There are few clubs in European football to have had the kind of dramatic change in revenue over the last decade that Tottenham Hotspur have enjoyed.
The decision to make the move from White Hart Lane to a new purpose-built 62,850-seater stadium on the Tottenham High Road has been a complete game-changer when it comes to the kind of sums that the club can pull in on an annual basis.
The aim of the build was to try and financially futureproof the football club and create diversified revenue streams thanks to hosting the NFL's London Series on a 10-year deal, as well as the ability to welcome world-class music artists and events to North London. It has been a plan that has worked.
It came at a heavy cost, of course, with the build at around £1.2billion, and that build was largely paid for by raising debt, around £850million of it that sat on the balance sheet at fixed rates as of the 2022/23 financials, the most recently available full, audited accounts. That debt was seen as good debt, secured at favourable rates compared to what the market can offer now, meaning that the club has already made headway in paying it down, the aim within the next ten-to-fifteen years to be debt free and the stadium paying for itself.
It has been a vital build, one that simply had to be done, and it will serve Spurs well both now and into the future. But there are obvious problems in the "priority" area for chairman Daniel Levy, and that is that the club are at this moment not competitive in the Premier League and closer to a relegation scrap than a battle for Champions League football. For the club to continue to see revenues grow, playing in European football's elite knockout club competition is incredibly important.
Commenting at the time of the publication of the 2022/23 accounts, Levy wrote: "Our turnover has exceeded half a billion pounds for the first time. Whilst UEFA monies contributed, this has also been driven by increased stadium revenues from both football and non-football events and additional revenue streams.
"This is the impact of our multi-use stadium and what our board has been focused on delivering in order to invest in our football in a financially sustainable manner. The absolute priority for our club is to deliver on-pitch success."
Sunday’s defeat at home to relegation-threatened Leicester City saw the anger directed the way of Levy, watching on from the stands, instead of embattled boss Ange Postecoglou, whose side have been hit with horrendous luck with injuries this campaign, particularly defensively, and left with a threadbare squad. Yet there has been only one January addition, a goalkeeper, and fans are angry.
Last week saw the publication of the annual Deloitte Football Money League, which takes a look at the financial state of world football’s biggest clubs.
What the report did give was some early hints as to what 2023/24 looked like from an accounting perspective for Spurs, with the club dropping one place to eighth in the list. Reductions in matchday revenue due to fewer games, and broadcast money due to a lack of Champions League football, means that Spurs are looking at a decline in total revenue of around £20million, with total revenue set to be around £529million for the 2023/24 financial year.
But one metric that does stand out is the club’s wage bill, which is pegged at around £222million for the 2023/24 period. That places them 14th on the Money League list, six places lower than where they sit for total revenue.
As a wage to turnover ratio, Spurs will sit at around 42%, down 5% year-on-year and down from a high of 57% in 2021. Spurs have the lowest wage to revenue ratio of all 20 Premier League clubs.
It could be argued that it is financially responsible, when rivals are willing to spend more, with wages often correlating with greater success due to the fact that wage rises often come about through incentivised contracts. But with wages a better barometer of a successful team than transfer spend, Spurs have been spending less, or at least seeing the gap widen between what the club as a business makes and what it spends on player salaries.
Those kind of numbers will be irksome for fans who want to see the ambition that was shown in making such a bold, world-leading football stadium, reflected in the ambition that the club has for the actual product on the pitch. There is a famous business phrase: “It’s the product, stupid.” Maybe that is apt here.
But there is a flip-side, and the notoriously cautious and tough dealmaker Levy will be well aware of the potential pitfalls. The club was very profitable between 2015 and 2019 to the tune of more than £300million. That was largely down to excellent player trading and selling major assets such as Kyle Walker and Gareth Bale.
But player trading, save for the sale of Harry Kane in August 2023, which will be accounted for in the 2023/24 accounts, when the club are projected to make a loss once more, has not been strong in recent years. That has coincided with the club flipping from profit to loss, with the last three years seeing cumulative losses of some £190million-plus, estimated.
Amortisation costs have risen, and taking into account the new squad cost ratio financial controls that come into effect from next season, where wages, amortisation, agents fees and termination payments work as a ratio against total revenue, Spurs are likely around 70%, which is where limit Premier League clubs competing in Europe will have to reach. That is around the same as some of their main ‘big six’ competitors.
So, there is some reason behind the fact that the club having been so unwilling to spend big sums on wages, and the problems that are currently being seen at Manchester United have offered some red flags as to what happens when clubs engage on that road without competitive success to follow. With revenue shrinking for 2023/24, and the trend likely a similar one for 2024/25 given the lack of a big player sale or any Champions League football, and a far smaller Premier League merit payment for this current season, Spurs are showing signs of real caution.
But with a wage to revenue ratio that puts them 20th out of all Premier League clubs, and at a time when the club has been crying out for some additional resource, it is a hard sell to fans to plead too much poverty when they are spending less than the likes of Aston Villa, who have surged past them, in chasing success.