So the cash flow crisis starts

[Woodleyclaret]

Spurs needed a £175M loan to cover losses
Even at 5% interest quoted thats still a serious amount for a former rich club.Perhaps rebuilding White Hart Lane will impact on any signings

[GodIsADeeJay81]

https://www.bbc.co.uk/sport/football/52924157

They've said it won't be used to purchase new players, possible most will go on their wage bill.

[Royboyclaret]

Spurs needed a £175M loan to cover losses
Even at 5% interest quoted thats still a serious amount for a former rich club.Perhaps rebuilding White Hart Lane will impact on any signings

The interest rate is 0.5%.
All covered in detail on the Magic Money Tree thread earlier today, the £175m is additional to the existing huge £658m Gross Debt at Tottenham.

[tim_noone]

I prefer Burnleys way of doing Business.

[Blackrod]

You shouldnt be able to borrow that amount of money from the Bank of England to cover wages. Cut the costs, the wages and the Chairman’s salary and wages. They’ve built a brand new stadium and now run out of money and come begging. Tough luck.

[NewClaret]

The interest rate is 0.5%.
All covered in detail on the Magic Money Tree thread earlier today, the £175m is additional to the existing huge £658m Gross Debt at Tottenham.

Sheet the bed.

Exactly why this should be a great leveller for us.

[Woodleyclaret]

How can teams with huge debts like Manure and Spurs sign anyone
Does the financial fair play rules not apply to them?

[tim_noone]

How can teams with huge debts like Manure and Spurs sign anyone
Does the financial fair play rules not apply to them?

No

[tiger76]

Does this mean Kane's on his way to Madrid in the summer?

[Chester Perry]

Sheet the bed.

Exactly why this should be a great leveller for us.

not really - a very sensible move from Spurs - one that the EFL would be wise to follow.

It must be understood that while this new debt (both unsecured and at a fantastic interest rate) has to be repaid in full, it is highly likely that the Stadium debt will not - the current stadium debt was transferred to long term bonds at very favourable rates last year, so Spurs are only interest paying interest only (not capital reducing) the annual interest equating to around a 20% of the revenues the Stadium makes (matchday, food and drink plus events) in normal operations.

Think of it being like the debt the Glazers leveraged on Man Utd - never reduced just pay interest - easy and secure business for the financiers and very comfortable for the clubs - but only at their stratospheric income and Premier League security levels. It would be very difficult and possibly reckless for a club like ours to use that finance approach.

[Chester Perry]

How can teams with huge debts like Manure and Spurs sign anyone
Does the financial fair play rules not apply to them?

FFP is about managing losses and ensuring fair (at market rate) levels of income (not over-valued sponsorship deals - hence the Man City ban situation) and most definitely not about debt. Also FFP does not consider infrastructure costs - it is focussed on football costs

[Chester Perry]

Does this mean Kane's on his way to Madrid in the summer?

Real Madrid are scraping the barrel for money, have told all their key targets they will have to wait another season before a bid and are trying to offload at least half a dozen players, with dramatic drops in fees being asked

[Chester Perry]

You shouldnt be able to borrow that amount of money from the Bank of England to cover wages. Cut the costs, the wages and the Chairman’s salary and wages. They’ve built a brand new stadium and now run out of money and come begging. Tough luck.

It is a scheme open to all businesses, and there are restrictions on what the money can be used for - it definitely will not be used for transfers for example

[Zlatan]

Is this the sound of a bubble bursting?

[TVC15]

Like Chester says Spurs are more than good for the debt.
They have built one of the best stadiums in the world and the additional income they are generating from match day revenue has been done to put them in the next league in terms of competing financially.
They have a 2 year waiting list for season tickets too.

Many Burnley fans would say thank goodness we do not have the financial model of Spurs.
ALL Spurs fans would say thank goodness we do not have the financial model of Burnley.

It’s just a very different world looking at a club like Spurs - no comparison whatsoever.
The fact that we can compete with them on the pitch some times just shows how remarkable Dyche and our board have done.

Let’s enjoy it whilst it lasts.

[tiger76]

Is this the sound of a bubble bursting?

Wouldn't be before time, football has lived in fantasy land for far too long, a reality check wouldn't go amiss.

I definitely think that some players and agents might well be in for a rude awakening when contract talks resume in future, the days of megabucks might be at an end , at least in the next few years.

[Chester Perry]

Wouldn't be before time, football has lived in fantasy land for far too long, a reality check wouldn't go amiss.

I definitely think that some players and agents might well be in for a rude awakening when contract talks resume in future, the days of megabucks might be at an end , at least in the next few years.

You mean like Chelsea (lost £102m before tax last year and Roman lent them another £250m or so) matching the full release fee for Timo Werner £53m and a 5 year deal at £9m p.a - Liverpool would only offer £30m according to reports

https://www.theguardian.com/football/20 ... imo-werner

[tiger76]

You mean like Chelsea (lost £102m before tax last year and Roman lent them another £268m) matching the full release fee for Timo Werner £53m and a 5 year deal at £9m p.a - Liverpool would only offer £30m according to reports

https://www.theguardian.com/football/20 ... imo-werner

And if Roman walks away, what then for Chelsea, there's far too many clubs overly reliant on their owners digging into their pockets, and it's not confined to just the PL, there's countless lower league clubs dicing with the devil, and covid has merely exacerbated their travails it didn't cause them.

[Chester Perry]

And if Roman walks away, what then for Chelsea, there's far too many clubs overly reliant on their owners digging into their pockets, and it's not confined to just the PL, there's countless lower league clubs dicing with the devil, and covid has merely exacerbated their travails it didn't cause them.

I don't disagree - but the debt owed by Chelsea will be factored into any price the club is sold for - and the debt is about 60% of the clubs value (even with the Chelsea Pitch-owners situation - which is well worth googling about). Whereas for our friends down the road the debt is 3 to 4 times the current value of the club.

[Royboyclaret]

Like Chester says Spurs are more than good for the debt.
They have built one of the best stadiums in the world and the additional income they are generating from match day revenue has been done to put them in the next league in terms of competing financially.
They have a 2 year waiting list for season tickets too.

Many Burnley fans would say thank goodness we do not have the financial model of Spurs.
ALL Spurs fans would say thank goodness we do not have the financial model of Burnley.

It’s just a very different world looking at a club like Spurs - no comparison whatsoever.
The fact that we can compete with them on the pitch some times just shows how remarkable Dyche and our board have done.

Let’s enjoy it whilst it lasts.

TVC, all of that would be fine in normal times, but these are far from normal times. Matchday receipts at Tottenham last season exceeded £82m (Burnley £5.6m) and IF the whole of next season has to be played behind closed doors, which is looking increasingly likely, then Daniel Levy will not be sleeping at night. There will be many clubs fall by the wayside and such casualties will not be confined to the EFL.

[Spijed]

TVC, all of that would be fine in normal times, but these are far from normal times. Matchday receipts at Tottenham last season exceeded £82m (Burnley £5.6m) and IF the whole of next season has to be played behind closed doors, which is looking increasingly likely, then Daniel Levy will not be sleeping at night. There will be many clubs fall by the wayside and such casualties will not be confined to the EFL.

You'd think there would be no shortage of rich buyers if ever Levy wants to sell.

[Chester Perry]

TVC, all of that would be fine in normal times, but these are far from normal times. Matchday receipts at Tottenham last season exceeded £82m (Burnley £5.6m) and IF the whole of next season has to be played behind closed doors, which is looking increasingly likely, then Daniel Levy will not be sleeping at night. There will be many clubs fall by the wayside and such casualties will not be confined to the EFL.

which is why all sports are looking at getting fans back asap - and there is a growing belief that fans will be back in some form by September - What is what makes the restart so interesting from this perspective is the loss of home advantage. if clubs are allowed a reduced number of fans - they might be inclined to maximise revenues - i.e. corporate seats, yet to help the team they may need the vocal support of their core supporters - ideally a few thousand noisy ones. the balance will be delicately poised

[Chester Perry]

You'd think there would be no shortage of rich buyers if ever Levy wants to sell.

club is not Levy's to sell - he is a minor shareholder - there are few that could currently find the £2billion + for a club that probably needs a fair bit of player investment to get the trophies in. There is no room debt wise for a leveraged buyout that Man Utd experienced.

[Royboyclaret]

which is why all sports are looking at getting fans back asap - and there is a growing belief that fans will be back in some form by September - What is what makes the restart so interesting from this perspective is the loss of home advantage. if clubs are allowed a reduced number of fans - they might be inclined to maximise revenues - i.e. corporate seats, yet to help the team they may need the vocal support of their core supporters - ideally a few thousand noisy ones. the balance will be delicately poised

September would be highly optimistic and even then social distancing will be the key factor. Can Tottenham continue to operate into the calendar year 2021 with home attendances restricted to 15,000 ?.......Tough times ahead for many, and Daniel Levy is fully aware of how severe those times might become.

[Chester Perry]

September would be highly optimistic and even then social distancing will be the key factor. Can Tottenham continue to operate into the calendar year 2021 with home attendances restricted to 15,000 ?.......Tough times ahead for many, and Daniel Levy is fully aware of how severe those times might become.

While it is far from what they want or need, you would say a season of 15k attendance would cover the interest payment on the debt comfortably. The more pressing concern will be to get back on the Champions League merry-go-round, that would help Levy sleep better with social distancing attendances

[Royboyclaret]

While it is far from what they want or need, you would say a season of 15k attendance would cover the interest payment on the debt comfortably. The more pressing concern will be to get back on the Champions League merry-go-round, that would help Levy sleep better with social distancing attendances

And the small matter of a £179m Wage bill. Tottenham are far from immune from short to medium-term problems.

Are we on the right thread, Chester ?

[NewClaret]

not really - a very sensible move from Spurs - one that the EFL would be wise to follow.

It must be understood that while this new debt (both unsecured and at a fantastic interest rate) has to be repaid in full, it is highly likely that the Stadium debt will not - the current stadium debt was transferred to long term bonds at very favourable rates last year, so Spurs are only interest paying interest only (not capital reducing) the annual interest equating to around a 20% of the revenues the Stadium makes (matchday, food and drink plus events) in normal operations.

Think of it being like the debt the Glazers leveraged on Man Utd - never reduced just pay interest - easy and secure business for the financiers and very comfortable for the clubs - but only at their stratospheric income and Premier League security levels. It would be very difficult and possibly reckless for a club like ours to use that finance approach.

Sorry Chester but cannot agree.

£178m is a massive amount of debt to take on, not to mention £650m of stadium debt. Even if they are only repaying that (low) interest rate, £800m+ debt will cripple them in time because it won’t reduce, especially if their stadium remains empty for any prolonged period.

Borrowing from Peter to pay Paul. Hard times ahead for Spurs.

[Iloveyoubrady]

Please can someone explain to me where the huge losses come from due to the virus?

We’re playing the rest of the season and the only loss will be fans ticket sales which will be a few million, not 100’s of millions of pounds worth of debt.

[aggi]

Sorry Chester but cannot agree.

£178m is a massive amount of debt to take on, not to mention £650m of stadium debt. Even if they are only repaying that (low) interest rate, £800m+ debt will cripple them in time because it won’t reduce, especially if their stadium remains empty for any prolonged period.

Borrowing from Peter to pay Paul. Hard times ahead for Spurs.

You don't have to get rid of all the debt, most businesses operate with a certain level of debt as it's more efficient than being debt free.

[TVC15]

TVC, all of that would be fine in normal times, but these are far from normal times. Matchday receipts at Tottenham last season exceeded £82m (Burnley £5.6m) and IF the whole of next season has to be played behind closed doors, which is looking increasingly likely, then Daniel Levy will not be sleeping at night. There will be many clubs fall by the wayside and such casualties will not be confined to the EFL.

Agree Royboy - and this is undoubtedly a setback for Spurs like it is for all clubs.
But Spurs and the new stadium are both long term projects. When we do return to normal they return to their long term financial plan. They may cash in on someone like Harry Kane and they may even suffer on the pitch for a 2 or 3 years like Arsenal have (longer in their case) but the big clubs like Spurs are all about getting bigger and competing with the biggest dozen or so clubs in Europe.

I’m not saying it’s without risk or it’s the right thing to do - but it’s becoming more akin to the big American sports franchises every year. The whole richer we are, the more sponsorship we attract worldwide etc etc.

It may all implode but personally I don’t think it will for the premier league. It’s such a marketable product with huge world appeal in growing overseas markets. The number of billionaires in the world has increased significantly in the last decade and English football clubs have become nice little toys for them to buy. At this level I think football clubs will survive and even go on to prosper after this.

Might be a very different story for lots of clubs without these rich owners and especially down the leagues which will be devastating for many fans and communities. Hopefully football finds a way of protecting these clubs some how.

[Chester Perry]

Sorry Chester but cannot agree.

£178m is a massive amount of debt to take on, not to mention £650m of stadium debt. Even if they are only repaying that (low) interest rate, £800m+ debt will cripple them in time because it won’t reduce, especially if their stadium remains empty for any prolonged period.

Borrowing from Peter to pay Paul. Hard times ahead for Spurs.

The BOE loan is a facility to guarantee operational cash flow - the club may or may not use it all - it depends on how much revenues are hit by TV rebates and commercial sponsorship drop, together with when fans are allowed back and how many.

Man Utd have an overdraft facility of £150m of which they have moved £140m into their cash account to do much the same thing. It is a different economic game at that level

[aggi]

Please can someone explain to me where the huge losses come from due to the virus?

We’re playing the rest of the season and the only loss will be fans ticket sales which will be a few million, not 100’s of millions of pounds worth of debt.

Spurs were probably expecting to make about £2-3m per game in ground revenue. On top of that they were looking at extra revenue from things like NFL games and pre-season games.

If we don't get fans back until next year for instance that's a big chunk of revenue being lost for Spurs compared to Burnley.

[cricketfieldclarets]

It would be very difficult and possibly reckless for a club like ours to use that finance approach.

And it might be for spurs if tv money drops, European competition is suspended and matchday revenues don’t exist...

[cricketfieldclarets]

It is a scheme open to all businesses, and there are restrictions on what the money can be used for - it definitely will not be used for transfers for example

But if they then sign players it indirectly is being used for that b

[Chester Perry]

And the small matter of a £179m Wage bill. Tottenham are far from immune from short to medium-term problems.

Are we on the right thread, Chester ?

I am treating it as a warm-up for football shorts part 3 tomorrow

As you know Roy, Spurs wage bill is at a very healthy level of revenue, Tv and commercial income will cover their operational cash flow - This season, if the Premier League reaches it's end their TV revenue (Premier League and Champs League) will still significantly exceed their wage bill - Levy runs a tight ship - next year Premier League and Europa League should do the same even if they drop by 20% - Commercial income should take care of other operational costs

[Chester Perry]

Spurs were probably expecting to make about £2-3m per game in ground revenue. On top of that they were looking at extra revenue from things like NFL games and pre-season games.

If we don't get fans back until next year for instance that's a big chunk of revenue being lost for Spurs compared to Burnley.

It is more £3m-£4m a game aggi - they make £800k a match from drink and food alone

[cricketfieldclarets]

It is more £3m-£4m a game aggi - they make £800k a match from drink and food alone

*did

[Dyched]

Burnley fans looking on at other clubs about the “bubble bursting” .

We’d be the first PL club to go if that happened.

[cricketfieldclarets]

I personally think we’d be ok for a while. Not that we can afford to. But I imagine playing staff aside , our running costs aren’t that high in the grand scheme of things.

Sure Roy or Chester will know how much it costs us to ‘keep the lights on’.

Even if sky don’t pay up next season - I imagine amazon, Facebook and the rest will all be queueing up and outbidding one another for what may be an underpriced ‘product’.

Arguably even more people than ever will want to watch it.

Amazon could undercut sky in terms of how much they sell it to customers but still make far more than sky do in the process.

There’s definitely a market now and in future for big tv rights.

I just think clubs at the top are going to have to be more frugal. Which in turn should hopefully even the playing field a bit more.

Not that competing with well backed clubs has ever been a problem for us on the field. We’ve done incredibly well pound for pound pretty much forever.

[Chester Perry]

I personally think we’d be ok for a while. Not that we can afford to. But I imagine playing staff aside , our running costs aren’t that high in the grand scheme of things.

Sure Roy or Chester will know how much it costs us to ‘keep the lights on’.

Even if sky don’t pay up next season - I imagine amazon, Facebook and the rest will all be queueing up and outbidding one another for what may be an underpriced ‘product’.

Arguably even more people than ever will want to watch it.

Amazon could undercut sky in terms of how much they sell it to customers but still make far more than sky do in the process.

There’s definitely a market now and in future for big tv rights.

I just think clubs at the top are going to have to be more frugal. Which in turn should hopefully even the playing field a bit more.

Not that competing with well backed clubs has ever been a problem for us on the field. We’ve done incredibly well pound for pound pretty much forever.

I have to say that most of the industry talk that I have read and posted on the MMT thread in the last few weeks (and there is a lot of it) is inclined to disagree with you - your GAAF (Google/youtube, Apple, Amazon, Facebook) are not ready to spend the sums you are taking about and the Premier League are not ready to go it alone with their own OTT service for probably 2 cycles.

There are some outliers, in foreign markets - the Nordic deal that the Premier League signed in Jan for 2022/28 is astronomical - In overseas markets there are potential opportunities if distributors want to consolidate on a few specific offerings (like is happening in Australia) - but many broadcasters and particularly OTT services are struggling with cashflow and a few are likely to go belly-up even really big ones like DAZN are struggling to raise cash.

Then you have the issue with Piracy where rights holders are openly speaking about significantly dropping their bids next time round. - again posted about that today even

There is also the issue with the under 24 market which are growing up steadfastly refusing to pay for subscription OTT sports services

[Chester Perry]

For those interested in wanting to know about the potential cash flow issues from restart and a possible "ghost season" this is a good place to start

viewtopic.php?f=2&t=20891&start=4262

[Danieljwaterhouse]

0.5%

[cricketfieldclarets]

I have to say that most of the industry talk that I have read and posted on the MMT thread in the last few weeks (and there is a lot of it) is inclined to disagree with you - your GAAF (Google/youtube, Apple, Amazon, Facebook) are not ready to spend the sums you are taking about and the Premier League are not ready to go it alone with their own OTT service for probably 2 cycles.

There are some outliers, in foreign markets - the Nordic deal that the Premier League signed in Jan for 2022/28 is astronomical - In overseas markets there are potential opportunities if distributors want to consolidate on a few specific offerings (like is happening in Australia) - but many broadcasters and particularly OTT services are struggling with cashflow and a few are likely to go belly-up even really big ones like DAZN are struggling to raise cash.

Then you have the issue with Piracy where rights holders are openly speaking about significantly dropping their bids next time round. - again posted about that today even

There is also the issue with the under 24 market which are growing up steadfastly refusing to pay for subscription OTT sports services

You probably have sound reason to doubt them wanting to fund tv rights. But I genuinely think it would be a huge move for apple or Amazon. Such a huge market for them. Maybe even Netflix.

They’re all going strength to strength even during this. And premier league football would be even bigger coup for them.

[Chester Perry]

You probably have sound reason to doubt them wanting to fund tv rights. But I genuinely think it would be a huge move for apple or Amazon. Such a huge market for them. Maybe even Netflix.

They’re all going strength to strength even during this. And premier league football would be even bigger coup for them.

Amazon and Netflix have been the big winners media wise out of the global lockdown and users will now consider them a necessity even in the oncoming recession/depression in much the same way mobile phones became viewed as necessities after the banking crash of 2008.

Apple have lost huge amounts of from significantly reduced Hardware sales, and the recession/depression will hit hard against their price points. Apple TV has yet to prove itself a significant competitor to Netflix/Prime

Google and Facebook will be facing reduced advertising spend over a longer time period as a result of recession/depression.

All four GAAF have huge cash-holdings but have all been reluctant at paying large amounts for content. Amazon's Premier League deal was so cheap (they paid a hell of a lot more for Jeremy Clarkson and his mates to play in cars, though they do attract a bigger audience than the Premier League) it almost cost the Premier League to let them have it. it looks to me that they have the Premier League on a leash rather than the other way round

[Chester Perry]

I personally think we’d be ok for a while. Not that we can afford to. But I imagine playing staff aside , our running costs aren’t that high in the grand scheme of things.

Sure Roy or Chester will know how much it costs us to ‘keep the lights on’.

The last couple of years we have spent around £15m a year keeping the lights on

The great unknown that Roy and I have talked about is the bonuses - the 2018/19 accounts blew out of the water the hypothesis that the bonus pot was all the tv money earned above 18th place.

Put simply If the bonus pot (roughly 30% of football wages last season according to Sean recently) is solely determined by TV revenues - we should be ok, as the total wage bill should drop accordingly. If it is just a straight 30% of wages then we are facing some significant cashflow issues.

[aggi]

It is more £3m-£4m a game aggi - they make £800k a match from drink and food alone

Yes, I suspected it would be more. I was basing that figure on Arsenal.

[Royboyclaret]

Yes, I suspected it would be more. I was basing that figure on Arsenal.

In fact Arsenal's figure is £5m per match, compared to Tottenham's £4m. Matchday Revenue at Arsenal last season was a remarkable £96m or 25% of Total Revenue which is by far the highest proportion of the big six. Clearly a whole season next year potentially played behind closed doors will hit them hard.

[Chester Perry]

In fact Arsenal's figure is £5m per match, compared to Tottenham's £4m. Matchday Revenue at Arsenal last season was a remarkable £96m or 25% of Total Revenue which is by far the highest proportion of the big six. Clearly a whole season next year potentially played behind closed doors will hit them hard.

Roy you are working just with Premier League games there but there are also cup (League and FA) and Europa League games (they went all the way to the final) in those Arsenal matchday figures

[Royboyclaret]

Roy you are working just with Premier League games there but there are also cup (League and FA) and Europa League games (they went all the way to the final) in those Arsenal matchday figures

Fair comment, not sure how many additional home Cup games they played but the figure will still be close to £4m.

Also the overall situation still applies with a Matchday Income at 25% of Total Revenue. Comparable figures at Man Utd (17%), Man City (10%), Liverpool (16%), Tottenham (18%) and Chelsea (15%). So Arsenal will be hit hardest the longer the behind closed doors situation continues.

[Chester Perry]

19 Premier League
1 FA Cup
3 EFL Cup
7 Europa League
= 30 games at home and an average of £3.2m a game - though I suspect you are right about Premier League games being closer to £4m

Concur that Arsenal are hard hit by the "ghost games" though I suspect Spurs were looking to generate £120m + from Matchday this season which is a huge number - probably the highest in global football

btw have you read football shorts part 3 yet? link was posted last night by the esk