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Monday, 31 July 2017

Why can't Spurs just sign 2 world class players?


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Tottenham will have discussed with their targets the situation and the criteria by which a player will be signed. Ross Barkley knows Spurs want to pay Everton less than Everton are asking for a player with under a year left on his contract so will understand that a move won't go through until the end of the window when Everton are under the greatest pressure to sell and the greatest pressure to lower their expectations over price.

The alternative is for him to wind down his contract and sign next summer or in January, if Tottenham are the only destination he wants, which we are led to believe. From the outside we don't know the score, on the inside they will.

That of course leaves the press with nothing to write about so we keep getting stories about his wage demands, which through 'close sources' he has denied. The guy isn't stupid and knows we have a wage structure that won't be broken for him, the fact that he wants Spurs and to learn under Mauricio Pochettino demonstrates he knows and accepts that.

As mentioned earlier Aurier looks to be our first choice right-back selection, but we will have had discussions with a second choice who will know if we can't get Aurier we'll come for him and terms will all have been agreed in principle. Thus any delay is signing isn't really an issue and backs up our managers words at a recent press conference in the USA where he assured fans there will be signings before the end of the window.

As an example Aston Villa had a turnover of £109m (12th highest in the league) in their annual accounts to 31 May 2016. Their wage bill was £93m (7th highest, 85% of turnover).

They are in the Championship now and with a reducing income can't sustain that level of wage bill, thus they have to buy and sell to reduce it to a more manageable figure. Wigan never recovered as the Premier League parachute payments simply went in wages, no promotion and the club was in financial danger. You have to sell and reduce the wage bill, when you want to be building.

Tottenham have a wage structure that it is understandable we maintain. If we break it then we have to pay every player more, so it isn't simply a case of buying two world class players and paying them world class wages. The wage bill would rise massively with existing players then all demanding rises immediately and for the next 5 years.

Assume we brought in two players and paid them £120,000-a-week. Harry Kane, Dele Alli, Hugo Lloris and Toby Alderweireld would all want parity, or a £20,000-a-week wage increase. The assumption is of £100,000-a-week wages for them currently which we know they are not all on so the situation would be even worse than is painted here.

All other players would also want a similar wage increase so you have suddenly increased your wage bill (based on 15 existing players, not the full squad of 25) by £300,000 plus your two new signings, a total of £540,000-a-week.

That's £28.08m-a-year, or, if my calculations are right, a 13.37% increase in wages to turnover to 60.99%. factor in a £5,000-a-week wage increase for the remaining 10 squad players and that is another £50,000-a-week, so £590,000-a-week, £30.68m-a-year.

Signing just 2 new players on £120,000-a-week, with that knock on effect, could increase our wage bill by a whopping 14.60%. What do you then do next year, sign two more and increase it to unsustainable levels again, while still trying to pay for a new stadium?

How about on £130,000-a-week, four players wanting parity (4 x £30,000), ten wanting a £20,000-a-week increase and the final ten £7,500-a-week increase. Total bill £655,000-a-week, £34.06m annually. That is a 16.22% increase in wages to turnover. The more you raise your top wage the worse the situation gets.

We have money from sales you will no doubt cry, well factor in increased wages and transfer fees for 2 world class players and it is all gone, where does the money come from for the next 4 years as you have now increased your wages outgoings permanently? What if the club don't qualify for the UEFA Champions League and income therefore drops at least £30m-a-year.

You have just put the club in financial difficulty increasing outgoing by £34m and decreasing income by £30m with a stadium to pay for that in 20 home games is producing an extra £20m (£1m per game based ion Arsenal figures). That £44m annually has to come from somewhere.

We simply can not pay £150,000-a-week to a couple of players, let along the £250,000-a-week others are paying players. Tough as it is, we have to raise our commercial revenue first, then we can reinvest in wages, not gamble in the hope of money coming in as so many clubs have done before ant never recovered from.

Robbing Peter to pay for Paul is not a sensible practice. What we have now is room for manoeuvre next summer, we can't continue to offer wage increases based on performance and thus help to keep the players we have happy. Spend now and we tie our hands. The future has to be looked at, not just the present.

We would have to sell players and use more youngsters to keep the wage bill under control. Sissoko is an option, saving £85,000-a-week but that still leaves a sizeable amount to find at a time when we have ongoing stadium costs for years to come. Factoring in that still increases our wage against turnover by 12.5%.

Should we start adding release clause into contracts as they do in Spain and every wage increase means a raising of the release clause fee. Is that legally possible over here, I don't know enough about employment legislation to say. Obviously a fee would have to be set high, say £75 million on Eric Dier, £60 million on Danny Rose.

That is a slippery slope, would it then be easier for clubs with more money to snatch our players away, probably it would so there is a down side. Weighing it all up and the fact it is only richer clubs who would be purchasing, I'd come down on the side of not having release clauses. This is the issue with Toby Alderweireld, we don't want a release clause in his new contract.

Anyway, back to wages, Aston Villa had an unsustainable 85% of turnover paid out in wages, Crystal Palace 79% of turnover, Stoke City 79%, Sunderland 78% (relegated), Swansea City 85%, WBA 76%. How can these clubs grow as we have done and as we are continuing to do?

What about our rivals, how do we compare with them?

Manchester United
Turnover £515m (1st, the highest in the league)
Wages £232m (Highest in the league, 45% of turnover)
Turnover bigger than Spurs: £305m

Manchester City
Turnover £392m (2nd highest in the league)
Wages £198m (4th highest, 51% of turnover)
Turnover bigger than Spurs: £182m

Arsenal
Turnover £354m (3rd highest in the league)
Wages £195m (5th highest, 55% of turnover)
Turnover bigger than Spurs: £144m

Chelsea
Turnover £335m (4th highest in the league)
Wages £224m (2nd highest, 67% of turnover)
Turnover bigger than Spurs: £125m

Liverpool
Turnover £302m (5th highest in the league)
Wages £208m (3rd highest, 69% of turnover)
Turnover bigger than Spurs: £92m

Tottenham Hotspur
Turnover £210m (6th highest in the league)
Wages £100m (6th highest, 48% of turnover)

The figures show we pay a greater percentage of our turnover on wages than Manchester United do and our figures are in line with UEFA guidelines.

The more turnover you have the more you can pay out in wages, that's obvious and it should be remembered that Manchester United, Arsenal and Manchester City all have new stadiums, although Manchester City didn't build there one. 

We still have the cost of building ours and as that is going to help increase our turnover, can't be put in jeopardy.

Simply pay the money isn't as simple as people make it out to be.


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30 comments:

  1. Superb article well written full of very useful information thanks keep it up. Coys

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    Replies
    1. Thank you. I have had so many discussions on Twitter on the subject I felt it needed explanation for the anti-Levy brigade.

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  2. An excellent article. However, I doubt most fans would understand the finances and would still push for one or two players that could turn Spurs into medal winners. Perhaps Spurs needs a player with medal winning experience , forget sell on value buy someone who knows how to win medals regardless of age.

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  3. Hooray! The voice of sanity. As Tony says most fans will not be able to work this out (not just ours). Sad thing is that the "journalists" on the web just want to drive traffic to their sites and will say anything in a headline. Therefore they stoke up unrealistic expectations and give lazy comments.

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  4. This comment has been removed by the author.

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  5. Excellent article. But remember city, Chelsea, united etc etc have owners who can increase turnover by various clever accounting means. When you have unlimited resources at your fingertips then paying inflated transfer fees and wages is nothing. Only when the governing bodies step in to enforce how income/turnover are monitored will their be anything like a level playing field. And so the European super league beckons!!

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    1. > But remember city, Chelsea, united etc etc have owners who can increase turnover by various clever accounting means.

      Which clubs are in the 'etc etc' bracket?

      Do you believe Levy does not employ clever accountants? Do you have any evidence that other clubs are increasing turnover by means of accounting practices that are not used at Tottenham?

      Is your reply based on any facts at all?

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    2. The EUFA Fair Play rules define what can legally be classified as Turnover so there is little room for shenanigans there. Good article i agree but there is room for improvement without becoming dangerously close to being in trouble.

      I would suggest that point is 60%+ of turnover less about 20 million to mitigate playing EL instead of CL. Once we can be in a range of 54-58% of turnover we should be all right. Based on the above numbers and some added revenues from Wembley and new stadium, that would allow for approximately a 9.5 million increase in the wage bill. Assuming Toby's contract extension and Deli's extension and a few others account for 3 million of that, we are left with 6 million for new players. If we got 2 new players at 60K a week that takes care of that. If Barkley costs 80K a week then the other player is a 40K a week player.

      We would need to assume a growth rate of some 15% od revenue per annum at a minimum to gradually increase our squad size and pay wages which begi to reach parity with the BIG3.

      It's really all about the numbers whether you like it or not.

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  6. Very good. The problem is that your article is logical, sensible and reasonable, and it is based on facts. The anti-Levy-buy-players-now-at-any-cost brigade won't like that and probably won't bother to try to understand it. Very simply, if you do not agree with them, you are told you are an idiot.

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    1. Spot on....most of them will be plastic supporters who have never been to a game

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  7. If we hadn't sold a world class player, we'd only need one more this summer. So a pretty stupid move. I'm sure, however, Barkley will buy into the Spurs project and accept £100k (after all, what could he do with £120k pw or even £200k pw that he can't do with £100k pw??). He knows that if he improves as a player under Poch then he can resurrect his England career and that rewards will come to ALL top Spurs players in the future, as long as they maintain progress and interest in what we're trying to achieve. We aren't going to bring in another world class full back to rival (or complement) Trippier, otherwise City would have got him first (and cheaper than Walker no doubt). No. They ain't out there although the potential ones are, and we must go for the best option. Our right side is not going to be as good as last season in any event, and that diminishes our chances of success ..especially with a hard season at Wembley ahead. But we must make the best of it ...buy Barkley, a decent young right back (or utility defender) while still hoping Walker-Peters rises early to the challenge ahead, and that should do it.

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  8. Good article and agree with the principle but I think that the salary numbers above are inclusive of admin/retail staff etc. Liverpool for example, do not have a playing staff wage bill that is double that of Spurs, but they do have a much larger percentage of non playing staff. The bigger issue at Spurs in my opinion, is not the higher end salaries (which Coutinho aside, are in line with Liverpool), but actually salaries for those not earning £100k per week. There is a very big gap.
    I would be just as happy if the club were to invest some transfer funds to bridge those gaps because they have the potential to put us in a very difficult position over the next year or so. Simply put, if the status quo remains then you have no alternative to but to bring youth through (which I am all for by the way), because the other option is to double your wage bill overnight if people leave

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    1. Admin staff don't get the figures we are talking here, the playing wage bill is certainly way above ours and they certainly pay more than we do, they have done for years.

      Delete
    2. Sorry to disagree Clive, but the numbers do include admin and retail. I don't disagree that Liverpool pay more, but its more like 20%, not double.

      I agree with the points made though, all out bankruptcy makes no sense and clubs without mega rich owners need a different approach.

      My problem with us currently though, is that we have a great squad and we should be investing in it otherwise they will be tempted away. Alderweireld.. Why is he making noises that he has had 'zero' contact..

      Levy made a statement to New York Stock Exchange that Spurs approach is that if a player deserves to be paid more, then previous contract is torn up and new agreement made. If anybody deserves a new agreement its Alderweireld. My understanding is that Danny Rose is significantly undervalued from a Spurs senior wage perspective, let alone what he could achieve at other clubs. Does he deserve that? I don't think so.

      That's said, I'm not anti or pro Levy. I'm just pro Tottenham

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    3. Of course they include it, I don't say they don't, I do say we are not paying admin staff £100,000-a-week and so their wages have a minimal effect on the overall wages bill, we are not talking 10 of millions of difference in the admin wages bill at Spurs and Liverpool.

      I can only give the figures that are published, I haven't made them up.

      The Alderweireld situation is about a £25m release clause he has one in his contract (not sure when that comes into effect), we want to remove it is a new contract, he wants to retain it. I think you'll find the problem isn't over wages.

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  9. By etc etc look at any club who is owned by multi billionaires or in some cases by huge financial institutions. Of course levy has clever accountants. What I mean is that if you have an owner who is literally worth billions and prepared to throw huge sums around, then by simply being clever you can get round all the FFP rules, make income v expenditure look good and therefore sign players for vastly inflated fees and pay them ridiculous wages. As long as the owner doesn't get bored the club will continue to thrive. We don't have that at spurs and in some ways I'm glad we don't but at the same time it is frustrating that we have such a great manager and very good team but are lacking two or three additional world class players to take us to the next level.
    I will also add this - I'm a huge fan of top players but are any really worth £200k plus a week.

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    1. > By etc etc look at any club who is owned by multi billionaires or in some cases by huge financial institutions. Of course levy has clever accountants. What I mean is that if you have an owner who is literally worth billions and prepared to throw huge sums around, then by simply being clever you can get round all the FFP rules, make income v expenditure look good and therefore sign players for vastly inflated fees and pay them ridiculous wages.

      Which clubs are they other than the couple ypu named before?

      Do you think Spurs do not do the same things as other clubs in regard to accounting? You do not have to be a millionaire, let alone a billionaire, to employ a top accountant. Do you have any evidence at all for any of the stuff you are writing here?

      If it is just your opinion (that is, no fact) that is fine but we can all just make things up.

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    2. @ Ian Alexander

      You seem to be stating that businesses will present their accounts in the ways that suit them best for various purposes. Would you really expect anything else?

      > I will also add this - I'm a huge fan of top players but are any really worth £200k plus a week.

      Yes - if the business thinks so. It is as simple as that. It is a business decision. Despite fans thinking differently, it has nothing to do with them. The day that will change is when people stop turning up, stop paying for premium sports on TV and stop buying club merchandise. That is how fans get a say. It is clear they are all happy as they keep paying for these things.

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    3. I'm not sure what point you are making, but I think that Ian makes a fair point. Either the industry wants FFP or not, because in it's current form its not worth the paper its written on.

      An example is PSG and Neymar. You don't have to be a billionaires accountant either to work out that €222m purchase over 5 years (assumed contact length) plus a suggested €500k per week after tax, actually wipes out their current operating income. Ok, they will suggest an increased income because of the purchase, but for any club/business to make that move unless you have somebody to support it independently, would be crazy.

      As a Spurs supporter, I would also love to see slightly more risk and increase the lower wage scale, and strengthen with one or 2 more top earners. Yes, we're building a stadium but it would appear at the moment that our Board are intent on de-risking the next years. Let's see. I hope I'm wrong

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    4. PSG are not paying for Neymar though, the Qatar government are. Players have to pay their release clause, buying clubs are not allowed to, officially. Neymar has a deal to advertise the World Cup in Qatar which will pay his release fee.

      Who are PSG owners? FFP doesn't even come into it, another fiddle to get around it.

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  10. Which clubs? How about PSG, Barca, real, in addition to those already mentioned. If you read the press, and I mean the respected journalists who know what they're talking about you'd easily see where I'm coming from. It's not literally just about clever accountants it's about how your increase revenue figures by various means apart from the obvious. It's not illegal just very astute.
    How can PSG pay £185 million for neymar and not infringe FFP? By being creative with their income v expenditure. You simply create additional income via numerous methods which are well known.

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    1. They aren't, the player has to pay the release clause and that is being covered by the Qatari government in return for him advertising the world cup.

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  11. The shirt sponsor of 35mil a year would cover this wage increase alone.

    The pro Levy anti winning brigade might not like that but it's a fact

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    1. "How many different things will this one £35 Mil be spent on?" is probably the important question here.

      Certainly, it's a simple solution, but be aware that simple solutions are generally only good for the simple. Rarely do they work well in the real world. A very little thought shows this one isn't viable.

      BTW. Clearly stated article Clive. I know you've said most of it before, but repeating it all here in one place while so many are struggling to understand or appreciate the wisdom of how Spurs are going about their business - in spite of two very successful seasons which might be considered an indication that those making the decisions aren't as stupid as those that think they are - is very helpful. At least for those that consider things from a balanced perspective.

      COYS!!

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  12. No it won't.. most of that's already factored into their operating income mentioned above. The neymar deal, I'm normal terms would more than likely have psg operating at a loss... unless somebody like rich owners support the loss.

    I'm not pro-levy at all. I think he is just about building the club for a huge profit. It's pro any club apart from those with mega wealth owners. Nobody else has the capability to spend that way

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  13. So pleased to see Clive’s efforts being rewarded on this post.
    The great debate ‘How Should My football club be managed’ will continue ad infinitum simply because every club is managed in a different way, and, let’s be honest, there is no guaranty of success no matter what formula is applied because the costs are outstripping the revenues!
    That said, if I look at the commercial revenues for the top clubs in Europe, it’s clear that THFC have a lot of catch-up to do.
    That is where we should be pointing the finger at ENIC…the failure to harness the club’s heritage…

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    1. Commercial growth is linked to regular Champions League participation and therefore greater club exposure around the world. Swiss Ramble did an excellent article on it a while ago.

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    2. Makes a change from being abused LOL

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    3. Sure, but there are other avenues to be explored...we scored more and conceded less (than any EPL team) last season...carpe diem...

      Delete

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