Daniel Levy’s £80M Headache: Urgent Fix Needed as Harry Kane’s Tottenham Transfer Uncovers Financial Quandary [Full Story Link in Comment]
While Tottenham’s recent accounts show the club are in a healthy financial position, Spurs have fallen short when it comes to player trading compared to their Premier League rivals.
When the 2023/24 financial accounts are published by Tottenham Hotspur in 12 months’ time, they will be given a significant boost.
Last week saw the release of the accounts for Spurs’ 2022/23 financial year. During that period, the club posted record revenues of £549.6million but posted a pre-tax loss of £86.8m, the reason for which was noted in the accompanying report as being down to continued investment into the first team.
Not included in the accounts out last week, however, was the sale of Harry Kane to Bayern Munich back in August for a sum of £100m that could potentially rise to as high as £120m. For Spurs, that sale represents pure profit due to Kane having graduated from the club’s academy. In accounting terms he held no book value, meaning that the initial £100m will be represented in the accounts in its entirety.
In terms of player trading, the sale of Kane, and not including any other outgoings that will have taken place before the June financial year-end, will push Spurs up a league table where they have been languishing in the lower reaches for too long. But with the sale something of an outlier, it shouldn’t mask the work that is required by the club in a key area that will improve their financial picture considerably moving forward.
Spurs are a club in a good spot right now. They have a world-class stadium that will yield significant financial benefits for years to come, while they have a good, young squad that is growing under manager Ange Postecoglou.
From a financial perspective, revenues are on a steep incline, and while the club made a loss this past year, the trends mean that they have among the least to fear when it comes to Premier League cost controls, be that the current profit and sustainability rules or the potential new squad cost ratio that is set to be introduced. The club is around 10 per cent under the squad cost ratio threshold that UEFA currently uses based on the 2022/23 figures.
But player trading has not been a strong suit for Spurs ever since Kyle Walker made the switch to Manchester City in 2017. The sale of Walker to City that season helped Spurs realise a £73m player trading profit for 2017/18. In the following five years the club’s combined player trading profit has been just £7m higher than that, at £80m.
The five-year picture in next year’s accounts will show a £169m performance, something that would have placed the club seventh in the Premier League list based on this season’s financials, above both Manchester United and Arsenal. But Spurs are the weakest of the so-called ‘Big Six’ when it comes to player trading, with West Ham United, Newcastle United, Crystal Palace, Fulham, Nottingham Forest and Leeds United the only clubs to be below them for the last financial year.
Spurs pulled in just £16m in player trading profit for 2022/23, and that was borne from the sales of Steven Bergwijn to Ajax and Cameron Carter-Vickers to Celtic. While Spurs have plenty of headroom when it comes to PSR or any new financial controls, the £86.8m loss should be instructive.
Investment into the first team is a costly expense every single year, and without addressing some of the areas where they are falling short, a few expensive summers without strong player trading could be impactful further down the line. Chelsea’s ability to spend so heavily under new ownership, to the tune of more than £1bn, has largely been aided by the club’s conveyor belt of talent that has emerged from Cobham.
Over the past five years that has delivered £496m in player trading profit, 520% more than what Spurs have achieved. Manchester City’s ability to stack talent in every position has also been built on strong player trading to help offset transfer costs, with the Premier League champions bringing in £337m over a five-year period.
Key to better trading is having a clear and defined transfer strategy, with a strong academy, strong player pathway, well-placed loans, excellent recruitment staff, and often a sporting director. The strategy has to be a thread that continues regardless of who is in the dugout.
Identifying players of the right age, in the right markets, and providing them with the right opportunities to either play at Spurs or to grow on loan spells away from the club can be enormously valuable. However, it is a model the likes of Brighton & Hove Albion have been remarkably good at implementing.
Many areas at Spurs are seeing an uptick at present, and that bodes well for future growth and in meeting the ambition to achieve competitive success. But for investment in the first-team squad to continue to be strong, Daniel Levy and Spurs will need to focus energy on getting far more value, and significantly increasing the club’s player trading profit to a sustainable and reliable level; not one eased by the sale of a world-class talent every few years.
