Today, Tottenham Hotspur’s financial report for the 2018/19 season was finally made public. The timing could not have been worse. Almost simultaneously, Daniel Levy issued a separate announcement to cut all non-playing staff’s wages – Levy included – by 20% and force the British government, and therefore the British taxpayer, to foot at least some of the bill through the government’s furlough scheme.

While these are indeed trying times for everyone, the sympathy for the club may ring hollow for many seeing the club announce substantial profits (£173m!) for the sixth year running. But what already is, and will likely continue to rage on, is the outrage over a conspicuous line buried deep into Tottenham’s financial report. This line announces a bonus for directors of the club totaling £6.4m, £3m of which went to Daniel Levy himself. This bonus is in addition to his salary of £4m, earning him £7m not long before he announced putting many of his staff on government assistance.

Many people are rightly very angry with Daniel Levy, the Premier League’s highest paid director. Taking government assistance and reducing staff wages while paying out massive million Pound bonuses to the executives is so jarringly villainesque. It’s like a Scrooge McDuck bit from an old Disney cartoon, and epitomizes late stage capitalism. It is quite simply a very bad look for an already polarizing figure.

While this story is expected to captivate the understandably stressed and restless public’s attention, there are still some other interesting tidbits to take from the report. So, let’s dive in!

Spurs’ Revenue

Tottenham announced record revenues of £461m. This is a significant increase upon the previous season (£381m). The £80m in new revenue can be traced to Spurs’ Champions League Final appearance, but that alone does not make the difference. Spurs earned £94m from UEFA prize money, which was a £41m increase upon the previous year.

So, where else did Spurs increase revenue? Television revenue basically stayed the same, as Spurs earned £149m compared to £147m the previous year.

Many would assume substantial revenue came from the opening of the brand new 62,000 seat stadium, and they would not be wrong. Though interestingly, Spurs’ matchday revenue from the League dropped, and quite considerably. Only 5 of Tottenham’s 19 League matches took place at Tottenham Hotspur Stadium (THS) due to construction delays. In part due to frustration with these delays and in part due to Spurs’ diminished form, attendance dropped precipitously in 2018/19. Average attendance at Wembley in 2017/18 was 67,953 per home match, and only 54,216 (buoyed by Spurs’ five final matches at THS).

This 25% drop in attendance precisely mirrors Spurs’ 25% in matchday income from £42.6m to £34.3m. However, the League drop in matchday revenue was massively offset apparently by Spurs’ extra Champions League matches, in which Spurs earned £15m from ticket sales from their six home matches, and possibly new sources of revenue generated at the THS. One of the most interesting figures from this report was always going to be getting a better glimpse into just how profitable THS proved to be, and while the League numbers are disappointing, the jump in total matchday revenue is impressive.

There is still quite a bit of noise in the figures, given Spurs played across two home stadiums of varying capacities over this reporting period. Nevertheless, Spurs’ total matchday revenue increased substantially from £71m to £82m. I am not entirely sure how these numbers add up, but Spurs did play two more home matches in the Champions League compared to the previous season.

In addition, the new stadium offers world class hospitality, from Michelin starred restaurants to exclusive one-way mirrors looking into the players’ tunnel. These hyper-exclusive packages’ pricing isn’t publicly advertised, but we can be sure that they are vastly more expensive than any sort of corporate hospitality offered at White Hart Lane or Wembley. The fact that the club is already generating over £80m annually, despite only playing the final two months of the season in their new stadium augurs well for the future. £80m in matchday revenue would be the third highest in the league (trailing only Manchester United and Arsenal). Even with a frustrating 2019/20 season, we can still expect Spurs to continue to increase their matchday revenue into the future.

The other big increase came from Spurs’ commercial deals, an area that has long lagged behind their peers. Tottenham earned £135m in commercial revenue, a significant increase on the prior year’s £109m. Part of this could be attributed to Spurs’ revised 15 year sponsorship deal with Nike, part could be attributed to Spurs negotiating new sponsorship deals, such as with Audi, 1XBET and IWC Schaffhausen, and other parts could be attributed to performance-based incentives with sponsors. Without firsthand knowledge, it’s highly likely that Levy has negotiated escalators into the large sponsorship deals to increase as Spurs market their brands to massive global audiences, as they witnessed in the Champions League Final.

Altogether, Spurs are in a better financial position than ever. Compared to their rivals, Spurs are no longer outmatched. They have now surpassed both of their London rivals, and trail Manchester City’s total revenue (£74m) by almost as much as Arsenal trail Spurs (£66m). It’s no longer “mind the gap” between Spurs and Arsenal, but “mind the canyon”. Meanwhile, Manchester United inexplicably convince commercial companies to give them outlandish amounts of money to play mid-table football.

Spurs’ Wages and other Expenses

I have long noted how Spurs spend far less on wages than any of their peers. This trend continues in 2018/19 and is even more pronounced than ever. To the club’s credit, the wage bill increased by £31m to £179m, though it should be noted that a decent portion of this can be attributed to the new stadium, which saw Spurs hire 76 new staff to bring the total of staff employed by the club to 561. However, the club’s wage bill almost certainly increased, as Spurs are famous for having sizable performance-based incentives built into their contracts, which would have certainly triggered payouts for reaching the Champions League Final. Despite not signing any new players in the reporting period, Spurs did offer new contracts to several players, including Harry Kane, Dele Alli, Son Heung-Min, and Erik Lamela.

While the wage bill did rise, it did not rise at the same pace as revenue increased, leaving Spurs in a league of their own in terms of wage bill frugality. The £179m paid equals only 38.7% of the club’s total revenue, their lowest ratio ever for the club, and the lowest in the Premier League by a substantial margin, and potentially one of the lowest ratios in the world. Let me reiterate, even if UEFA revenues were completely removed from the calculation, Spurs would still only spend 50.7% of their total revenue on player wages, which would STILL be the lowest ratio in the Premier League!. Compared to their top 6 rivals, Tottenham lag considerably behind.

Spurs can afford to pay their players more, and their players will rightfully feel reluctant to cut their wages, when the club is giving them a significantly smaller slice of the pie than any other club in the League, especially at a time when the executives are showering themselves in bonuses.

Regarding other expenses, this would typically be a mine of interesting information on player trading. But in this period, Spurs did not buy anyone. It does note that the club earned £10.9m for the sale of Mousa Dembele to Guangzhou, Keanan Bennetts to ‘Gladbach and other unspecified contractual clauses. There are no surprises here, as Dembele’s transfer fee was reported to be £10-11m, and Bennetts’ fee being nominal.

While not relevant to this specific annual report, there is an interesting bit of information regarding Spurs’ spending in Summer 2019. For the sale of Kieran Trippier, Vincent Janssen, GK N’Koudou and Josh Onomah, the purchase of Tanguy Ndombele and Ryan Sessegnon, and the loan of Giovani Lo Celso and Cameron Carter-Vickers, the club spent a net of £74.5m (Notably, this list omits Jack Clarke.). These figures might cast some doubt on those reported in the press, specifically since with Ndombele’s fee being £55m, Sessegnon £25m, Lo Celso’s loan fee being £15m, Spurs spent £95m. If Trippier was sold for £20m, Janssen for £6m, N’Koudou £3m, and Onomah unspecified (but let’s assume £1m), it means Spurs earned £30m in fees. This would suggest a net spend of £65m. Jack Clarke’s fee of £10m would rectify this difference, but I would also have expected Onomah to have earned more too. In any case, it is something worth keeping an eye on in next year’s report.

Not included in this report, but still worth mentioning, is the refinancing of Spurs’ £637m of debt to build the new stadium, which was done in October 2019. At an interest rate of 2.66% over thirty years, Spurs can expect to spend £25m per year servicing the debt. With the stadium expected to boost revenues substantially, as noted above, THS will quite literally pay for itself several times over over the subsequent several decades.

Spurs’ Financial Future

Altogether, Tottenham have announced a profit from operations (before player trading, depreciation and taxes; EBITDA) of £173m, slightly up on last year’s profit of £163m. Since the 2014/15 season, Tottenham have earned a total of £563m in EBITDA; a remarkable sum by any standard.

In past years, the club had several notable revenue stream increases to look forward to. While this is still the case: Spurs can look forward to playing many more matches in THS, but they have otherwise largely maxed out their potential growth. In fact, there are considerably more potential pitfalls in their future than in the past.

The biggest elephant in the room is obviously the uncertainty surrounding the current state of European football. With COVID-19 pausing matches all around the globe, the financial future of the club is a big question mark. Will the season be finished? How will the delay or cancellation affect Tottenham’s revenue streams? Where will Spurs finish the season? Will they qualify for European football? Will European football even take place in 2020/21? Many of these questions are impossible to answer, and the others would result in this article spiraling into something much more complex, but would perhaps be worth looking into at another time. Suffice to say, Spurs find themselves in a very strong position to not only survive the consequences of the COVID-19 pandemic, but find themselves uniquely unshackled by substantial losses, given their low annual expenditures, and in a position to benefit from the other clubs’ misfortune.

Related to the above, Spurs will see a drop in Champions League revenue. Spurs were knocked out by RB Leipzig and will now likely earn around £60m in prize money, a drop of £33m. In addition, Champions League qualification – or even Europa League qualification, for that matter will come into question in two years. Spurs sit in in 8th place, which depending on the outcome of Manchester City’s Europe ban, might be good enough to qualify for the Europa League. Depending on how the season is resolved, Spurs may see a further £60m drop in UEFA revenue. However, as noted above, even a total absence of European football, Spurs would still find themselves in a very stable financial position.

There is plenty to be pessimistic about these days; with Spurs’ miserable performances on the pitch of late and the bleak uncertainty posed by COVID-19, you would not be wrong to feel that Tottenham have squandered a golden opportunity for success. However, Daniel Levy has built a financial juggernaut that basically prints money, and should be able to sustain high levels of performance for many years to come. Frustratingly, the question still remains: will he spend the money that he is able to?

Let’s see.