Thread by @SwissRamble

Tottenham Hotspur’s 2017/18 financial results covered a season when they finished 3rd in the Premier League and reached the last 16 of the Champions League and the FA Cup semi-finals. Home games played at Wembley, while new stadium was being developed. Some thoughts follow #THFC

#THFC profit before tax improved by £87m from £52m to £139m, as revenue rose by £71m (23%) to £381m and profit on player sales was up £33m to £73m. New club records for both revenue and profit. Profit after tax “only” increased by £77m from £36m to £113m.

All three #THFC revenue streams increased: commercial rose £33m (43%) from £76m to £109m; match day was up £26m (57%) from £45m to £71m, due to the larger capacity at Wembley; while broadcasting was £13m (7%) higher at £201m, due to advancing further in the Champions League.

#THFC wage bill rose £21m (16%) from £127m to £148m, while player amortisation/impairment was £22m higher at £72m and other expenses were up £14m to £74m. Progress on the new stadium meant reductions in depreciation £22m and interest payable £3m, due to accounting adjustments.

Once-off movements also impacted #THFC figures, as 2018/19 benefited from £8m profit from property disposals, while there was no repeat of the prior year’s £7m of enabling costs related to new stadium construction. 2016/17 profit restated to £52m, due to new accounting standard.

#THFC £139m profit before tax was the highest in the Premier League, ahead of #LFC £125m, as the Reds reached the Champions League final, then #AFC £70m and #CFC £67m. This is obviously a fantastic achievement, especially as 7 clubs in the top flight have reported losses.

In fact, #THFC £139m profit before tax is the highest ever registered in the Premier League. Spurs have actually delivered 3 of the top 10 profits in PL history, including £80m in 2013/14 & £52m in 2016/17. Note: #LCFC £92m in 2016/17 was due to their Champions League adventure.

#THFC profit was boosted by £73m profit on player sales, including Walker to #MCFC, Bentaleb to Schalke, Wimmer to Stoke, N’Jie to Marseille and Fazio to Roma. The only clubs to make more money than Spurs from player trading were #LFC £124m, #AFC £120m, #CFC £113m and #EFC £88m.

However, last season’s £73m profit on player sales was not the most ever achieved by #THFC. That honour belongs to the £104m made in 2013/14, due to the very lucrative sale of Gareth Bale to Real Madrid, which is the 4th highest ever in the Premier League.

Clearly, player sales have been a major part of #THFC financial success. In the last 5 years, they have made a hefty £265m from this activity, only behind #CFC £337m and around the same as #LFC £260m. However, #AFC, #MCFC and #MUFC only made £165m, £108m and £50m respectively.

#THFC have been profitable for the last 6 seasons, making an impressive £321m in that period (£64m a year). However, chairman Daniel Levy cautioned, “Trading for the current year will be impacted by the additional costs at Wembley and the delay to the opening of the new stadium.”

As we have seen, profit from player sales has had a big impact on #THFC figures, contributing £381m in last decade, but worth noting that they have been profitable even without this in last 3 years. Only sale of note next year is Dembélé to China, so will be much lower in 18/19.

#THFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, increased from £122m to £159m, so is now an amazing £140m higher than the recent low of £19m in 2012/13.

Following this notable growth, #THFC EBITDA of £159m is now the 2nd highest in England, only behind #MUFC, regarded by everyone as the absolute kings of cash generation with £177m, but interestingly twice as much as Arsenal £78m

#THFC revenue has grown by 81% (£171m) in just 2 years from £210m to £381m, driven by success on the pitch (better PL positions and Champions League qualification). Most of the increase has come from broadcasting £90m, but also healthy growth in commercial £50m & match day £30m.

#THFC £381m revenue has just about closed the gap with #AFC £388m, but is still a fair way behind other rivals, e.g. #MUFC £590m is around £200m higher, while #MCFC £500m is over £100m more. The difference with #LFC £455m and #CFC £443m has narrowed, but is still meaningful.

In fact, #THFC £170m (81%) revenue growth since 2016 is the highest of the “Big Six”, both in absolute and percentage terms. In the same period, #AFC only grew by £38m (11%), so the gap between the North London rivals has shrunk from £141m to just £10m (Money League definition).

#THFC £379m overtook Juventus £350m to climb one place in the Deloitte Money League to 10th, only the second time that Spurs have been in the top ten and their best position since the 2006/07 season. For context, also ahead of Borussia Dortmund, Atletico Madrid, Inter and Roma.

#THFC broadcasting income rose £13m (7%) from £188m to £201m, comprising £148m domestic TV and £53m Champions League prize money. This was the 6th highest in Europe, only below Real Madrid £223m and four other English clubs, but just ahead of Barcelona £198m.

#THFC TV money from the Premier League fell £1m to £144m, as they finished one place lower (3rd vs. 2nd in 2016/17). Even though they finished below Spurs, #LFC received more money, as they were shown live more often on TV, leading to higher facility fees.

#THFC earned €61m from Europe for reaching the Champions League last 16, €15m more than the prior season (CL group stage + Europa League last 32). This was a long way behind #LFC €81m, who reached the CL final, but equally was far ahead of #AFC €38m (EL semi-finalists).

#THFC Champions League revenue was boosted by finishing 2nd in the prior season’s Premier League, which meant they got 30% of first half of the UK TV pool. This is much higher than other countries, which explains why Spurs got more CL money than quarter-finalists Barcelona €57m.

Mauricio Pochettino’s view that “The most important thing is being consistently in the top four and playing in the Champions League” is underlined by revenue earned in last 5 years. #THFC received a useful €140m, though lower than other leading English clubs, e.g. #MCFC €279m.

Champions League revenue is 54% higher in 2018/19, though a new UEFA coefficient payment (based on performances over 10 years) will benefit traditional big clubs like Real Madrid & Barca at the expense of clubs like #THFC from countries with large TV pools, i.e. England & Italy.

#THFC match day income rose £26m (57%) from £45m to £71m, as attendances more than doubled from 32,000 to over 68,000 at Wembley Stadium and the club hosted one more domestic cup game. Close to #CFC £74m and #LFC £81m, but still a long way below #MUFC £110m and #AFC £99m.

#THFC 68,000 average attendance was 2nd highest in England, only below #MUFC 75,000, but ahead of #AFC 59,000. Ticket prices were cheaper at Wembley than White Hart Lane, but will increase in the new stadium to the most expensive prices in Britain (ranging from £795 to £2,200).

#THFC have just moved into a splendid new stadium with a 62,000 capacity, though there were lengthy delays and it has come at a big price. The total cost was over £1 bln, including nearly £500m spent in 2017/18 alone. Nevertheless, it should drive significant revenue growth.

#THFC commercial revenue was up £33m (43%) from £76m to £109m, overtaking #AFC £107m, but way behind #MUFC £276m, #MCFC £232m, #CFC £165m and #LFC £154m. The facilities at the new stadium should help close the gap, e.g. NFL games & other major events.

#THFC benefited from two major new deals in 17/18: (a) AIA shirt sponsorship extended to 2022, up from £16m to £35m; (b) Nike replaced Under Armour, doubling money from £15m to £30m, running to 2023. However, these long-term deals run the risk of being overtaken by others.

Indeed, #AFC have announced a new Adidas kit deal at £60m, while the Emirates shirt sponsorship is worth £40m. Daniel Levy is still waiting to agree a decent #THFC naming rights deal (asking price £20m a year) before signing a sleeve sponsor (#AFC have £10m Visit Rwanda deal).

#THFC wage bill rose £21m (16%) from £127m to £148m. In the last 2 years, revenue has shot up by £171m while wages have only grown £48m, though headcount up 20%, which is testament to Spurs’ ability to keep costs down. Before that, wages had remained at £100m level for 3 years.

In fact, although #THFC have the highest % growth in the Big Six over the last 2 years, their absolute growth of £48m is only 4th highest, behind #MUFC £64m, #MCFC £62m & #LFC £55m. However, they have outpaced both #AFC £28m and #CFC £22m.

Even after the growth, #THFC £148m wage bill is still miles behind the rest of the Big Six. The closest is Arsenal, £75m higher at £223m, while Manchester United’s £296m is twice as much. Even more incredibly, Spurs’ wages are only £3m more than #EFC £145m.

#THFC cut their wages to turnover ration from 41% to an astonishingly low 39%, which is a full 11% below #MUFC 50%. This does raise the obvious question of how long Spurs can manage to keep their wages at this level without their stars moving to better paying clubs.

#THFC chairman Daniel Levy saw his remuneration halve from £6m to £3m, though the previous season apparently included a backdated pay rise and bonuses. As a result, he now only has the second highest director’s pay, behind Ed Woodard’s £4.2m at #MUFC.

#THFC depreciation dropped from £33m to £11m, which is a bit strange, given that tangible assets have increased by £514m to £1.025 bln. Regardless, this is one of the highest charges in the Premier League, only below #AFC £16m, #MCFC £13m and #MUFC £11m.

#THFC player amortisation, the annual charge to expense transfer fees, increased £15m (34%) from £43m to £58m, up from just £31m two years ago, reflecting more investment in the squad. The club also booked a £14m player impairment charge, compared to £7m in the prior season.

Despite the increase, #THFC player amortisation of £58m is still only the 7th highest in England, even below #EFC £67m. It is less than half of big-spending #MUFC £138m, #MCFC £134m and #CFC £124m.

#THFC made player purchases of £116m in 2017/18 (including Davinson Sanchez, Lucas Moura, Serge Aurier, Fernando Llorente & Juan Foyth), which might sound impressive until you realise that #MUFC splashed out £328m, while #EFC spent almost twice as much with £215m.

It is remarkable that #THFC have done so well on the pitch, despite averaging £13m net sales in the last 3 years (compared to £27m net spend in the previous 2 years). Indeed, since these accounts closed, Spurs have not bought a single player in the last two transfer windows.

#THFC gross debt rose £281m from £185m to £466m, comprising £445m drawn against a £537m facility (up to £637m in October 2018) agreed with HSBC, Goldmans & BoA for the new stadium and £21m from Investec for the new training ground.

#THFC £466m gross debt is 2nd highest debt in the Premier League, only behind #MUFC £496m (Glazers’ leveraged buy-out). It is due for repayment in 2020, but the club will convert to a mixture of maturity dates. Also owe £108m transfer fees (though owed £40m by other clubs).

#THFC paid £14m in interest last year, only surpassed by #MUFC £19m. As Spurs’ debt increases, the interest payments are likely to further rise, which should prove as much of a burden to them as the Emirates Stadium bill has been to their North London neighbours.

#THFC cash balance was virtually halved from £200m to £101m, though is only lower than #MUFC £242m and #AFC £231m. This is partly a result of their solid cash generation, but is a little misleading, as it is also due to loan advances for the new stadium.

#THFC generated an impressive £136m cash from operations in 17/18, but also needed £279m from new loans and £6m from net player sales. The vast majority was spent on capex (the new stadium) £481m, but they also had to pay £26m tax and £14m interest, while cash balance fell £99m.

In last decade #THFC generated £776m cash from own operations, but also needed to raise £408m loans & £55m share capital. An incredible £948m was invested in new stadium & training centre, £80m on players, £54m interest, £47m tax, £40m preference shares buyback & £4m dividends.

#THFC have done very well to compete at the highest level against teams that spend much more on transfers and wages, while their focus has been on building a new stadium (and training ground). Whether they can continue to manage this tricky balancing act is the big question.