Investment into Tottenham explained
I think a quick post, 1,236 words, around the bid for Tottenham Hotspur is required.
Reports suggest there has been a bid of $3.75 billion (£3.1bn) by Iranian-American billionaire Jahm Najafi, chairman (he isn't something you sit on in my book) of MSP Sports Capital, a private investment firm based in Phoenix, Arizona.
Note the words PRIVATE INVESTMENT FIRM, in other words, in it for the returns, the profit.
He is also the chair of MSP Sports Capital, a sports investment firm that owns several professional sports teams, including the Phoenix Suns of the National Basketball Association (NBA) and the Phoenix Mercury of the Women's National Basketball Association (WNBA).
Najafi was born in Iran in 1958 and moved to the United States with his family when he was a child. He earned a bachelor's degree in economics from the University of Washington and a law degree from the University of California, Berkeley.
After graduating from law school, Najafi worked as an attorney for several years before founding the Najafi Companies in 1987.
The company has invested in a wide range of industries, including technology, consumer products, and real estate. It has also acquired and sold several prominent companies, such as Book of the Month Club, BMG Music Service, and SkyMall.
Najafi's involvement in sports ownership began in 2018, when MSP Sports Capital acquired a majority stake in the Phoenix Suns. He has since expanded the firm's portfolio to include the Mercury and the Real Salt Lake of Major League Soccer.
$3.75 billion is a figure Najafi, or his company, have come up with as the value of Tottenham Hotspur Football Club.
The Financial Times reported that MSP Sports Capital was working with a consortium of investors to structure a bid and that it is weeks away from formally approaching the club's owner Joe Lewis and chairman Daniel Levy.
Glaxier's buyout of Manchester United
In 2005, the Glazer family, led by American businessman Malcolm Glazer, completed a controversial leveraged buyout of Manchester United.
A leveraged buyout is a type of acquisition in which the buyers use borrowed money to finance a purchase, with the intention of paying it back with the future cash flows of the acquired company.
The Glazers purchased Manchester United for a reported sum of £790 million, a price that many fans and analysts felt was too high for the club.
The Glazers used a combination of their own funds and loans secured against the club's assets to finance the purchase.
The buyout was controversial for several reasons.
First, the Glazers were not well-known in the football world and had no prior experience owning a football club.
Second, many fans and critics were concerned about the amount of debt the Glazers had taken on to finance the purchase.
The Glazers' ownership structure included a significant amount of debt, which was initially seen as a financial burden that could hinder the club's ability to compete and invest in new players.
In the years since the buyout, the Glazers have faced criticism from some Manchester United fans who argue that they prioritize profits over the club's success on the pitch.
However, the Glazers have overseen a period of continued financial success for the club, which has remained one of the richest and most valuable football clubs in the world.
The club has won several major trophies during the Glazers' ownership, including the Premier League and the UEFA Champions League.
Overall, the Glazers' leveraged buyout of Manchester United remains a controversial moment in the club's history, with many fans and observers divided over the long-term impact of the acquisition.
Jahm Najafi is looking at a leveraged buyout, securing money against the club assets to increase, which have been built Jahm Najafiith loans.
Money will have to be taken out of the club to finance leveraged buyout loans every year, as will money for the group of investors.
The fans who want ENIC out don't want money taken out of the club, which ENIC don't do, but support this bid even though it does the opposite of what they actually want!
Firstly, let me say that the bid has absolutely no chance of success, none at all.
ENIC will value Tottenham at around 50% more than that.
Tottenham has a strong history of success and a large and passionate fan base. The club has a modern stadium and excellent training facilities, as well as a talented team and coaching staff.
However, like many football clubs, Tottenham faces the continued financial challenges and uncertainty that the COVID-19 pandemic brought to the sports industry.
I predicted at the time that it would take 3 years before we started to see £100m of investment a season, the way the fans view investment.
As a business, Spurs have in fact invested the 4th highest net amount in Europe since 2018/19.
Potential investors are looking at the future growth potential of the club, which is rosy.
- NFL Deal and Franchise: Tottenham's partnership with the NFL to host American football games at its stadium is a unique opportunity to generate additional revenue and expand its global brand. The partnership and the design of the stadium also opens the possibility of hosting an NFL franchise at the stadium, which could provide a highly profitable new revenue stream for the club.
- Stadium Naming Rights: The potential sale of stadium naming rights could provide a significant infusion of cash for the club, as we have seen with other Premier League clubs such as Manchester City and Arsenal. However, the timing and terms of any deal would depend on a variety of factors, including the state of the global economy, the financial stability of potential sponsors, and the perceived value of the Tottenham brand. Harry Kane, at the moment is critical to that, the brand is devalued without him signing a new contract.
- Reinvestment of 50% of Stadium Profits: The reinvestment of 50% of stadium profits into the team is a significant commitment that could help the club attract and retain top talent and improve its overall competitiveness. However, the success of this strategy will depend on the quality of the club's scouting and recruitment processes, as well as its ability to manage its finances effectively. There have certainly been questions raised in this regard, but thus far Fabio Paratici seems to have improved us in this area and will be looking to continue to do so.
Overall, Tottenham's future growth potential looks promising, particularly given the success of its new stadium and our efforts to diversify our revenue streams.
There has certainly been forward thinking involved, something a club has to do, but fans don't do.
However, the club will need to continue to invest in its team, manage our finances effectively, and navigate the challenges and uncertainties of the sports industry in order to achieve sustained financial success in the long term.
Only with financial success off the field can the club achieve lasting success on the field, a more worthy and loftier goal than the short-term 'instant' thinking of fans.
The fact the club has been built in this manner demonstrates the ambition the owners have, even if that is lost on a section of the fanbase.
COYS
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