A look into Tottenham transfer funds
Tottenham are in a difficult situation trying to compete with the rich clubs without the resources. We have the resources to finish above the rest and generally do. If fans are frustrated now then what are they going to be like when the new stadium is built.
That will take debt and that debt will have to be serviced, there will be less cash to spend on players, the same as happened to Arsenal. With that in mind building players from within becomes increasingly important, it's why first Andre Villas-Boas was appointed and then Mauricio Pochettino. We lost sight of our goal, or at least tried a short cut method to get there and AVB shot himself in the foot. Temporary Tim was then replaced with the Argentinian.
He has a fantastic opportunity to build a club, to build a conveyor belt of talent. Daniel Levy is once again backing his manager and has publicly stated he#ll do so in the transfer market this summer. That does not mean he'll go out and buy Messi if Pochettino asks for him, in the manner that some fans interpret backing a manager.
Players are identified by Paul Mitchell and his team, this is his first window to show what he can do. Players are approved or discarded by Pochettino who gives Mitchell the remit for the type of player he is after. The players will be placed in order of preference for each position by Pochettino and then valued. That value will be what the club feel they should pay for the player and Pochettino plays his part in that valuation. He knows, as any manager or coach does, that the club will not simply pay whatever price a selling club wish to place on their player.
Within that we negotiate transfers, we start with the first choice and sound out alternatives. If the first choice can't be agreed on terms acceptable to us then we move to the second choice. Every club operates in the same way in that respect so to suggest a manager isn't being backed simply because he didn't get his first choice is nonsense, it bears no relation to the real world of transfer dealing.
Daniel Levy has promised to ring-fence a percentage of cash for buying new players, extra cash will have to be raised from player sales, so if we can produce Premier League quality players from the academy some can be sold in the same way Jake Livermore was. Not all of them can or will play for Tottenham.
In 2012/13 we had a net debt of £54.8 million and have transferred that into positive net funds of £3.2 million. Gross debt has been reduced by £22.6 million from £58.0 to £35.4 million, while cash has been increased by £35.3 million from £3.2 million to £38.5 million. Our debt is made up of a £14 million Investec bank facility, which is repayable over a five year period tracking LIBOR, a £1.2 million bank loan which tracks the Bank of England base rate and £20.2 million of 7.29% secured loan notes, which is repayable in equal instalments over 16 years from September 2007.
Now let's shock a few fans and talk transfer fees because many seem to think once you have bought a player that's it, money magically appears for the next window, a few are going to be somewhat surprised to find out how much we are still paying for players we have previously bought. I have seen several people protesting that when we sell a player we don't have to pay any more fee for them which is not the case. A loan agreement, which is what a transfer is, is binding, you still owe the debt and that has to be serviced.
In 2007 the transfer fees we owed other clubs for players we had bought in instalments was £21.3 million against being owed by other clubs who had bought our players in instalments of £8.4 million.
In 2008 we owed £29.3 million and were owed £15.6 million, in 2009 we owed £64.4 million against £25 million. In 2010 we owed £43.8 million and were owed £18.4 million, 2011 we owed£30.9 million and were owed £3.4 million, in 2012 we owed £15.6 million and were owed £7.5 million, in 2013 we owed £34.5 million and were owed £9.9 million and finally in 2014 we owed £51.1 million and were owed £73.4 million.
We owe more in transfer fees than we have been owed each year, in 2007 the deficit was £12.6 million, in 2008 £13.7 million, in 2009 £39.4 million, in 2010 £25.4 million, in 2011 £27.5 million, in 2012 £8.1 million, in 2013 £24.6 million and in 2014 the excess in our favour was £22.3 million.
These are the figures we are investing in the squad annually so when you hear fans on forums talk about an investment of £25 million that is what is meant, not £25 million for the full transfer fee but £25 million for instalments of transfer fees.
Players are purchased not for an outright fee but for instalments over the length of their contract, thus if we sign a player on a four-year contract, we pay the transfer fee over four years, part of which is add-ons, as many as we can add. If the add-on clauses are not met, i.e. the player doesn't play enough games, or we don't qualify for the Champions League for example, than that portion of the add-on fee is not payable.
Erik Lamela cost £30 million but there were £4 million of add-ons, not all of which will have been triggered. Thus his actual transfer fee payable in instalments is £26 million + whatever add-ons are triggered. When you sell a player it is the add-on element that has not already been triggered that is no longer payable. Sometimes you will see clubs who are going to sell a player, not play them so they don't trigger further add-on payments. There may well be an element of that with Etienne Capoue for instance which would help the club when it comes to purchasing new players. I don't know, that is a guess, but it certainly happens.
At the moment we have only received £33 million of the Gareth Bale money, hence the high figure we are owed at the moment (£73.4 million). In addition to the £51.1 million we owe we have £15 million in potential contingency liabilities. These become payable depending upon the success of the team and players (add-ons) as discussed. On the other side we have a potential £18 million we could receive.
This window we are looking at players up to about £15 million unless a player who can make a difference becomes available and wants to come to our club, not everyone does it may surprise you to hear! Hungry to improve players fall into two categories, those really hungry to be the best they can be and those that get a jump in wages and think that they have made it, it happens in all sports.
Those who think Pochttino is on limited time need to remember we are about to build a stadium, we can;'t be chopping and changing manager while we do that, we simply won't have the transfer money for a new head coach to buy his own team. Pochettino has been here to stay from day one and Daniel Levy has been backing him, it wouldn't surprise me in the slightest if he is still here in 5 years time.
Realistic optimism is the watchword at the moment, a phrase Daniel Levy used when the club accounts were published, embrace it.
That will take debt and that debt will have to be serviced, there will be less cash to spend on players, the same as happened to Arsenal. With that in mind building players from within becomes increasingly important, it's why first Andre Villas-Boas was appointed and then Mauricio Pochettino. We lost sight of our goal, or at least tried a short cut method to get there and AVB shot himself in the foot. Temporary Tim was then replaced with the Argentinian.
He has a fantastic opportunity to build a club, to build a conveyor belt of talent. Daniel Levy is once again backing his manager and has publicly stated he#ll do so in the transfer market this summer. That does not mean he'll go out and buy Messi if Pochettino asks for him, in the manner that some fans interpret backing a manager.
Players are identified by Paul Mitchell and his team, this is his first window to show what he can do. Players are approved or discarded by Pochettino who gives Mitchell the remit for the type of player he is after. The players will be placed in order of preference for each position by Pochettino and then valued. That value will be what the club feel they should pay for the player and Pochettino plays his part in that valuation. He knows, as any manager or coach does, that the club will not simply pay whatever price a selling club wish to place on their player.
Within that we negotiate transfers, we start with the first choice and sound out alternatives. If the first choice can't be agreed on terms acceptable to us then we move to the second choice. Every club operates in the same way in that respect so to suggest a manager isn't being backed simply because he didn't get his first choice is nonsense, it bears no relation to the real world of transfer dealing.
Daniel Levy has promised to ring-fence a percentage of cash for buying new players, extra cash will have to be raised from player sales, so if we can produce Premier League quality players from the academy some can be sold in the same way Jake Livermore was. Not all of them can or will play for Tottenham.
In 2012/13 we had a net debt of £54.8 million and have transferred that into positive net funds of £3.2 million. Gross debt has been reduced by £22.6 million from £58.0 to £35.4 million, while cash has been increased by £35.3 million from £3.2 million to £38.5 million. Our debt is made up of a £14 million Investec bank facility, which is repayable over a five year period tracking LIBOR, a £1.2 million bank loan which tracks the Bank of England base rate and £20.2 million of 7.29% secured loan notes, which is repayable in equal instalments over 16 years from September 2007.
Now let's shock a few fans and talk transfer fees because many seem to think once you have bought a player that's it, money magically appears for the next window, a few are going to be somewhat surprised to find out how much we are still paying for players we have previously bought. I have seen several people protesting that when we sell a player we don't have to pay any more fee for them which is not the case. A loan agreement, which is what a transfer is, is binding, you still owe the debt and that has to be serviced.
In 2007 the transfer fees we owed other clubs for players we had bought in instalments was £21.3 million against being owed by other clubs who had bought our players in instalments of £8.4 million.
In 2008 we owed £29.3 million and were owed £15.6 million, in 2009 we owed £64.4 million against £25 million. In 2010 we owed £43.8 million and were owed £18.4 million, 2011 we owed£30.9 million and were owed £3.4 million, in 2012 we owed £15.6 million and were owed £7.5 million, in 2013 we owed £34.5 million and were owed £9.9 million and finally in 2014 we owed £51.1 million and were owed £73.4 million.
We owe more in transfer fees than we have been owed each year, in 2007 the deficit was £12.6 million, in 2008 £13.7 million, in 2009 £39.4 million, in 2010 £25.4 million, in 2011 £27.5 million, in 2012 £8.1 million, in 2013 £24.6 million and in 2014 the excess in our favour was £22.3 million.
These are the figures we are investing in the squad annually so when you hear fans on forums talk about an investment of £25 million that is what is meant, not £25 million for the full transfer fee but £25 million for instalments of transfer fees.
Players are purchased not for an outright fee but for instalments over the length of their contract, thus if we sign a player on a four-year contract, we pay the transfer fee over four years, part of which is add-ons, as many as we can add. If the add-on clauses are not met, i.e. the player doesn't play enough games, or we don't qualify for the Champions League for example, than that portion of the add-on fee is not payable.
Erik Lamela cost £30 million but there were £4 million of add-ons, not all of which will have been triggered. Thus his actual transfer fee payable in instalments is £26 million + whatever add-ons are triggered. When you sell a player it is the add-on element that has not already been triggered that is no longer payable. Sometimes you will see clubs who are going to sell a player, not play them so they don't trigger further add-on payments. There may well be an element of that with Etienne Capoue for instance which would help the club when it comes to purchasing new players. I don't know, that is a guess, but it certainly happens.
At the moment we have only received £33 million of the Gareth Bale money, hence the high figure we are owed at the moment (£73.4 million). In addition to the £51.1 million we owe we have £15 million in potential contingency liabilities. These become payable depending upon the success of the team and players (add-ons) as discussed. On the other side we have a potential £18 million we could receive.
This window we are looking at players up to about £15 million unless a player who can make a difference becomes available and wants to come to our club, not everyone does it may surprise you to hear! Hungry to improve players fall into two categories, those really hungry to be the best they can be and those that get a jump in wages and think that they have made it, it happens in all sports.
Those who think Pochttino is on limited time need to remember we are about to build a stadium, we can;'t be chopping and changing manager while we do that, we simply won't have the transfer money for a new head coach to buy his own team. Pochettino has been here to stay from day one and Daniel Levy has been backing him, it wouldn't surprise me in the slightest if he is still here in 5 years time.
Realistic optimism is the watchword at the moment, a phrase Daniel Levy used when the club accounts were published, embrace it.
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