Will Lankshear

[ricky2tricky4city]

We refinanced ourselves post COVID (this is NOT the stadium debt, that was done well before). The refinance I'm talking about is the repayment of the government loan and some more to restructure some smaller BofA short term stadium debt. £250m in total.

From the accounts it's pretty obvious we hadn't made much use of the COVID Loan as our cash balance went to extremely healthy. (Basically paid back the gov loan with a large chunk of the money they'd lent us). It was at a rate of 0.5%, so on the face of it, why would you pay it back? The reason is you had limitations on how you could use it. So we refinance just to get in the same position BUT with money we can use how we want.

Since then the cash pile has dwindled, in part poor spending, poor selling. So we are close now (especially given this window) where cash flow will be more of a concern, and we have seen moves to mitigate that with the owner injections and the (costly) Macquarie loan.

Depending how sales go, and also league finishes, will naturally feed into the cash flow situation as just front loading big purchases works if results follow. (From the finance pov). Of course there is some underpinning from the stadium events/commercial etc.

(Just as a side point....squad management is an art, from the fact you are on a 3 year cycle regarding the spending rules, get that wrong and you can box yourself into corners)

 

[Muttley]

Where I beleive you have got mixed up is that in the last reports our net transfer debt owed was £242.8M. So in range of £250M mentioned by @Bedfordspurs but that is not what is owed this year it’s going to be over a period of 3-5 years.

But it’s important understand that transfer instalments as trade creditors, not financial debt. If you run a yrestaurant you need to have tables, chairs, cutlery, kitchen equiement, refrigerators etc which often get purchased in installments. That’s how transfer fees are treated while the salaries are treated as expenditure.

Even then if we assume the transfer debt is not in the £400M mark based on this summers high spending. Add it in to the stadium and infusatrucure debt of about £600M. That takes debt to £1Billion.

Sounds like a scary number but we make £600M+ a year in revenue.

Imagine you make £60k a year after tax. So £5k per month.

• Transfer Fees - You have a car financed over 5 years that’s worth £40k. It costs you £850pm
• Stadium Debt - You have a 30 year mortgage on a house thats worth £60k per year. It costs you £500pm

Are those keeping you up at night?

Yeah, I totally get all of that.

I think the part that I focus on is our ability to get to the next level in life. Lots of people buy a house and have an interest only mortgage. Then the interest rates sneak up and the mortgage goes up. They still manage. So other people go down the capital + interest path and make overpayments to reduce the term of the debt. They also don't drive off the forecourt and lose 20% of their car's value in the first couple of miles. They get a 3 year old car that they can mostly afford up front and therefore live to their means.

I do find the consumer comparisons a little fruitless actually. The business ones are better. Every company has products to sell and make tough decisions, even getting into debt to drive sales. They take calculated risks and I think that is fair in football. The PL a pretty safe market if you can obviously stay in it. It is a money train and you need to learn to ride that train well. What is also interesting is whether football clubs are hitting a cap. Houses definitely are and I think football clubs valuations will be flat to down in the near future. Nobody would be complaining if the right acquisition happened and the debt was reduced or cleared. Obviously the massive caveat there is if we get the right owners.

We're obviously living to our means but back to the original conversation, I still think we've hit a point in the summer where we have to sell to buy. I think RDZ's commentary over the weekend supports that as well. We should expect exits before we see purchases. I think we have these purchases tee'd up and ready to go as well.

 

[robp135]

Yeah, I totally get all of that.

I think the part that I focus on is our ability to get to the next level in life. Lots of people buy a house and have an interest only mortgage. Then the interest rates sneak up and the mortgage goes up. They still manage. So other people go down the capital + interest path and make overpayments to reduce the term of the debt. They also don't drive off the forecourt and lose 20% of their car's value in the first couple of miles. They get a 3 year old car that they can mostly afford up front and therefore live to their means.

I do find the consumer comparisons a little fruitless actually. The business ones are better. Every company has products to sell and make tough decisions, even getting into debt to drive sales. They take calculated risks and I think that is fair in football. The PL a pretty safe market if you can obviously stay in it. It is a money train and you need to learn to ride that train well. What is also interesting is whether football clubs are hitting a cap. Houses definitely are and I think football clubs valuations will be flat to down in the near future. Nobody would be complaining if the right acquisition happened and the debt was reduced or cleared. Obviously the massive caveat there is if we get the right owners.

We're obviously living to our means but back to the original conversation, I still think we've hit a point in the summer where we have to sell to buy. I think RDZ's commentary over the weekend supports that as well. We should expect exits before we see purchases. I think we have these purchases tee'd up and ready to go as well.

We have to sell to buy big is more how I would put it. We could bring in maybe 2x £50M attacking players. But if we can’t sell Romero, Vicario, Sarr, Richarlison for decent money and want to bring in 2x needbale movers at £75M+ each we would need to sell someone like Bergvall.

 

[robp135]

Like I said, they have played themselves into a corner with Romero and Vicario. other teams are going to play Tottenham like a fiddle with those two players and low ball them. As for Sarr and Richarlison, Sarr has value, but teams do know that Tottenham has upgraded their midfield and that could effect his value. As for Richarlison , do teams see him as a premier goal scorer? I think that Tottenham will already have to sell a younger player like Bergvall if they want to revamp their forwards.

True but the alternative is we don’t sign Dubravka, JPVH, Tonali or a Forward until Vicario, Romero, Sarr, Richarlison are sold.

 

[Ace Face]

True but the alternative is we don’t sign Dubravka, JPVH, Tonali or a Forward until Vicario, Romero, Sarr, Richarlison are sold.

Or the reverse would be selling our players first and then having our pants pulled down as selling clubs would know we have cash available and need to buy players to replace the sold ones.

Damned if you do, damned if you don’t.