New article in the Athletic about Levy and PSR.
Levy, Tottenham and PSR: What other clubs’ problems tell us about Spurs
If you took a glance at the reaction to the Premier League enforcing its profit and sustainability rules (PSR) this week, you could be forgiven for thinking that they were an act of vandalism. As if some spiteful outsider was gleefully taking a hatchet to our beloved league, destroying its beloved mobility, its beloved competitiveness, out of nothing more than puritanical jealousy.
One of the many remarkable things about the events of recent days has been how the public sphere has been dominated by those voices arguing the PSR system is bad.
Everton have fought their corner after their 10-point ban and subsequent second charge, while we await a campaign on behalf of Nottingham Forest. But the discussion has it seems been led by those associated with Saudi Sportswashing Machine, bristling at the realisation they will not be able to turn Saudi Arabia’s state wealth into signed footballers as smoothly as they hoped. To call their complaints prejudiced barely scratches the surface. It is a surprise that so many others with no stake in their success have decided to adopt their self-serving logic.
But it does make you wonder why no one is making the public case for the rules.
In an ideal world, the Premier League itself would be dominating the airwaves, arguing why, in a time of flux and uncertainty, we need our leading clubs to be stable and secure, and protected from their own worst instincts. The Premier League’s chief executive Richard Masters should not need to speak to a House of Commons select committee to be heard on this matter.
In an ideal world, the point could be reiterated that the Premier League is a collective endeavour and that these were the rules the clubs signed up to in the first place.
It could be sold as a far-sighted and sensible move to preserve competition and safeguard the future of the English game, if only someone was willing to make that argument in public.
As long as the anti-PSR voices dominate the media, people will be left with the wrong impression: that there is nothing to be said for these rules and that no one in football who supports them. The reality is the opposite.
There is a silent majority of clubs who have played by the rules since their introduction and only spent within their means. These are clubs who have repeatedly faced public pressure to spend more but have decided against it, knowing they would risk unpopularity with their fans and losing their competitive edge by doing so. It has not been an easy position for clubs to take.
There must have been moments for clubs in recent years when they wondered what the point was in playing within the rules. Because if those rules were not enforced — and it is only this season that the Premier League has started seriously punishing teams for breaches — then they were effectively meaningless. You cannot have regulation as something that clubs can choose to opt into. You may as well have a car race with an optional speed limit.
This is why the events of this season are so significant.
If these rules are finally being enforced, then they are no longer something that clubs can opt into. The choice of whether to comply with the speed limit or not has been removed. And if this is now the case — and yes, it may still be too early to tell — then the landscape of English football has changed forever.
We may not hear much from the rule-abiding silent majority this week, but maybe they feel that they do not need to do the talking right now. Because if the landscape has changed, then it has changed in their favour.
Take, for example, Tottenham Hotspur.
They have worked very hard to run themselves sustainably throughout ENIC’s 22-year tenure. They have only spent what they generate, they keep wage costs as a smaller proportion of revenue than anyone else (just 47 per cent in 2021-22) and they do not rely on benefactor largesse to keep up. They have never won the Premier League, but the fact they have stayed competitive near its top end, despite the constraints they face, is a testament to their long-term strategy.
According to Swiss Ramble, the football business blogger, Tottenham were the most profitable team in the league across 10 seasons from 2012-13 to 2021-22. Spurs are nothing if not committed to staying well within the rules.
Central to this strategy is the money brought in by the Tottenham Hotspur Stadium, which they moved into in April 2019. This has transformed the club’s matchday revenue. In the 2021-22 season, Tottenham brought in £106m in matchday revenue, second only to Manchester United (£111m). In Spurs’ last season at the old White Hart Lane, 2016-17, they brought in £45.3m.
Tottenham have not yet published their 2022-23 accounts, which are expected next month or in early March, but it would not be a surprise if they have overtaken United and made more matchday revenue than anyone else. And that number will not include the eight-figure sum the club made for staging five sold-out Beyonce concerts in May and June last year. Their overall revenue for 2022-23 could be pushing the £500million mark.
As the money has started to roll in from the new stadium, Tottenham have slowly started to be more ambitious in the transfer market.
When their 2021-22 accounts were published in February last year, a statement on the club website proudly announced Spurs had “invested more than £500million” in first-team players since their new stadium opened, “putting us in the top five of spending in the Premier League”.
Tottenham continued to spend last summer and have done so again this month. The summer of 2018, when they signed no one, feels a long time ago now.
But generating revenue through your stadium could only ever be part of the plan. For a self-sustaining model to work, whether at Tottenham, Brighton & Hove Albion or anywhere else, it needs to exist in a world where all clubs are held to the same rules.
Only then will teams stand or fall by their own revenue and the quality of their decisions. Otherwise, owners will just spend as much as they can and, as sure as night follows day, those with the deepest pockets will win in the end.
It is no surprise, then, that Spurs’ chairman Daniel Levy has repeatedly spoken so positively about PSR and European football governing body UEFA’s equivalents.
Levy’s ‘chairman’s statement’ last February said: “We welcome the changes to the governance of the game, which will compel greater financial sustainability and financial fair play (FFP).” Levy pointed to UEFA’s new sustainability rules and wrote: “Many expect that these new rules will be a game changer for the sport. Even tighter regulations may follow.”
When Levy spoke to the Cambridge Union in March last year, he again underlined his belief in the value of spending restrictions.
Discussing the importance of clubs still making investments, Levy said that “the most important thing” was “to not get ourselves in a place where unlimited investment can be made, and it isn’t sustainable when that investment suddenly stops or that owner suddenly goes, and then the club disappears”. He again pointed to the new UEFA rules and predicted they would have “quite a big impact on the financing of football”.
It would not be a surprise if Levy — or anyone else running a club who play within the rules — would be keen on them being enforced or even tightened in future.
Sticking to the rules is self-defeating unless the rules have teeth. For years, the clubs who stick by the rules have seen themselves leapfrogged by the clubs who do not. Robust enforcement could be a silver bullet for those clubs who comply.
It has been tempting in recent years to draw a line between Tottenham’s strategy now and Arsenal’s strategy under Arsene Wenger.
The two situations are not identical but Arsenal made a bet when they moved from Highbury to the Emirates Stadium in 2006 that the increased matchday revenue would transform the position of the club in the financial landscape. But when Emirates Marketing Project were bought by Abu Dhabi two years later, the landscape moved irreversibly against Arsenal. Wenger was a vocal campaigner for UEFA’s FFP rules, and called for clear rules and clear punishments.
By 2017, with City and Qatar-owned Paris Saint-Germain barely impacted by FFP enforcement, Wenger had effectively lost the argument. Europe’s biggest clubs could spend more or less whatever they wanted.
“Do we have to open the door completely to investments?,” Wenger said in 2017, at the start of his final season as Arsenal manager. “It looks like we have created rules that cannot be respected. Nothing worse than when you create rules that are not respected.” In this environment, where clubs could spend whatever they wanted, the revenue uptick of the Emirates Stadium had effectively been rendered irrelevant.
We now know that the 2010s was a decade of financial permissiveness in the game, a Wild West of spending. Betting on your own intelligence and revenue generation never stood a chance. The question, now that the Premier League is enforcing its rules, is whether that bet has a better shot in the 2020s.
Spurs have been committed to sticking to Premier League and UEFA rules on finance - a position that has now been justified more than ever
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