Stadium success at Spurs depends on Levy-Pochettino relationship

Debt at Arsenal and Spurs – and what it could mean

By Rhys Jaggar:

The recent statement by Daniel Levy at concerning the stadium project was unusually supplemented by a club statement on Spurs’ financial position, in effect giving unofficial indications of the 2018 financial statements around four months before they are usually published.

The key point to note is that the development finance draw-down facility has expanded from £400m to ‘up to £637m’, although no comment was made on whether this was simply the overall Northumberland Project continuing to develop on time or whether this is an indication of significant financial implications for the stadium project over-run.

The interesting figures for 2018 turnover was £381m, up just over £170m in two years. Operating profit aka EBITDA (for the accountants amongst your readers) is up just over £115m in two years to £163m, showing the benefits of a season at Wembley and a better Champions League run. This is pretty much consistent with my estimates to you in the summer.

The other snippet of financial news was that net debt on accounts day was £366m and that £1bn of tangible assets now sit on the balance sheet (i.e. stadium, training ground, other Northumberland project construction builds), suggesting that far from Spurs going bust, as certain less worldly and more delusional Arsenal fans try to contend, their financial position was fairly healthy as of 30/06/2018.

The club admits there are financial implications to continuing to use Wembley and the stadium delays, the exact amount of which remains to be seen. Not to mention the poor Champions League position. It could easily be £30m extra costs for hiring Wembley vs last year, going up to £50m if they had to play 25 games there. Quite what the stadium position is, who knows.?They may lose £20m from European revenues too.

The pitch is ready, the surrounding areas are now rapidly approaching completion, the external cladding is moving toward completion. The snagging on the safety systems appears the chief issue.

I must say that to completely cover up wiring/safety systems prior to preliminary testing (and possibly having to rip everything open, fix the faults, then reseal everything) sounds like cutting corners gone berserk, criminally poor project planning and management or deliberate sabotage. Not being inside the project makes it difficult to comment. You confirm the systems work with the wiring exposed, then you seal everything in three stages, repeating tests after each section is sealed. Well you do unless HSE is crazy….

With Levy now openly saying he cannot give a date when safety system testing will be completed satisfactorily as it is outwith his control, it does suggest Levy is in damage limitation mode.

There are some Levy haters calling regularly for blood: difficult to comment without inside knowledge of project planning, project management and how contacts for the build were organised.

The longer term issue of refinancing is also addressed: Rothschilds will ‘be helping to convert our development finance into notes of different maturities’. Translated into football fan lingo, that may mean individual projects are refinanced according their ability to repay (some over 10 years, some stretched out to 30 years), or it could simply be like Arsenal did in 2007 with some 20 year bonds and some 25 year bonds. Who knows.

I do not yet consider ‘Spurs are fucked’ to be accurate. What is less clear is what their annual service payments will be.

As for Arsenal, the allusions of Peter of Le Grove to ‘becoming the Dortmund of the EPL suggest that that long term supporter of Kroenke (his blog started just as Kroenke started buying shares) thinks Arsenal will be reverting to 2007-12 of buying low, selling high.

Rumours of a summer transfer budget of only £40m does suggest Kroenke expects the club to pay his debts. Adidas deal adds £30m a year to the kitty, so basically apart from that there is absolutely no budget.

My working assumption is that Kroenke’s £550m debt will cost the same as the Spurs stadium debt, so the bottom line is that 12 years of being fleeced as fans is not bringing improved finances, just a new laundryman rinsing his clothes in smelly Arsenal kit. A comedian would suggest sending Kroenke 60,000 sponges as a Christmas present, along with Bert Brecht’s Gute Mensch von Sichuan...Kroenke could do with a lecture from Shui Ta….

None of which detracts from the superb start Unai Emery has made as Wenger’s successor. The defence is starting to tighten up, the goals are still coming, so the upcoming Liverpool game is by no means a foregone conclusion it might have seemed six weeks ago. A home win would be a big statement.

A lot could happen at both North London clubs in the next 12 months.

Myles says:

If so, let’s hope that Spurs isn’t sold to the wrong owner. At the end of Juneheard that Spurs was about to be sold to a US corporation for £1.4bn with Daniel Levy staying on as chairman. 

I was heard that owner Joe Lewis, Levy’s uncle, was in town. But that deal didn’t happen and I don’t know if it’s still on the table.

Levy became chairman in 2001 and within a month he’d sacked George Graham and hired Glenn Hoddle.

The rise of Spurs has depended on the close relationship between Daniel Levy and Mauricio Pochettino, who took over from Tim Sherwood in the summer of 2014.

Levy began to realise that Poch was far superior to the other 8 managers he’s had since 2001. The challenges for Spurs the next two seasons are huge.But the fact that Dele Alli has just signed a new six-year contract is evidence that their top players still want to play for this manager.

Arsenal fans were probably delighted that Man City beat Spurs 1-0 on Monday night. Myself, I didn’t expect the game to be so tight and what we saw proves that City have improved defensively.

On Arsenal, Rhys, I don’t think they’re ready to beat Liverpool just yet. I wouldn’t bet my house on that with Mustafi and Xhaka in the back four. But you never know….

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