Last week saw the publication of Tottenham Hotspur’s accounts for the 2023/24 financial year, a year in which the club finished fifth in the Premier League.
The headline figures were that the club made a pre-tax loss of £26 million, down from the £94.7m pre-tax loss that was seen in the 2022/23 period. It was the fifth financial year in a row that Spurs had made a loss, a trend that started in 2019/20 during the first COVID-impacted campaign, but one that came on the back of the previous five years being profitable.
In recent times, with a world-class stadium completed back in 2019 that has been transformation to the club’s revenue-generating ability, there has been plenty of fan unrest related to a perceived lack of investment into the product on the pitch by chairman Daniel Levy and owners ENIC.
This season has been one of particular struggle, with head coach Ange Postecoglou’s future uncertain with the club languishing in 14th place albeit with the potential to still lift silverware in the UEFA Europa League, something that would see them find a route to next year's Champions League, the competition that supercharges the revenues of those who participate.
Spurs have long been run like a normal business, and in football that doesn’t always go hand in hand given the many unique variables.
When it comes to what clubs can spend within the confines of the Premier League’s profit and sustainability rules (PSR), and what they actually spend in line with the business model, the picture varies greatly across the Premier League.
In recent seasons both Everton (twice) and Nottingham Forest have been punished with points deductions by the Premier League for breaching PSR, while clubs such as Chelsea have had to sell assets such as hotels, and even the women’s team, in order to ensure compliance. Aston Villa, Manchester United and Newcastle United are among the list of other Premier League clubs to have had to be mindful of their PSR position.
It hasn’t been much of a concern for Spurs, though. But where do the club stand with PSR up to 2023/24, and what challenges might they face in terms of compliance moving forward given that PSR is sticking around until at least the end of next season as clubs await greater clarity on associated party transaction rules, with the Premier League and Manchester City case yet to be resolved?
For PSR, club finances are assessed over a three-year period, with a maximum of £105m allowed to be lost during that period. There are allowable deductions for investment into infrastructure, the depreciation of tangible fixed assets, the women’s team, community initiatives and the academy.
We already know that all Premier League sides were PSR compliant as the league informed all clubs in early January after requiring them to submit accounts for scrutiny before the end of December last year. The three-year monitoring period for Spurs up to June 30, 2024, had the club reporting £182m in losses.
It was noted in the accounts that “the club continues to comply with and support both UEFA and the Premier League Financial Fair Play criteria.”
Given that the club were some £77million over the £105m allowance that might have seemed curious, but Spurs have a significant amount of allowable deductions, largely due to the depreciation related to the stadium, something that amounts to around £70m per season. Add to that the deductions for youth development, the women’s team and community work and the figure grows further.
Football finance expert Swiss Ramble estimated that Spurs had around £93m per year of allowable deductions when it came to PSR compliance, with that figure made up of depreciation of £70m, £15m on youth development and £3m each on the women’s team and the community.
Using those allowable deductions, Spurs came out as net positive for PSR in 2021/22 at £32m, negative for 2022/23 at £2m given the heavy £95m pre-tax loss, and net positive for 2023/24 at £66m.
That £96m sum, added on top of the £105m that as already allowed, meant that the club had some £201m in PSR headroom before having to be concerned about any kind of Premier League punishment. That was one of the healthiest PSR positions in the Premier League.
Next season’s position will likely see less headroom, but they still won’t be concerned about compliance given the breathing space that they have already created.
The figures for 2024/25 likely won’t make great reading. There will be no hefty player trading profit, which, let’s not forget, involved them having to sell European football’s best striker in Harry Kane to Bayern Munich in a deal that represented pure profit for the club. There will be an increase in European money from a deep run in the Europa League, which stood at just £1.3m for 2023/24, but that will just about touch the £30m mark, a fraction of the £100m-plus that Aston Villa will earn from their Champions League journey this season.
Spurs will also see a sum of around £25.5m drop off what they earned for finishing fifth in 2023/24 compared to what they would earn from the Premier League in merit payments should they end the season in 14th position.
Should Spurs manage to book a spot in the Champions League next season, which would take revenues above £600m from the £528m they stood at in 2024, then they also wouldn’t have issues meeting the financial controls imposed by UEFA.
European football’s governing body has a squad cost ratio as a financial control, where the ratio of player wages, transfers and agent fees is limited to 70 per cent of revenue and profit from player sales. According to Swiss Ramble estimates that stands at 49 per cent, well beneath the limit.
Spurs have the ability to invest, but with some uncertainty about just what revenue streams will look like if competitive success alludes them, much will ride on how they fare in the Europa League as to whether they have the confidence to engage in the market in a significant way this summer and who will be at the helm into next season.