Finance expert explains why Spurs may be more attractive to investors than other clubs
Finance expert Doctor Dan Plumley has claimed that Tottenham Hotspur will be lucrative for potential investors despite the club’s high debt. Last week, Forbes published their annual list of football’s most valuable clubs in the world, with Spurs ranking 10th on the list with an estimated value of $2.35 billion (£2B). Four of the other five […]
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Finance expert Doctor Dan Plumley has claimed that Tottenham Hotspur will be lucrative for potential investors despite the club’s high debt.
Last week, Forbes published their annual list of football’s most valuable clubs in the world, with Spurs ranking 10th on the list with an estimated value of $2.35 billion (£2B).
Four of the other five ‘big six’ clubs, Real Madrid, Barcelona, Bayern Munich, Paris Saint-Germain and Juventus are all ranked above Spurs while Arsenal are one place below in 11th.
The report also revealed that Tottenham’s operating income of $127m (£108.3m) is the third highest in the world behind just Manchester City and Manchester United.
However, the only concerning part is that the Lilywhites’ debt/value ratio is by far the highest of the top 20 most valuable clubs, standing at a whopping 45 per cent.
That is mostly down to the money that the North London club borrowed to build the Tottenham Hotspur Stadium.
But Plumley explains that the figures may be misleading because they do not take into account the interest-free loans that other clubs have borrowed from their shareholders.
When asked about Tottenham’s debt, he told Football Insider: “Personally, I wouldn’t worry too much about that number for Spurs. The debt figure that is included in this report is only on interest-bearing borrowings, including stadium debt.
“If you look at some of the other clubs, they have got debt levels of zero but that isn’t true because they are indebted to their owners. Spurs borrowed to fund the stadium through more traditional borrowing channels.
“So, you see that it’s quite a high figure compared to other clubs that report. However, in the long run, that is going to expand growth and open up revenue streams.
“As a long-term play, they have got to work through the debt, but provided they can service that, it’s not a problem.
“If you’re an investor, you might not see them as that attractive now, but when that debt is paid off and they are earning through the stadium, it will start to look far more attractive.”
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The debt Spurs have incurred on the stadium is low-interest, long-term debt, unlike clubs like Inter Milan and Barcelona, who have to pay off their debts in their immediate future.
So, Tottenham’s high debt-to-turnover ratio is not something that would put off potential investors. Looking at the fee that Chelsea fetched recently, one would expect ENIC to hold out for at least £4 billion to sell Spurs.
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