Thread by @SwissRamble

Tottenham Hotspur’s 2018/19 financial results covered a successful season when they reached the Champions League final, finished fourth in the Premier League and got to EFL Cup semi-finals. Home games played at Wembley until new stadium opened in April. Some thoughts follow #THFC

#THFC profit before tax dropped by £52m from £139m to a still excellent £87m, as revenue rose £80m (21%) to a club record £461m, but profit on player sales fell £62m to £11m and expenses increased £70m. Profit after tax decreased £44m from £113m to £69m.

All three #THFC revenue streams had significant growth: broadcasting rose £43m (22%) from £201m to £244m, due to reaching the Champions League final; commercial increased £26m (24%) from £109m to £135m; while match day was up £11m (15%) from £71m to £82m.

#THFC wage bill rose £31m (21%) from £148m to £179m, but player amortisation fell £10m (17%) to £48m, though there was no repeat of prior year’s £15m player impairment. Other expenses shot up £40m (53%) from £74m to £114m, including the rental of Wembley Stadium.

Completion of the new #THFC stadium meant big increases in depreciation, which more than doubled from £11m to £25m, and interest payable, up £7m (39%) from £18m to £25m. Profit from property disposals fell from £8m to £6m.

#THFC £87m profit before tax was easily the highest in the Premier League in 2018/19, more than twice as much as the closest challenger #LFC £42m, followed by #MUFC £27m and #WWFC £20m. This is a great achievement, especially as half the clubs in the PL have posted losses.

#THFC 2018/19 profit of £87m is actually the fourth highest ever reported in the Premier League. In fact, Spurs’ prudent business model means that they have been responsible for three of the top five PL profits, including the record £139m in 2017/18 and £80m in 2013/14.

#THFC financial performance is even more impressive, considering that profit on player sales was only £11m, significantly below prior year’s £73m, mainly from Mousa Dembele’s move to China. This was much lower than some other clubs: #CFC £60m, #LCFC £58m, #LFC £45m & #MCFC £39m.

This is a bit of an anomaly, as #THFC have often made big money on player sales, apart from the £73m in 2017/18. The club record came in 2013/14, when their profit was £104m, the 4th highest ever in the Premier League, following the lucrative sale of Gareth Bale to Real Madrid.

To reinforce the point that player sales have been a major part of #THFC financial success, in the last 6 years they made a hefty £276m from this activity, only surpassed by #CFC £398m and #LFC £305m. However, #AFC, #MCFC and #MUFC only made £177m, £147m and £76m respectively.

#THFC have been profitable for the last 7 seasons, making an impressive £412m in that period, averaging £59m a year. They made £226m profits in the last two years alone, while the last time they reported a loss was back in 2012 – and that was only £7m.

As we have seen, player sales have had a big impact on #THFC figures, contributing £336m profit in last decade, but worth noting they have been profitable even without this in last 4 years. 2019/20 includes Trippier to Atletico Madrid, Janssen to Monterrey & Nkoudou to Besiktas.

#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 £159m to £168m, so is now an amazing £149m higher than the recent low of £19m in 2013.

Following this growth, #THFC EBITDA of £168m is the second highest in the Premier League, only behind the cash machine known as #MUFC £186m, but a fair way ahead of #LFC £124m and #MCFC £118m. In stark contrast, #EFC EBITDA was negative £15m.

#THFC revenue has grown by a quarter of a billion pounds in just 3 years, from £210m to £461m, largely driven by success on the pitch (including Champions League). Most of the increase has come from broadcasting £134m, but also healthy growth in commercial £77m & match day £41m.

In fact, #THFC £251m (120%) 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 £44m (13%), so the £141m deficit against their North London rivals has swung to a £66m surplus.

#THFC £461m have also overtaken #CFC £447m, so they now have the highest revenue in London and fourth highest in England. That said, they are still a fair way behind the top three: #MUFC £627m are £160m higher, while #MCFC £535m and #LFC £533m are around £70m more.

#THFC climbed two places from 10th to 8th in the Deloitte Money League, which ranks clubs globally by revenue. They enjoyed the 3rd highest year-on-year revenue growth with their £80m increase only beaten by Barcelona £129m (mainly by taking merchandising in-house) and PSG £81m

#THFC broadcasting income rose £43m (22%) from £201m to £244m, comprising £150m domestic TV and £94m Champions League prize money (per club accounts). This was the 4th highest in Europe, only below #LFC £264m, Barcelona £263m and #MCFC £253m.

#THFC TV money from the Premier League rose £1m to £145m, despite finishing one place lower, as this was offset by one more game being shown live plus higher overseas TV rights. Spurs have earned almost exactly £1 billion from PL TV money in the last 12 years.

#THFC earned €102m for reaching the Champions League final, only surpassed by Barcelona & #LFC, comprising €14m participation fee, €55m prize money, €16m UEFA coefficient & €17m TV pool. Including gate receipts, Europe was worth £108m, i.e. almost a quarter of total revenue.

It is worth noting the big financial differences in Europe. Both North London clubs reached the finals of their tournaments, but #THFC received €102m in the Champions League, while #AFC only got €39m in the Europa League, i.e. €63m less.

In 2018/19 UEFA introduced a new payment element called the coefficient ranking, based on performances in Europe over 10 years. This hurt #THFC, as they only received €16m, the lowest of the English clubs. In contrast, #MUFC earned €31m here, largely based on former glories.

The importance of the Champions League to #THFC revenue growth is evident, as they have received €209m in the last 3 years (2017 €46m, 2018 €61m and 2019 €102m). In fact, they have earned more from Europe than any other English club in this period, just ahead of #MCFC €207m.

#THFC match day income rose £11m (15%) from £71m to £82m, due to more Champions League games and moving to the new Tottenham Hotspur Stadium for last 5 games of the season. Only below #MUFC £111m, #AFC £96m and #LFC £84m, but ahead of #CFC £67m and #MCFC £55m.

#THFC 54,000 average attendance, based on 14 games at Wembley and 5 games at the new stadium, was 4th highest in England. Price freeze on tickets in 2019/20, but club has announced an unpopular 1.5% rise for 2020/21, even though prices already among the most expensive in England.

#THFC splendid new stadium has a 62,000 capacity, though there were lengthy delays and the total cost was over £1 bln, including nearly £500m spent in 2018/19 alone. Nevertheless, it should drive significant revenue growth, with club pushing for ambitious £25m naming rights deal.

#THFC commercial revenue rose £26m (21%) from £109m to £135m, following growth in sponsorship, hospitality and merchandising. This is £24m higher than #AFC, but way behind #MUFC £275m, #MCFC £227m., #LFC £188m and #CFC £180m. New stadium should help close the gap, e.g. NFL games.

In the last 3 years, #THFC commercial income has grown by an impressive £77m, more than any other club in the Big Six, just above #LFC £72m and #CFC £63m, though much better than #MUFC and #AFC, who have only grown by £7m and £4m respectively in this period.

#THFC two major commercial deals increased in last 2 years: (a) AIA shirt sponsorship extended to 2027, up from £35m to £40m; (b) Nike replaced Under Armour in 2018, doubling money from £15m to £30m, running to 2033. However, these long-term deals run the risk of being overtaken.

#THFC wage bill rose £31m (21%) from £148m to £179m. In the last 3 years, revenue has shot up by £251m while wages have only grown £79m, which is testament to Spurs’ ability to keep costs down. Before that, wages had incredibly remained at the £100m level for 3 years.

In fact, although #THFC have the highest percentage wages growth in the Big Six over the last 3 years, their absolute growth of £79m is only the 4th highest, behind #MCFC £118m, #LFC £102m and #MUFC £100m. The gap to #AFC has reduced, but is still a chunky £53m.

Even after the growth, #THFC £179m wage bill is still miles behind the rest of the Big Six. #MUFC £322m is nearly twice as much, while #MCFC, #LFC and #CFC are all at least £100m higher than Spurs. In fact, their wages are only £19m more than #EFC £160m.

#THFC wages to turnover ratio remained at an astonishingly low 39%, which is a full 14% below #MUFC 53%. This does raise the obvious question of how long Spurs can manage to keep their wages at a relatively low level without their stars moving to better paying clubs.

#THFC chairman Daniel Levy remuneration increased from £3m to £7m, including a deferred £3m bonus for completing the stadium (albeit late), which is £4m more than Ed Woodward at #MUFC. He has now trousered a cool £31m in the last 10 years, though improved Money League ranking.

#THFC depreciation increased from £11m to £25n, due to the major investment in the new stadium. This is by far the highest charge in the Premier League, £10m more than #AFC £15m, followed by #MCFC and #MUFC, both £13m.

Maybe somewhat surprisingly, #THFC player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, fell £10m (17%) from £58m to £48m, as a result of £15m once-off impairment in the prior year as well as player sales.

#THFC player amortisation of £48m is only 10th highest in England, below the likes of #LCFC £64m, #WHUFC £57m and Southampton £51m. It is also £120m less than big spending #CFC £168m and half of #EFC £95m. All of these comparatives highlight Spurs’ lack of investment in players.

In fact, #THFC only had £22m player purchases in 2018/19, the second lowest in the Premier League. For some perspective, #CFC spent £281m and #LFC £223m. Levy said, “We could easily have spent more money on players. Who knows if that would have bought us more success or not.”

It is remarkable that #THFC have done so well on the pitch, despite averaging £9m net sales in the last 4 years (compared to £16m net spend in the previous 6 years). Since these accounts closed, Spurs have bought Ndombélé, Bergwijn, Sessegnon and Clarke.

#THFC gross debt rose £197m from £461m to £658m, comprising £632m from HSBC, Goldmans and BoA for the new stadium and £25m from Investec for the new training ground. In September 2019 the stadium loans were refinanced into long-term maturities (average 23 years) at 2.66%.

#THFC £658m gross debt is by far the highest debt in the Premier League, well ahead of #MUFC £511m (Glazers’ leveraged buy-out). Worth noting that other clubs have also taken on debt for new stadiums, e.g. #BHAFC £280m and #AFC £217m. #EFC debt has risen to £337m.

Also big growth in #THFC transfer debt, which has risen from £26m in 2015 to £88m, only offset by £4m owed by other clubs, so net £84m debt. In addition, Spurs have £21m contingent liabilities, based on success of team or individual players, though also £21m contingent assets.

#THFC paid £26m interest last year, the highest in the Premier League, ahead of #MUFC £19m and #AFC £11m. Despite the debt refinancing, interest payments will still prove a burden to Spurs in the same way as the Emirates Stadium debt has impacted their North London neighbours.

#THFC generated an impressive £278m cash from operations (including £104m increase in trade payables), but then spent a massive £413m on the new stadium, £26m interest, £8m tax and £3m (net) on players. This was funded by £195m new loans.

As a result, #THFC cash balance rose £23m to £123m, one of the highest in the Premier League, but still below the likes of #MUFC £308m, #AFC £167m and #MCFC £130m. Partly a result of their solid cash generation, but also due to loan advances for the new stadium.

In the last decade #THFC generated £1 bln cash from own operations, but also needed to raise £587m loans and £55m share capital. An incredible £1.3 bln has been invested in new stadium and training centre, £77m interest, just £62m on players, £54m tax and £40m shares buyback.

#THFC have done very well to compete against teams that spend much more on transfers and wages, while their focus has been on building a new stadium. However, these excellent financials owe much to their success in the Champions League, where qualification is far from certain.

However, #THFC scored a spectacular own goal this week when they furloughed 550 non-football staff, with the government paying 80% of salary, while their players’ wages were left untouched. This may be addressed at a later date, but the announcement left a bad taste in the mouth.