In the Lions’ Den #1

Post 18

19th June 2017


Spurs Finances

In this series of posts (tagged ‘Spurs finances’), I’m considering the following:-

(A) Whether Spurs can grow income to £400 million per annum by 2019-2020.

(B) And, more generally, the impact of our new stadium on Spurs finances (and hence our ability to sign and retain the best players within a sustainable wage structure).

We want Spurs to have an income that, say, doubles by 2020.

So £200 million of revenues in 2016 up to £400 million p.a. in 2019.

With those kind of annual revenues, the Club would have the money to be able to compete for and retain the very top players.

‘Reasons to be Cheerful #3’, Post 16

To reach £400 million by 2019-2020, I’m assuming that Spurs will require £100 million (25%) of ‘Match Day Revenues’ and £100 million of ‘Commercial Income’ (25%), to add to £200 million (50%) of Premier League and European TV & Prize Money. The total of £400 million would lift Spurs much closer to the other ‘Top 6’ Clubs.

Having considered the available information, I think it’s quite clear that £100 million of Commercial Income can be achieved by 2019.

What is ‘Commercial Income’?

Spurs’ audited Commercial Income in 2016 was £59 million (out of a total of £210m).

Broadly speaking, what football clubs label ‘Commercial Income’ is anything that doesn’t fall into the category of ‘Match Day Revenues’ (sale of tickets and catering on match days) and ‘TV & Prize Money’ (eg. Premier League and UEFA contracts).

The most important commercial contracts are for Kit Deals (shirts) and, in some cases, Stadium Naming Rights. There are then secondary contracts with, for example, booze and betting partners / sponsors.

Spurs figure of £59.9 million was made up of £47.6 million of sponsorship and partner-related income (79%), and £12.3 million of merchandising (21% – basically sales of Spurs merchandise in the Club shop and online).

What could we earn from shirt sponsors?

Like most clubs, Spurs have two main shirt sponsors; (i) a manufacturing / technical sponsor and (ii) a marketing sponsor. Until the end of the Season just finished (2017), Spurs wore Under Armour shirts with the AIA logo on the front.

However, for the next 5 years (at least), until 2022, Spurs are due to wear Nike shirts with the AIA logo continuing on the front. The Nike deal has not (officially) been signed at today’s date (19th June) but it is reputedly ‘worth’ £25 million per annum.

Shirt Manufacturer Contract

The new shirt is based on the Nike Vapor Aeroswift template with a ‘retro-style Cockerel Badge and Shield’ over the heart, and a matching ‘Nike swipe’ over the other side of the chest, both above a centred AIA logo.

Shirt manufacturer contracts are notoriously complex. Essentially, both Nike and Spurs get a share of revenues from the sale of replica shirts and kits to fans. The ‘headline’ number published is more of an estimate of potential earnings than simply a guaranteed cheque written by a sponsor. However, what’s certain is that Spurs’ annual income from the Nike deal will be considerably more than the £10 million p.a. received via the Under Armour partnership.

Shirt Sponsor Contract

The ‘shirt sponsorship’ deal with AIA was worth £16 million p.a. in 2016 (out of the £47.6 million). It was originally signed to run at that annual rate for 5 years from 2014-2019.

However, it was recently renewed (early) to run until 2022. While no contract details have been released it’s obviously going to be a higher figure. My best guess is £25 million per annum which is comparable with Liverpool’s shirt sponsorship deal with Standard Chartered Bank (the actual figure is likely to be dependent annually on CL v EL football).

So, I’m going to assume £50 million of total shirt (kit) sponsorship income in 2019; £25m from Nike and £25m from AIA.

Other Sponsorship Income

Other Sponsors and Partners receive a variety of benefits for their association with Spurs; often including promotional visits from players, conference facilities, programme and pitch side advertising, digital content, executive boxes and corporate entertainment, plus extra business from the affiliation (MBNA for cards, Fun 88 for betting, etc.).

In round numbers, Spurs received £22 million of commercial income in 2016 from ‘non-kit’ sponsors and partners, including Carlsberg (beer), Clinova (Sports Drinks), MBNA (Credit Cards), Thomas Cook (Travel), Aquascutum (Formal Clothing), William Hill and Fun 88 (Betting), StubHub (Tickets – see below) and Kumho (Tyres).

Most of the current contracts were signed for 2 years and most expire in 2018. It is quite reasonable to assume that they will be renewed – or replaced – at higher amounts for periods after 2019. I’m going for a modest increase of 35% in ‘other sponsor revenues’ (although I suspect the increase will turn out much higher). So £22 million will initially increase to £30 million. This 35% hike compares with an increase of 90% in our estimated shirt sponsorship revenues over the same period.

*  The StubHub deal is ending with the Club taking our ticket sale / resale business in-house, which is great news for all fans. Tickets will be resold at face-value plus a modest admin fee. Season ticket holders will receive 1 x 19th of their season ticket price for each Premier League game regardless of opposition.

Merchandise Sales

In 2016, we reported £12.3 million of merchandise income.

We already know that Spurs are building the largest ‘stadium retail outlet’ in Europe. With the increased number of overseas fans, the Nike shirts deal and Champions League football, I think a 65% increase in merchandise sales is easily achievable by the time we’ve moved to the new stadium.

So £12.3 million will increase to £20 million.


The table below compares my 2019 projections with 2016

Year                                                            2019                                2016

Shirt Manufacturer                                 £25m                              £10m

Shirt Sponsor                                            £25m                             £16m

Sub Total   (kits):                                   £50m                              £26m

Balance from other sponsors:            £30m                            £22m

Total Sponsorship:                               £80m                             £48m

Merchandise Income:                           £20m                            £12m

TOTAL                                                      £100m                          £60m


How does this compare with other Clubs?

The available information for 2016 suggests the following:

Club                                                      Commercial Income 2016

Manchester United                                  £272m                 (4.53)

Manchester City                                       £179m                 (2.98)

Chelsea                                                      £122m                 (2.03)

Liverpool                                                   £120m                 (2.0)

Arsenal                                                       £107m                 (1.78)

Spurs                                                          £60m                   (1.0)

The figure in brackets is the multiple each Club earns compared with Spurs. So, for example, Manchester United declared 4.53 x Spurs’ commercial earnings in 2016.

The above figures tell us two key things: (i) Daniel Levy has been defying gravity by keeping Spurs competitive with the 5 other ‘Top 6 Clubs’ despite having much lower commercial income and (ii) our potential upside is huge. Even at my estimate of £100 million by 2019, Spurs will still remain in 6th place. Which is part of the reason I expect our Commercial Income to continue to increase strongly until 2023.

Naming Rights

None of my figures above include Stadium Naming Rights, which are usually considered Commercial Income. Figures of £250m – £400 million, over 10-15 years have been rumoured (@£25 million p.a.), with Nike seen as the most likely candidate to be our stadium sponsor.

The extension of the AIA deal (to 2022), along with the new Nike manufacturing deal (to 2022) has “muddied the waters” regarding our stadium becoming the ‘Nike Stadium’. Whilst I do think ‘WHL2’ will eventually be ‘branded’ and the sponsor will be an American corporation, I now think it’s possible that tie-up won’t happen until 2022.

And the eventual sum payable will dwarf our Commercial Income to date.

Remember, Daniel wasn’t eaten by the lions.

His competitors were.

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