Untold Arsenal » How can Tottenham make a profit?

It is one of the more bemusing things about the EPL, that each year it seems, the Tiny Totts sack a manager, pay him off, off load some of the players the last manager bought (D Bentley anyone?) and still make a profit.

To put this in context here is a list of the profitable clubs from the last financial year (that’s the one that ended in the summer of 2008)

Arsenal £36.7m Blackburn Rotational Fouling £3m Everton Anti Gravity £26,000 Mohamed Al Fulham £3.2m Tottingham £3m

West Bromwich Wobbleyou £11.3m (in Championship)

That’s it. Everyone else made a loss.

In looking at the EPL figures, the turnover show just how far apart different clubs are. Turnover of course isn’t everything – you can have a massive turnover and make a massive loss (as the examples show), but it reflects the size of the operation

Here’s a few selected turnovers

Arsenal £222.5m Aston Villa £75.5m Blackburn £56.4m Chelsea £213.6m Manchester U £256.2m Stoke City £11.2m (while in Championship) Liverpool £159m Tottenham £114.7m

West Brom £27.2m

It is obvious that profit and turnover don’t go together in this league. Tottenham are half the size of the top four clubs by turnover, but are double the size of Blackburn. Top of the second league, if you like. A similar size to Newcastle (£100.8m)

So profit and turnover don’t link. But still, Tottenham always have these funny managers and their squads and that must drain money out. How do they make a profit?

The clue – or at least one clue – comes in player salaries…

Arsenal: £101.3m Manchester U: £121.1m Chelsea: £149m Tottenham: £52.9m Newcastle: £74.6m

Blackburn: £39.6m

The picture that emerges is that Tottenham are in every sense a much smaller club than Arsenal. Their wage bill as a percentage of turnover is about the same as Arsenal (around 46%) – as opposed to Newcastle where it is at 74% – which explains why Newcastle made a loss of £34m.

I think what we can see with Tottenham is that profit always comes first. If we recall the transfers of last summer, they held back on the deal with Manchester U in order to maximise their income from Barbietoff – irrespective of the fact that this left them without time to buy another striker.

It is also interesting that the Tinies pay dividends The dividend a year ago gave £2.5m to Enic – the organisation mostly owned by Mr Lewis in his tax haven.

So the strategy is clear – raise the income up to the big league level in order to get into the big league itself in order to pay more divis.

There are two problems with this strategy however

First, there seems to be a doubt about whether Tottenham will get 58,000 for each home game. Arsenal entered the Ems with a 10 year season ticket waiting list, which was quite separate from the silver membership and the waiting list for silver membership.

Tottenham’s silver membership automatically puts you on the season ticket waiting list – and the club has been counting both its silver membership and its season ticket waiting list as two separate items. Of course we won’t know until we see Tottenham v Wigan in February, but there is a doubt as to how full the stadium will be. In reality they might well settle down to having 45,000 for regular games.

Second there is the problem of getting into the Champs League. It is being shown year on year that to get into the Champs you need one of the current top four to slip up (as Liverpool did when Everton sneaked in) and you also need to spend more and more on players in preparation to get in.

We saw this year how Aston Villa really thought that they could do it – and so they took a reserve side to Russia for a UEFA Cup game, and got knocked out, so they could focus on ending up in 4th in the League. But they simply did not have the playing resources to make it happen.

Building a new stadium soaks up a lot of the money available to you. To try and do it with a debt in place before you start, makes it harder still. To then increase your wages bill to Champs League levels makes it harder again. Especially if in the meanwhile the stadium is not full for each game.

If we add all that together we get

Existing debt £65m plus Training Ground bill £20m plus Stadium bill of £350 = total debt of £435m – similar to Arsenal in fact, although not on such good terms because of the problem of raising money now.

Plus an increase of say £50m a year in wages to try and get into the Champs League.

Against that the extra income from the stadium – if it really is there. It is quite a gamble. And I am not sure it is a gamble they are going to take.

I believe they will build the new stadium (although the seats won’t be quite as close to the pitch as they are currently suggesting) but it will only be full for the biggest matches. They won’t dramatically increase their player salary level, and they won’t seriously expect to get into the top four for a prolonged period. They will stay top of the second economic division – nothing more.

In short, the aim is not long-term football success in the Arsenal fashion, but rather long term profit in the Arsenal fashion. They won’t get both profit and success because to do that you need a manager of far greater ability than the type of guys that Tottenham employ. And you need stability.

(c) Tony Attwood 2009