Daniel Levy - Chairman

[Finney Is Back]

New stadiums or major renovations is a must (at some point) for all serious clubs. We have that behind us and only costs us £17m a year.

If you think any serious business pay off capital on infrastructure projects when locked in on super low interest rates long term you are mistaken. Inflation will be along soon (well we can wait 23 years if we have to) to shrink the burden on its own.

I have agreed with some of your other points but not this one.....

Serious businesses absolutely pay off capital costs. The ones that don't tend to be the ones that eventually go bankrupt. Capital projects only have a certain shelf life. If you haven't paid off the loan for the capital project by the time the shelf life has expired then you have no room in which to manoeuvre to pay for the next capital project, or no room in which to borrow if an unforeseen event (such a covid) occurs.

Remember also that the average 23 year term of our debt at the 2.66% average interest is unlikely to just be made up of rolling loans that we are paying only interest on. If that is the case (and I would be very surprised) then we will have to continually restructure our debts and be at the mercy of interest rates rising. I suspect the club will indeed continue to look to restructure debt long term whenever it can find favourable interest rates to do so, though our shorter term debt will be at a lower rate of interest and it will be the long term debt that is jacking the overall average interest up to 2.66% so moving more debt long term will raise the level of interest paid (and that's before you consider the fact that there are typically penalties associated with paying off debt early.

THFC's total gross debt actually dwarfs the £630m or so loans taken out for the stadium as it includes the government covid loan, the interest on all of our the loans, tax owed to the government and fees owed to other clubs for transfers. In Feb of this year our total gross debt was estimated to be £1.17 billion. Which is a huge amount of debt for a club of our size to be carrying. Additionally I doubt that we are in a position to pay back in full the £175m to the government when it is due next month and will therefore have to hope that the government will extend their covid loan scheme or seek further debt from the market at higher rates than the government rate (thus increasing our debt pile further).

Inflating away debt is indeed a potential option but typically (and I know the world has been anything but economically typical since the financial crash in 2008) with inflation comes interest rate rises. Can the US, EU and UK afford continue to give away free money by quantative easing forever? Personally, I don't think so.

I suspect that ENIC will definitely look to pay off the stadium debt over the term of our loans, that is the prudent thing to do and not doing so would be put us seriously at risk in the event of interest rate rises, I would be surprised if the club hasn't invested in some interest rate options to hedge some of this risk but there is only so much hedging that you can do when you're carrying a huge debt.

 

[Finney Is Back]

I agree with the streaming side
But that could conflict with the investment from home TV which is still the big driver in money in the prem.

Who would you see buying these clubs though?

That’s what I can’t work out. The club values now are so high for what is a volatile industry it just seems daft for an investment model, hence why it’s the sugar daddy more that has had the biggest influence in change of clubs prospects.

I think the home TV market is already beaten by the overseas TV market. That is one of the bug bears of the big teams as the overseas TV market money is distributed equally and the likes of Man Utd and Liverpool especially can claim with validity that the overseas market is mainly driven by the popularity of their clubs (as overseas TV viewing figures show). The big clubs may have shot themselves in the foot with the ESL thing as I think prior to them going for this there may have been the possibility of the big clubs persuading the Premier League to allow each club to sell their overseas streaming rights (which I think in time would've dwarfed all other broadcast revenues). The ESL breakaway has basically caused the other 14 clubs to arm themselves and it may now not happen.

 

[SpurMeUp]

I have agreed with some of your other points but not this one.....

Serious businesses absolutely pay off capital costs. The ones that don't tend to be the ones that eventually go bankrupt. Capital projects only have a certain shelf life. If you haven't paid off the loan for the capital project by the time the shelf life has expired then you have no room in which to manoeuvre to pay for the next capital project, or no room in which to borrow if an unforeseen event (such a covid) occurs.

Remember also that the average 23 year term of our debt at the 2.66% average interest is unlikely to just be made up of rolling loans that we are paying only interest on. If that is the case (and I would be very surprised) then we will have to continually restructure our debts and be at the mercy of interest rates rising. I suspect the club will indeed continue to look to restructure debt long term whenever it can find favourable interest rates to do so, though our shorter term debt will be at a lower rate of interest and it will be the long term debt that is jacking the overall average interest up to 2.66% so moving more debt long term will raise the level of interest paid (and that's before you consider the fact that there are typically pelanties associated with paying off debt early.

THFC's total gross debt actually dwarfs the £630m or so loans taken out for the stadium as it includes the government covid loan, the interest on all of our the loans, tax owed to the government and fees owed to other clubs for transfers. In Feb of this year our total gross debt was estimated to be £1.17 billion. Which is a huge amount of debt for a club of our size to be carrying. Additionally I doubt that we are in a position to pay back in full the £175m to the government when it is due next month and will therefore have to hope that the government will extend their covid loan scheme or seek further debt from the market at higher rates than the government rate (thus increasing our debt pile further).

Inflating away debt is indeed a potential option but typically (and I know the world has been anything but economically typical since the financial crash in 2008) with inflation comes interest rate rises. Can the US, EU and UK afford continue to give away free money by quantative easing forever? Personally, I don't think so.

I suspect that ENIC will definitely look to pay off the stadium debt over the term of our loans, that is the prudent thing to do and not doing so would be put us seriously at risk in the event of interest rate rises, I would be surprised if the club hasn't invested in some interest rate options to hedge some of this risk but there is only so much hedging that you can do when you're carrying a huge debt.

With respect, this is all nonsense. We are not like United who leveraged a buy-out - the Glaziers borrowed money to buy the club. And put that debt on United. The club got nothing back from the debt. That is not the case with us. "Serious business" if they can borrow to make an extra £100m a year while paying off 17m a year will do it. The question is, do the management team have the vision, and execution to pull off such a move? Can they invest and deliver this net 80m uplift? Or 50m if being conservative.

 

[Finney Is Back]

We did
And I assume we will again

Oh I hope we don't!..... I want to see us run at about zero every year from now on.... Any 'profit' should be invested in the team and paying off our debt.

 

[Finney Is Back]

With respect, this is all nonsense. We are not like United who leveraged a buy-out - the Glaziers borrowed money to buy the club. And put that debt on United. The club got nothing back from the debt. That is not the case with us. "Serious business" if they can borrow to make an extra £100m a year while paying off 17m a year will do it. The question is, do the management team have the vision, and execution to pull off such a move? Can they invest and deliver this net 80m uplift? Or 50m if being conservative.

With respect, none of it is nonsense and I have never said that we are anything like Man Utd and nor did I mention a leveraged buyout. Serious businesses will of course borrow to invest, just as THFC have done. What serious businesses will not do is borrow to invest and then leave the loan open ended, rolling over and never paying off the capital. Businesses that get into trouble are the ones that just keep on rolling over their debt, a credit squeeze and the Banks calling in their loans cripples those businesses.

 

[billyiddo]

Oh I hope we don't!..... I want to see us run at about zero every year from now on.... Any 'profit' should be invested in the team and paying off our debt.

This is how we operated before the build from what i remember so i expect to see us go back towards that now we're in

 

[glasgowspur]

Rodgers still has a lot going on with Leicester atm so I'd watch that space rather than call it as done - interesting the bookies still consider him a favourite. ETH - Ajax supposedly had an extension clause that they activated rather than he signed a new deal. Me personally, I'd be as happy with Potter as i would with either of those because i think it would show that we are looking at what the manager has in his locker, rather than what he has on his honors list. He also knows the league and presumably has an idea of our squad strengths and weaknesses which should help in the short term.

@Modric THFC done a breakdown last night i think of some of the negative parts of Rodgers managerial record and it does have me second guessing him a bit - terrible record in Europe and no Rangers to contend with at Celtic does color his achievements somewhat.

Something I've been banging on about for over a year.
Rodgers won a cup with Swansea, what else? fudged up a title race he had in the bag in a way that if spurs had done we would never have heard the end of and won a one horse league.
Big deal!
Rodgers is a pr genius and an average manager.[/QUOTE]

 

[Finney Is Back]

This is how we operated before the build from what i remember so i expect to see us go back towards that now we're in

Fingers crossed! It will be difficult to tell for a couple of years I think. As the figures this summer will still be affected by covid. The club doesn't gain much any more in operating at anything other than a tiny profit (other than maybe being more attractive to a buyer)

I wonder if we'll even see us operate at a small loss each year, ensuring no tax due to the government but properly improving the squad and paying down a bigger portion of our loans. If so then I'll take back everything I said about ENIC and offer to go and polish Daniel's car and Uncle Joe's boat.

 

[ricky2tricky4city]

Serious businesses absolutely pay off capital costs. The ones that don't tend to be the ones that eventually go bankrupt. Capital projects only have a certain shelf life. If you haven't paid off the loan for the capital project by the time the shelf life has expired then you have no room in which to manoeuvre to pay for the next capital project, or no room in which to borrow if an unforeseen event (such a covid) occurs.

No they don't in a low interest rate enviroment. Why direct working capital/profits to pay off £40m a year off the loan when all its saving you is £1.2m in interest, that money is far better in the business, especially during the transitional/growth phase we will be in. Besides its money you can 'back the manager with'. I'm hoping the stadium wont need renewing for at least 50 years (conservative estimate), so not sure of your point.

Remember also that the average 23 year term of our debt at the 2.66% average interest is unlikely to just be made up of rolling loans that we are paying only interest on. If that is the case (and I would be very surprised) then we will have to continually restructure our debts and be at the mercy of interest rates rising. I suspect the club will indeed continue to look to restructure debt long term whenever it can find favourable interest rates to do so, though our shorter term debt will be at a lower rate of interest and it will be the long term debt that is jacking the overall average interest up to 2.66% so moving more debt long term will raise the level of interest paid (and that's before you consider the fact that there are typically pelanties associated with paying off debt early.

Its bonds with staggered maturities ranging from 15 to 30years. Interest baring averaging 2.66%. Much oversubscribed when placed (ie someone liked the cut of our jib). We are locked in with a known interest burden for a minimum of 15 years, that is exactlty what we need at present, long term known costs. You're worried about things that don't exist or are not in play. Levy will deal with things as they come along, i have it on good authority that he is much repsected in the finance world as a first class sports executive, which basically means....he'll pay the rates and they'll get their money back

THFC's total gross debt actually dwarfs the £630m or so loans taken out for the stadium as it includes the government covid loan, the interest on all of our the loans, tax owed to the government and fees owed to other clubs for transfers. In Feb of this year our total gross debt was estimated to be £1.17 billion. Which is a huge amount of debt for a club of our size to be carrying. Additionally I doubt that we are in a position to pay back in full the £175m to the government when it is due next month and will therefore have to hope that the government will extend their covid loan scheme or seek further debt from the market at higher rates than the government rate (thus increasing our debt pile further).

Yes it is amazing that a company our size (especially going back 10-15years) had the balls or vision to undertake such a project and secure the backing to do it. Probably had to be cautious through the whole period, one might think. I wonder why all clubs aren't doing it? The Goverment loan is a no brainer, you dont turn down £175m at 0.5% interest, even if you dont need it. They wont call it in or change the terms (i think the terms are set anyway), if we couldn't pay it we can just give them 5% of the club I think there are few thousand businesses that are going to default on the goverment before we ever do.

nflating away debt is indeed a potential option but typically (and I know the world has been anything but economically typical since the financial crash in 2008) with inflation comes interest rate rises. Can the US, EU and UK afford continue to give away free money by quantative easing forever? Personally, I don't think so.

They're giving it a bloody good go! Of course they are (gov's) in a bigger hole than ever. Some inflation will suit them, and that suits us as we will be sitting on interest rates from the all time low era while inflation does its work. £637m will probably buy you a right back from Leicester in 25 years.

I suspect that ENIC will definitely look to pay off the stadium debt over the term of our loans, that is the prudent thing to do and not doing so would be put us seriously at risk in the event of interest rate rises, I would be surprised if the club hasn't invested in some interest rate options to hedge some of this risk but there is only so much hedging that you can do when you're carrying a huge debt.

I disagree. Lewis and Levy know the debt will just be deducted off their sale price (when that ever happens), the more money they can keep in the business, the more they can put to work, the more they accumulate.

 

[SpurMeUp]

With respect, none of it is nonsense and I have never said that we are anything like Man Utd and nor did I mention a leveraged buyout. Serious businesses will of course borrow to invest, just as THFC have done. What serious businesses will not do is borrow to invest and then leave the loan open ended, rolling over and never paying off the capital. Businesses that get into trouble are the ones that just keep on rolling over their debt, a credit squeeze and the Banks calling in their loans cripples those businesses.

Isn't one of your Levy-bugbears that he has not spent enough on transfers and wages? At the same time, you identify that businesses who roll over debt can't afford to pay back money and get into trouble. Is it really a bad thing that our wages to turnover is lower?

You even identify the reasons why Spurs are well run, yet when you reach your conclusions you forget your accountant's hat and take on a teenage football-fan mindset. Which is fine. We are all fans, this is a pastime. We are entitled to demand more entertainment. But if you claim to approach things with business acumen, also apply it to your conclusions. They do say love is blind.

 

[Finney Is Back]

No they don't in a low interest rate enviroment. Why direct working capital/profits to pay off £40m a year off the loan when all its saving you is £1.2m in interest, that money is far better in the business, especially during the transitional/growth phase we will be in. Besides its money you can 'back the manager with'. I'm hoping the stadium wont need renewing for at least 50 years (conservative estimate), so not sure of your point.


Its bonds with staggered maturities ranging from 15 to 30years. Interest baring averaging 2.66%. Much oversubscribed when placed (ie someone liked the cut of our jib). We are locked in with a known interest burden for a minimum of 15 years, that is exactlty what we need at present, long term known costs. You're worried about things that don't exist or are not in play. Levy will deal with things as they come along, i have it on good authority that he is much repsected in the finance world as a first class sports executive, which basically means....he'll pay the rates and they'll get their money back

Yes it is amazing that a company our size (especially going back 10-15years) had the balls or vision to undertake such a project and secure the backing to do it. Probably had to be cautious through the whole period, one might think. I wonder why all clubs aren't doing it? The Goverment loan is a no brainer, you dont turn down £175m at 0.5% interest, even if you dont need it. They wont call it in or change the terms (i think the terms are set anyway), if we couldn't pay it we can just give them 5% of the club I think there are few thousand businesses that are going to default on the goverment before we ever do.


They're giving it a bloody good go! Of course they are (gov's) in a bigger hole than ever. Some inflation will suit them, and that suits us as we will be sitting on interest rates from the all time low era while inflation does its work. £637m will probably buy you a right back from Leicester in 25 years.


I disagree. Lewis and Levy know the debt will just be deducted off their sale price (when that ever happens), the more money they can keep in the business, the more they can put to work, the more they accumulate.

Only time (and our accounts over the next umpteen years) will tell. I think that we will look to significantly reduce our gross debt from its current £1.17 billion over the next 10 years.

I hope that the two of us are both around long enough to see which of us was right. If it's you then I'll buy you a drink at the stadium mate (might cost me £50 quid at your inflationary estimate!)

 

[Finney Is Back]

Isn't one of your Levy-bugbears that he has not spent enough on transfers and wages? While at the same time identifying businesses that roll over debt and can't afford to pay back money getting into trouble...

Is it a bad thing that our wages to turnover is lower?

You even identify the reasons why Spurs are well run, yet when you reach your conclusions you forget your accountant's hat and take on teenage football-fan mindset. Which is fine. We are all fans, this is a pastime. We are entitled to demand more entertainment. But you claim to have some business acumen, but don't seem to apply it to your conclusions at Spurs. They do say love is blind.

My issue is that we overspent on our stadium by a huge amount which meant that we couldn't spend an adequate amount of money on the team. Our chairman took a £3m bonus for that just to rub it in.

 

[ricky2tricky4city]

Fingers crossed! It will be difficult to tell for a couple of years I think. As the figures this summer will still be affected by covid. The club doesn't gain much any more in operating at anything other than a tiny profit (other than maybe being more attractive to a buyer)

I wonder if we'll even see us operate at a small loss each year, ensuring no tax due to the government but properly improving the squad and paying down a bigger portion of our loans. If so then I'll take back everything I said about ENIC and offer to go and polish Daniel's car and Uncle Joe's boat.

Thats why the pandemic intervention is such a pain, we'd be 2 years fully in the stadium by now (3 if we didn't have the wiring fudge up) and the ENIC direction would be clearer to see. Anyway, this really is the last stage of the masterplan Levy had, so you have to give it 5 years to show itself.

Ironically i think we've flipped i'm more for giving the team as much finacial muscle as possible, you're up for putting some towards capital repayments (disgrace back the effing manager)
We are in a good position FFP (if it exists) will never be a problem for us and we are writing down the depreciation on the stadium every year (last year £71m added to expenses) so paying any tax to the goverment probably wont be happening

 

[ricky2tricky4city]

My issue is that we overspent on our stadium by a huge amount which meant that we couldn't spend an adequate amount of money on the team. Our chairman took a £3m bonus for that just to rub it in.

During the build, you natrually have to be cautious. BUT every extra £100m on the stadium was going to cost us £2.66m a year. (or Bales wages for 10 weeks) Thats not scary

Ironically we had our best times in decades during the main part of the build project. I kind of reverse austerity effect, weird. Probably was mostly Poch?

 

[Finney Is Back]

During the build, you natrually have to be cautious. BUT every extra £100m on the stadium was going to cost us £2.66m a year. (or Bales wages for 10 weeks) Thats not scary

Ironically we had our best times in decades during the main part of the build project. I kind of reverse austerity effect, weird. Probably was mostly Poch?

Indeed. I think much of my anger really comes down to the way that Pochettino was treated. I think we were the very definition of looking a gift horse in the mouth. There were some bad decisions made around that period (including backing him with 3 players and then sacking him before he could really use them). Maybe I just need to finally get over that and I can get back onboard the ENIC bus for a few years to see where we end up. Having finally got rid of the mistake after the mistake that was Mourinho, I should find it easier to do that.

 

[SpurMeUp]

My issue is that we overspent on our stadium by a huge amount which meant that we couldn't spend an adequate amount of money on the team. Our chairman took a £3m bonus for that just to rub it in.

So your only one gripe with Levy is we overspent on the stadium. I believe it is quite a common occurrence on grand schemes. Just look at the various rail projects. We had Brexit extra costs with the dip in the pound to contend with?

 

[Finney Is Back]

So you only one gripe with Levy is we overspent on the stadium. I believe it is quite a common occurrence on grand schemes. Just look at the various rail projects. We had Brexit extra costs with the dip in the pound to contend with?

I never, ever look at public projects when assessing costs. Public projects always go over budget as there is no consequence in going over budget.

Regarding Brexit and the dip in value of the pound I would've honestly expected our currency trading owner to have hedged a lot of the currency risk and for the project to have been originally costed as such.

 

[Raziel]

So you only one gripe with Levy is we overspent on the stadium. I believe it is quite a common occurrence on grand schemes. Just look at the various rail projects. We had Brexit extra costs with the dip in the pound to contend with?

The stadium costs more than initially expected in some part to certain cost changes, but also due to us expanding the scope.

The main thing is -> it's done, the debt is on long term low interest and barring another multiple years of Covid, we will be back on our feet within the next 12 months.

What the delay/cost effect on the team during the build timeline is speculation and hindsight. I for one don't think it was positive, but fits in the understandable/expected.

 

[SpurMeUp]

I never, ever look at public projects when assessing costs. Public projects always go over budget as there is no consequence in going over budget.

Regarding Brexit and the dip in value of the pound I would've honestly expected our currency trading owner to have hedged a lot of the currency risk and for the project to have been originally costed as such.

Why would you have expected that? It is a bit of a misconception that companies are playing the currency markets buying up money well before purchasing. The idea that Jo Lewis is involved in hedging Spurs bets frankly just shows how naive fans analysis is.

 

[BrainOfLevy]

PE buy outs, rounds of funding etc are based on far more quantifiables and solid metrics than football clubs offer. Far too much is down to chance and luck to risk investors money. For any club whose turnover (not profit) is say 250m to expected to buy a single asset for 50m is risky as fudge. (Think Andy Carroll). The inflation of transfer fees and wages is a real problem for football.

That's why the potential buyer group is so limited, our value currently has little potential upside at the quoted valuation.

An NFL potential franchise is a juicy carrot...but I do have some worries about that.

I’m not saying an actual PE should buy us, I was talking about the principal of different investors with different risk profiles and different amounts of cash to invest. All I’m saying is I’d like a group equipped with the cash to invest in taking us to the next level, because ENIC aren’t that. They have done a great job picking us up for not very much, running the club sustainability and building the infrastructure while staying in the top 6. I think a new group would have to stump up a lot of cash, so we would need someone with deep pockets willing to do it. But our next phase, if we are going to continue to progress, would be a different investment and risk profile compared to when we were picked up.