I think we've arrived at a very interesting potential chapter in our history, something I've been mulling over since the Beyonce and Kendrick concerts were announced - both of which will sell out within hours of going public. I worry that ENIC looks at the football side of the business and wonders if it's really worth the effort, money and bother. It is by far the most volatile of all of their portfolio of interests. Real estate is either constant or highly profitable, concerts the same, boxing the same (if the ticket is big enough), NFL likewise, various tourist attractions similar. My point is that unlike the footballing operation, none of the others will show a £40-50m loss from one year to the next just because we played badly in a few games and missed out on CL football. By the same token, none of the others will require us to invest north of £60m on just one player who may or may not deliver value in return that exceeds the investment. Success in football is a massive gamble. Is it worth it? This makes the football operation highly risky from a purely business perspective (which is, I believe, ENIC's sole perspective and has been all along). If I had absolutely no emotional connection to the club and saw it as a purely business venture, I would 100% be mimicking the pattern we're seeing now. Reduce the wage bill to the absolute barest of minimums to keep us in the most-watched league in the world. Invest just enough in player purchases to keep fans eager and interested, increase ticket prices regularly etc. But crucially, never make the foolish mistake of overstretching and gambling enormous sums of money on achieving things that in a league as competitive (and doped) as the PL, are nothing more than pipe dreams. I would double down investment in my less risky and more diverse non-footballing portfolio, and do just enough to keep the football side of things floating along steadily while I increased market value in every other piece of the pie. In essence, I'd do everything possible to decouple financial success from the football sector of the business, such that one is not reliant on the other; something no other club in the world can do simply because none of them have our stadium. So while clubs like Villa and Newcastle must go 'all-in' on football because it is their only serious income stream. For us, it happens to be the biggest of a dozen income streams...for now...and I would be working night and day to manoeuvre my business into a position whereby the sum of the other income streams exceed the football one, and I can then stop caring about it permanently.
We are Stadium & Development FC. The football club is a front to fund stuff and get a hearing in development projects that ENIC would never get without it.
A scary, and more than likely quite prophetic post that. You can almost see this scenario unfolding before our eyes and you feel it would accelerate somewhat if they ever got hold of that NFL franchise they have long yearned for...
Business wise there’s so much less risk with concerts and American football matches and they don’t have to pump in money (other than stadium repayments) to finance it. The football team will always require substantial money as well as the money it brings in. ENIC and some say the revenue made from concerts and NFL all goes back into the football club. Other say it doesn’t.
I really hope it isn't prophetic but the majority of signs (and sadly common sense once you stop looking at it through the emotional eyes of a fan) point to it happening. I'd like to think once upon a time they genuinely wanted to deliver footballing success, but as time has passed two things have happened: 1) The PL has gotten much, much tougher which makes success less likely and more expensive. 2) The new stadium has opened the door to every capitalist's wet dream: a diversified portfolio. Now all they need to do is increase the profitability of that portfolio's other interests to cover the loss of regular CL/EL money, plus the amount lost for finishing lower in the table... That's a gap of around £60-80m tops, easily bridgeable. Once you've done that, the footballing side really doesn't matter anymore. Do just about enough to keep enough fans interested (which tbh simply staying in the PL and playing vaguely entertaining football is more than enough to achieve), and you're done. No more reliance on football. Ever.
I don't think this would work because there is a limit on the number of non football events at the stadium. So to keep the income up you have to sell out all the football events. Also the prospective gain to ENIC from the football side being successful is massive compared to that from the events. All the ENIC haters always miss that last point. The business value is mostly driven by football success. It would be a crazy business decision not to invest all the revenue in the football side. You can argue that they are not very good at it although I maintain the data doesn't support that but the theory that they are deliberately not doing it is bonkers.
The last point isn't a matter of opinion, it is completely clear in the accounts. The unamortised value of the squad is greater than the initial capital plus the retained profit. Also they don't pump money in, they spend the cashflow on football up to the allowable limit.
The value of a PL club is almost independent of the profit or loss it is making as far as I can see. Someone will always want to buy it no matter what. What does increase it is prestige...ie football success. That is what attracted ENIC to football in the first place.
At the moment certainly, but 5 or 10 years into the future? A few greased palms and you'd suspect that any complaints from the indigenous population would get batted away. It's will be interesting to see how this all plays out.
Correct. As soon as the local authority sees how profitable it is and how many jobs it generates for the region, restrictions will magically dissolve and those they protect simply won't have the money or power to take it through an appeals system.
I don't think the profit margins are big enough for them to ever really care. I see it as a relatively simple equation. Finishing in the top 4 plus winning a domestic cup would add: £30m prize money (assuming we advance to the last 16) £20m broadcasting £15m gate receipts £5m merchandise Total: £70m But to get and then keep hold of a top 4 place in a league as tough as the PL, we'd need to spend: £16m on an £80m contract spread over 5 years £20m on two £40-50m contracts over 5 years £10m annual wage bill rise Total: £46m Net profit: £24m And that's only if the whole thing works and we don't miss our on top 4, in which case we've gambled a loss of £46m with nothing coming in the other direction, which is exactly what has been happening for the past few years. If you think same profit can't be generated through other far less risky revenue streams, I'd have to admit being extremely surprised. Football isn't worth the risk. The upward curve is negligible compared to the relative risk exposure. It's really only worth the gamble if you can secure sustained success such as City and Liverpool have done recently, which massively raises your global profile and as a consequence you'll see a huge upward curve in merchandise and sponsorship. Otherwise it just isn't worth the bother imo.
That isn't how it works. Almost no-one makes profits out of football. You just grow the asset base and sell it to some richer people who want to bathe in the reflected glory of football success. The stadium is just worth the discounted sum of its cashflows which isn't much. The alleged £3b valuation of the club is primarily due to the football operation despite it being loss making. If it lost more money and won more trophies then it would be worth more. That's why you have all the events and invest all the proceeds back into football.
Even if there were 100 events a year making £3m profit each that wouldn't value the business anywhere near the £3b that's currently being talked of
You're stuck in an outdated revenue model. Ours is unlike anything that has ever existed in this country, possibly in the whole world of football. Do you honestly think the value of the club won't skyrocket if we secure a full NFL franchise? It is perfectly feasible to grow the overall portfolio to a point that potential investors don't actually care much at all about what the football piece is doing. If you can't see this, I'd imagine you can't see the direction football in general is heading. And we are very much in the vanguard of leading it there.
You don't just get given an NFL Franchise though, you have to buy it off an existing team or if the NFL is expanding pay them it. We couldn't afford one in our current state as it would be several billion dollars and there are rules on how you can raise the money. Anyway...it is you who is doing the revenue calculations. My point is that sports teams are not valued that way. They are worth many multiples of the revenue. Adding £80m in profit from events at the stadium would add much less than £1b in value whereas a top football club or NFL team is worth about five times that. The best way of ENIC maximising their investment is to overtake two or three of the clubs above us and I think that was always the plan. I don't think they planned for the high level of financial doping that Man City and Chelsea have got away with nor Liverpool's resurgence though...so it is proving harder than they thought.
Team sports are a rare phenomenon in commercial sectors. Specifically, the TRIBAL customer. In a pure market-driven sector, product/service quality/cost will determine where customers go. But I don't go and watch other teams because the above for Spurs is currently bad.
I think you are almost spot on here. I'm slightly less cynical perhaps as I believe that the point is to gamble big on the football side, but only once you have so much money coming in from other means that it matters less how it pans out with the football. Not to stop caring about it completely. Not the worst idea at all when you're trying to compete with oligarchs and states. I just don't think we've actually got to the bit where the big gambles happen. Ange, and backing him, may actually be the first big gamble coming to life as we witness it, post stadium build. We just don't like what the gamble looks like right now. Even a drop into the Championship would not cripple us thanks to Kendrick, Beyonce and the NFL. We'd be straight back up in no time. There is also a clique of 'traditional' top English teams. Man United, Newcastle, Villa, Liverpool, Arsenal, Everton. (Man City and Chelsea bullied their way in with money.) A lot of these teams don't want to see Spurs successfully join that top tier. No one likes us. Certain teams outwardly conspired to 'make sure' we didn't win the league when Leicester City won it. Anyone but Spurs. Look at how these teams have exchanged players over the years. With us, not so much. The conspiracy to pilfer our best players whenever we have them is not a 'theory', it's common knowledge. Even Mourinho said that Man United can't steal Tottenhams best players anymore. This change, whether we like to admit or not, is down to Levy making firm decisions to stop that happening. Levy has had to find another way to arrive at the position of respect within the league. The stadium in an undeniably superior tool. Yes, Levy is money over football and he's made some very dumb decisions. Yes, he pays himself too much in comparison to other chairmen, but he has also made some good decisions in his quest to improve the standing of the club. He almost got it spot on with Pochettino. The core of the English team came from Spurs, and not Man United as has been the case 'traditionally'. The power shifted, this was the beginning of the end on Man United on top. Pity how it panned out. (When the like of Gary Neville is fawning over the way the club is run, and crying for Man U to do similar, this is a sign that somebody at Spurs is doing a good job.) We are witnessing round two of that, hence Archie Gray, Mikey Moore and the sweeping up of young British talent from academies countrywide. It's chess, not checkers. If the team has a solid club grown core and enough money to dispose on top global talent to help the players win, and enough free hits to roll again if your 'gambles' don't pay off the first or second time, eventually you win, and win big. The stadium successfully competes with Wembley Stadium and Arena, plus the O2, which is where these big event would naturally happen in London. That money coming into to Tottenham instead is huge. The cliches that pundit love to hang on Spurs, but would absolutely lose their **** and their shtick of they couldn't anymore, are..... 1) Tottenham sell their best players. 2) Tottenham don't win nUfFinK, they are Spursy bottlers. 3) Tottenham sack their managers without backing them. 4) Tottenham don't pay the big wages. All of these have to cease to be true to 'compete'. The stadium and the infrastructure around the club that some fans are moaning about is the most reliable tool to tackle no. 3&4, and in turn all of the others.
