.
Tottenham Finances – Transfers
Tottenham spent significantly in a cautious transfer market as they looked to improve on its 6th placed finish in 2020.
In came Lo Celso (£29m), Reguilón (£27m), Doherty (£15m), Höjbjerg (£15m), Rodon (£11m) and Vinícius (Loan – £2.7m) for a combined £99m.
The only departure for a transfer fee was Walker-Peters for £12m. This resulted in a net transfer spend of £88m.
Amortisation
Player amortisation charges rose from £74m to £83m (13%) following this investment. Lower investment in 2021/22 to date will likely see amortisation charges fall slightly.
Profit on player sales
Profit on player sales was £19m, slightly higher than the £15m generated in 2020. This was due to the sale of academy graduate Walker-Peters and other smaller sell-on clauses.
Increased player sales so far in 2021/22 will likely see a larger profit generated in 2022.
Transfer debtors / creditors
Tottenham is a net transfer creditor, owing more in transfer fees than it owed other clubs. The club owe £170m in transfer fees while being owed only £19m, a net £151m creditor position.
This may explain the slight decline in 2021/22 transfer spending.
Tottenham Finances – Transfers summary
Tottenham’s performance has not reached the levels hoped for in the last two seasons. As a result, the club requires further squad investment although it could also benefit from generating increased player sales to aid profitability. This is a difficult dilemma to solve for the club.
Tottenham Finances – Profitability
Tottenham has suffered significant losses in the past two seasons, totalling £148m. This a stark financial change from the five preceding years where combined profits of £328m were achieved.
Operating profit / loss before player trading
Before player trading, Spurs recorded an operating profit of £21m, a 39% decrease on 2020 (£34m).
This was due to the decline in revenue being greater than costs. With revenue likely to rise slightly in 2022 as matchday revenue returns, this may improve.
Operating profit / loss after player trading
After player trading, operating losses rose from £25m to £43m (77%). The club will be hoping that greater player sales in 2022 and lower spending helps reduce this loss.
It is worth noting that over the past five years despite losses in the last two, combined operating profits total £275m.
Profit / loss before tax
Due to significant net finance costs of £37m, Tottenham’s loss before tax was £80m. This showcases the significant costs of the new stadium with finance costs representing nearly half of its 2021 loss. These financing costs will hence make it difficult to avoid losses in the coming years.
Similarly, to operating losses, despite large losses in the past two seasons, profits before tax over the past five seasons totalled £130m.
Tottenham Finances – Profitability summary
Spurs has been hugely profitable in recent years. A combination of significant costs from a new stadium and a global pandemic has decimated this model. A more ‘normal’ 2021/22 season should lead to significant improvements in profitability, however this may be damaged by its absence from the UCL (and UEL this season).
Tottenham Finances – Assets / Liabilities
Tottenham has taken on significant debt to build its state-of-the-art stadium which should prove a valuable asset going forward via increased commercial and matchday revenue.
Cash flow
Tottenham’s cash reserves fell from £226m to £148m as it looked to extend its training ground and maintain the new stadium. Cash outflows across operations (£17m), player transfers (£55m) and capital expenditure (£33m) were partly offset by net new financing of £22m.
Debt
Tottenham’s debt levels rose from £852m to £874m.
There were significant changes to the debt profile of Tottenham as it refinanced £637m in stadium debt. £525m of this came from US investors via long term bond issues. The remaining £112m was financed by Bank of America Merrill Lynch, of which £50m has since been repaid.
In addition, Tottenham used the Government’s Covid Corporate Financing Facility (CCCF), taking a £175m short term loan which has now been repaid. North London rivals Arsenal is the only other club to use the facility.
Spurs also has access to a £50m HSBC credit facility and a £22m Investec loan for its new training ground.
All of this debt has had a significant impact on its profitability as it has to pay significant interest cost to pay the debt down. Over the past five seasons Tottenham has paid £145m in debt. This is more than the entire revenue of League 2.
Net debt
Net debt hence rose from £625m to £726m.
Tottenham Finances – Final Remarks
Spurs has faced challenges on and off the pitch over the past two seasons following several profitable years. Tottenham will now be looking forward and hoping the return of fans and increased matchday revenue can drive improved profitability off the pitch and performances on it as it aims for a return to the UCL.
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