Time For ENIC To Stand Up

[haslemereyid]

THFC is in between a rock and a hard place. We need to pay higher wages in order to compete for the best players. But we cannot afford to do so because we do not generate enough revenue. In order to increase our revenue we need a new stadium. The price of the new stadium is too high for our current profitability to sustain. Stuck.

The new stadium in its current plan is speculated to cost £400m/£450m. Even if by some miracle some bank lent us the money the interest burden would be immense leaving us little room to go out and pay up for the best players. It would also put us at risk of a financial meltdown should we ever go through a West Ham like period on the pitch. We cant afford it and more importantly we cant risk it.

So whats the answer. Well DL is doing an amazing job in keeping us as one of the best financially managed clubs. We are profitable yet still have an excellent squad and meet the new financial regulations. HR has produced a team capable of competing for the top four on a regular basis so no real complaints there. Us fans pack the stadium out for every game despite paying some of the highest prices in the PL.

So if DL, HR and the fans cant do much more who can.

The one stakeholder who could do more is our owner ENIC and ultimately Joe Lewis. I know DL effectively works for ENIC but its JL's money. ENIC needs to make an investment into THFC so that the stadium becomes financially viable and doesnt leave the club wearing a huge debt burden.

If ENIC put say for instance £200m of equity (not debt) into the club then that could be used to fund a good portion of the stadium development leaving the club with a much more manageable level of debt.

We could then begin to spend more money on wages NOW as we would know with certainty that significantly increased revenues were 3/4 years down the road. ENIC would get its money back on the investment because post the stadium build THFC would be a much much more valuable asset.

Everyone from DL to the fans is doing the best they can but its not going to be enough. Time for ENIC to stand up and be counted.

 

[Spurger King]

Unfortunately I don't think Lewis sees us as much more than a peripheral investment. I certainly can't see him bankrolling a massive jump in wages, or investing in a new stadium.

The best we can hope for is that Joe Lewis bumps into Roman Abramovich at some swanky billionaire hangout, and after fighting over the last prawn sandwich they become embroilled in some bitter ego war, in which Tottenham and Chelsea are the pawns in their game. The resulting arms race between the two clubs would see Lewis throw everything he could at improving Spurs...and we would emerge triumphantly out of the smoke of the battlefield.

Probably won't happen though.

 

[Maske2g]

We're beginning to sound like Arsenal fans around new players.

When they started out paying their significant debt repayments on the Scumirates, they stopped spending big on transfers.

And with good reason.

If your paying the interest and repayments on a 300-400 million loan, you can't go splashing out 60-70 million on expensive players and their wages,

Thats 60- 70 million that could be used to repay the debt.

Without the boring calculations, this is adding an extra 10-12 million a year in interest payments alone, because you now have an extra 120-140 million of debt to service.

So in essence, borrowing big money on future expexted earnings is suicidal. Just ask the bubbles and the paddies.....

 

[haslemereyid]

Unfortunately I don't think Lewis sees us as much more than a peripheral investment. I certainly can't see him bankrolling a massive jump in wages, or investing in a new stadium.

The best we can hope for is that Joe Lewis bumps into Roman Abramovich at some swanky billionaire hangout, and after fighting over the last prawn sandwich they become embroilled in some bitter ego war, in which Tottenham and Chelsea are the pawns in their game. The resulting arms race between the two clubs would see Lewis throw everything he could at improving Spurs...and we would emerge triumphantly out of the smoke of the battlefield.

Probably won't happen though.

its exactly because JL sees us as an investment is why ENIC should get the stadium built through putting additional equity into the club. THFC with a new stadium and sustainable debt levels is far far more valuable than it is today. He would make a profit.

 

[haslemereyid]

We're beginning to sound like Arsenal fans around new players.

When they started out paying their significant debt repayments on the Scumirates, they stopped spending big on transfers.

And with good reason.

If your paying the interest and repayments on a 300-400 million loan, you can't go splashing out 60-70 million on expensive players and their wages,

Thats 60- 70 million that could be used to repay the debt.

Without the boring calculations, this is adding an extra 10-12 million a year in interest payments alone, because you now have an extra 120-140 million of debt to service.

So in essence, borrowing big money on future expexted earnings is suicidal. Just ask the bubbles and the paddies.....

Thats why it would not be debt ENIC put into the club it would be equity. It would avoid exactly the situation you outline in your post

 

[$hoguN]

Or we could just do it the right way, without needing to use a sugardaddy to bring us any chance of glory?

 

[haslemereyid]

Or we could just do it the right way, without needing to use a sugardaddy to bring us any chance of glory?

we would be doing it the right way - it would be 60,000 fans being given the opportunity to watch and it would be those 60,000 who would be funding the clubs purchases/wages over and above what we have now.

 

[Spurger King]

Or we could just do it the right way, without needing to use a sugardaddy to bring us any chance of glory?

I'm not sure how plausible that is in this day and age. We'd pretty much need to sell all of our best players for large prices, without investing any of it back into the team, in order to generate the money to fund the stadium.

We've done fantastically well with the existing set-up, and let's not forget that we've had a lot of investment over the last 10 years. Obviously we've balanced the sheets well by selling players like Berbatov and Carrick for big profits, but we've got to the point where we cannot expect to sell players like Bale and Modric whilst expecting to maintain the level of momentum we have had.

I'm not suggesting we should welcome the prospect of becoming the play thing for some Arabian group of multi-billionaires...but it's clear to me that the club won't reach the next level without some significant investment in the club.

 

[Spurger King]

^ this is under the assumption that Lewis won't pay for a new stadium.

 

[haslemereyid]

Or we could just do it the right way, without needing to use a sugardaddy to bring us any chance of glory?

Comparing our owners to that of the owners of citeh or chelski is way off the mark. when they put money into citeh or chelski it just disappears into transfer fees and players wages. What i am asking JL to do is akin to building an extension to the house - it costs up front but you get all the money back on the increased value of your property.

 

[dav3j]

Think SK's first post about Spurs as a peripheral investment is probably the key issue here. ENIC's parent company (or investment group, whatever) is the Tavistock Group which has a huge portfolio of diverse investments, all of which probably reap a lot more profit than football, which is pretty unrewarding as far as investments go. This Joe Lewis "sugar daddy" thing is nonsense, we're being run as a profit making machine for ENIC/Tavistock, and given the poor return from football investment, we're lucky we've got Levy championing our cause.

 

[Stoof]

I think we'd probably have to check exactly how Joe Lewis, ENIC and Tottenham Hotspur plc fit altogether before making accusations about who has/hasn't put up money.

From memory, when someone handily downloaded things from Companies House, I thought ENIC was owned by DL and JL 50:50 through various family trust arrangements; does anyone know the percentage of THFC plc ENIC owns?

 

[dav3j]

does anyone know the percentage of THFC plc ENIC owns?

84%.

(http://en.wikipedia.org/wiki/ENIC_Group)

 

[Ron Burgundy]

THFC is in between a rock and a hard place. We need to pay higher wages in order to compete for the best players. But we cannot afford to do so because we do not generate enough revenue. In order to increase our revenue we need a new stadium. The price of the new stadium is too high for our current profitability to sustain. Stuck.

The new stadium in its current plan is speculated to cost £400m/£450m. Even if by some miracle some bank lent us the money the interest burden would be immense leaving us little room to go out and pay up for the best players. It would also put us at risk of a financial meltdown should we ever go through a West Ham like period on the pitch. We cant afford it and more importantly we cant risk it.

So whats the answer. Well DL is doing an amazing job in keeping us as one of the best financially managed clubs. We are profitable yet still have an excellent squad and meet the new financial regulations. HR has produced a team capable of competing for the top four on a regular basis so no real complaints there. Us fans pack the stadium out for every game despite paying some of the highest prices in the PL.

So if DL, HR and the fans cant do much more who can.

The one stakeholder who could do more is our owner ENIC and ultimately Joe Lewis. I know DL effectively works for ENIC but its JL's money. ENIC needs to make an investment into THFC so that the stadium becomes financially viable and doesnt leave the club wearing a huge debt burden.

If ENIC put say for instance £200m of equity (not debt) into the club then that could be used to fund a good portion of the stadium development leaving the club with a much more manageable level of debt.

We could then begin to spend more money on wages NOW as we would know with certainty that significantly increased revenues were 3/4 years down the road. ENIC would get its money back on the investment because post the stadium build THFC would be a much much more valuable asset.

Everyone from DL to the fans is doing the best they can but its not going to be enough. Time for ENIC to stand up and be counted.

What sort of return would they get on that though? And just putting in equity in no way helps towards the financial fair play criteria

All this "Joe Lewis needs to stump up" talk has been going around for ages, and it's just never going to happen.

 

[haslemereyid]

What sort of return would they get on that though? And just putting in equity in no way helps towards the financial fair play criteria

All this "Joe Lewis needs to stump up" talk has been going around for ages, and it's just never going to happen.

the return joe lewis would get would be a club (which he owns the vast majority of) being more valuable than the additional equity he puts in. We dont need help in meeting the financial regs as we are there already. Borrowing the money to build a new stadium would put this at risk.

and joe lewis has already stumped up once recently - he paid for the new training facilities via a issuance of new shares which he bought - so he is showing a willingness to invest

 

[Azrael]

Unfortunately I don't think Lewis sees us as much more than a peripheral investment. I certainly can't see him bankrolling a massive jump in wages, or investing in a new stadium.

The best we can hope for is that Joe Lewis bumps into Roman Abramovich at some swanky billionaire hangout, and after fighting over the last prawn sandwich they become embroilled in some bitter ego war, in which Tottenham and Chelsea are the pawns in their game. The resulting arms race between the two clubs would see Lewis throw everything he could at improving Spurs...and we would emerge triumphantly out of the smoke of the battlefield.

Probably won't happen though.

Lewis's Tavistock Group invests in nearly 200 companies and he has a third of the wealth of the Russian.

It's not comparable on any level IMO.

 

[Rocksuperstar]

How many threads do we need from financial and football experts (who just happen to not be employed in that arena out of choice, i can only assume) declaring we need to spend more/pay more wages, and how this would be instantly sorted if ENIC sold the club to a multi-bajillionairre?

Can't any of you manage to fit your opinions into one of the other threads about this same, or at least similar, discussion? How about we just start a new thread "Spurs are shit and will be til they do exactly what i say", which would save us the bother when reading the front page for stories about the club we support, not this apparently broken club that you are all so determined to fix.

It's fine. Leave it be.

 

[Ron Burgundy]

the return joe lewis would get would be a club (which he owns the vast majority of) being more valuable than the additional equity he puts in. We dont need help in meeting the financial regs as we are there already. Borrowing the money to build a new stadium would put this at risk

So assuming ENIC, a subsidiary of Tavistock Group (an investment company) has £200m burning a hole in it's pocket, it would have to consider how to deploy that capital in the most effective way

Given all the press (and there's been plenty) about Football clubs losing money, would you consider that a high, medium or low risk investment? I reckon it would be a bloody high risk.

Football clubs just eat money, with very little actual uplift in likely valuation. In making this investment, ENIC would have to look at other investments of similar risk - take your pick right now, any sort of CDS, Mezzanine finance, PIK notes etc, all of which are returning more than 10 to 12% per year. I'd say this is arguably more risky than any of them.

What's the return of buying players? Lets just look at it, buying e.g. Modric. You might make some return on the basis of capital appreciation, but equally you might lose a shed load (look at Bentley) pay his wages and not actually get any return on the pitch. Furthermore, even if you do get in the CL, it's at best an extra £30m. That's one really good player these days - you need more.

In short, football is by and large a high risk investment, where very, very few people have actually made any sort of return.

The concept that you can simply chuck money at a club and make it more valuable is wrong.

You're right to point out that improving the infrastructure is the right way to go, and clearly ENIC have recognised this (they're obviously looking at improving the stadium) but as we've seen, it's much easier said than done.

Clearly were the (risk adjusted) return there, then it's quite feasible that they would have injected further equity. But that they haven't says it all IMO

 

[Spurger King]

Lewis's Tavistock Group invests in nearly 200 companies and he has a third of the wealth of the Russian.

It's not comparable on any level IMO.

What about on the level of fiction :shrug:

I know Lewis isn't anywhere near as rich as Abramovich. He also lost a huge chunk in the credit crunch IIRC. I was just alluding to some completely ridiculous scenario whereby Lewis decided to inexplicably chuck money at the club due to some personal interest.

Seeing as he lives in the Bahama's and is in his 70s he's probably so disconnected with Spurs that he thinks Modric is a new term for the moderately well off.

 

[haslemereyid]

So assuming ENIC, a subsidiary of Tavistock Group (an investment company) has £200m burning a hole in it's pocket, it would have to consider how to deploy that capital in the most effective way

Given all the press (and there's been plenty) about Football clubs losing money, would you consider that a high, medium or low risk investment? I reckon it would be a bloody high risk.

Football clubs just eat money, with very little actual uplift in likely valuation. In making this investment, ENIC would have to look at other investments of similar risk - take your pick right now, any sort of CDS, Mezzanine finance, PIK notes etc, all of which are returning more than 10 to 12% per year. I'd say this is arguably more risky than any of them.

What's the return of buying players? Lets just look at it, buying e.g. Modric. You might make some return on the basis of capital appreciation, but equally you might lose a shed load (look at Bentley) pay his wages and not actually get any return on the pitch. Furthermore, even if you do get in the CL, it's at best an extra £30m. That's one really good player these days - you need more.

In short, football is by and large a high risk investment, where very, very few people have actually made any sort of return.

The concept that you can simply chuck money at a club and make it more valuable is wrong.

You're right to point out that improving the infrastructure is the right way to go, and clearly ENIC have recognised this (they're obviously looking at improving the stadium) but as we've seen, it's much easier said than done.

Clearly were the (risk adjusted) return there, then it's quite feasible that they would have injected further equity. But that they haven't says it all IMO

all points above accepted. however look at the increase in value of Arsenal since building the emirates - the shareholders have made incredible returns by investing in the stadium. Also JL has recently put more equity into the club to fund the new training facilities

Perhaps DL needs to make more of a case for investment into THFC - remember this is a man who was prepared to chuck several hundreds of millions of dollars into Bear Sterns so he is prepared to have a go