Guido 🇺🇦
- thanks a lot for posting it here.
For me personally it was interesting and easy reading. As I work as full time credit analyst in corporate banking.
So as a Spurs fan and analyst I'd like to sum it up for those who did not want to go through all of it.
1) SPURS DOES NOT HAVE A DEBT PROBLEM; NOT EVEN CLOSE - there is debt and there is debt. There can be very different types of liabilities. You can owe credit card company that charges you ~15-20% per year for the drinks you ordered while nightclubbing or you can owe bank a 3-5% interest rate mortgage for home in growing population center where prices have doubled since you took the mortgage. Football clubs can also have similar issues - we could finance liquidity with overdraft and pay off salaries of players and staff, or clubs can build assets that generate income for future. Spurs have only done the latter. And obviously the increased revenue from new stadium far exceeds the loan repayments per year.
As it was pointed out - our short term debt amount was as little as 57 million. This is ~13% of our total revenue, which is not too much. Though usually these amounts are compared to pre-amortization profits, but I would not go as deep.
2) SPURS HAVE THE MONIES - while having significant debt, we also had cash buffer of 148 million pounds (!!). And first thing about having money to buy assets is - YOU PAY WITH MONEY (actual cash), NOT PROFITS (just concept). So even before the 150 mil injection we had same amount of cash in the balance sheet. Also our cash balance is enough to cover the debt servicing of more than 2 years (not sure the interest payment and too lazy to google it; for principle payments it would almost cover 3 years).
3) CURRENT ECONOMY MAKES SPURS INVESTMENT EVEN SMARTER - now this part goes further from content posted; just an observation from economy. Currently we are seeing fast tempo inflation - quick googling shows that UK saw yearly inflation of 9%. So now lets assume that our average loan interest is 3%. That would mean that real/net interest rate is -6%! Or to put it other way - we have taken the loan in in valuable money and we are paying loan back with lot cheaper money. Principle amounts will not change but value of the money is in quick decrease. So that is very favourable for the clubs point of view. Most likely this 706 or 857 million pounds will be peanuts in few years time. Of course this inflation rate will not last forever. And central banks will increase the price of money which will mean our interest payments will increase, but I have no doubt that financial person Levy is, our interest rates are fixed / hedged in large part.
So we are in VERY-VERY good position financially. We got an equity injection by owners but on top of this we have significant cash buffer and our yearly cashflows will support future investments/expenditure as well.
Now lets hope the club can use these resources wisely and spend on players in better fashion than we have in recent past.
For me personally it was interesting and easy reading. As I work as full time credit analyst in corporate banking.
So as a Spurs fan and analyst I'd like to sum it up for those who did not want to go through all of it.
1) SPURS DOES NOT HAVE A DEBT PROBLEM; NOT EVEN CLOSE - there is debt and there is debt. There can be very different types of liabilities. You can owe credit card company that charges you ~15-20% per year for the drinks you ordered while nightclubbing or you can owe bank a 3-5% interest rate mortgage for home in growing population center where prices have doubled since you took the mortgage. Football clubs can also have similar issues - we could finance liquidity with overdraft and pay off salaries of players and staff, or clubs can build assets that generate income for future. Spurs have only done the latter. And obviously the increased revenue from new stadium far exceeds the loan repayments per year.
As it was pointed out - our short term debt amount was as little as 57 million. This is ~13% of our total revenue, which is not too much. Though usually these amounts are compared to pre-amortization profits, but I would not go as deep.
2) SPURS HAVE THE MONIES - while having significant debt, we also had cash buffer of 148 million pounds (!!). And first thing about having money to buy assets is - YOU PAY WITH MONEY (actual cash), NOT PROFITS (just concept). So even before the 150 mil injection we had same amount of cash in the balance sheet. Also our cash balance is enough to cover the debt servicing of more than 2 years (not sure the interest payment and too lazy to google it; for principle payments it would almost cover 3 years).
3) CURRENT ECONOMY MAKES SPURS INVESTMENT EVEN SMARTER - now this part goes further from content posted; just an observation from economy. Currently we are seeing fast tempo inflation - quick googling shows that UK saw yearly inflation of 9%. So now lets assume that our average loan interest is 3%. That would mean that real/net interest rate is -6%! Or to put it other way - we have taken the loan in in valuable money and we are paying loan back with lot cheaper money. Principle amounts will not change but value of the money is in quick decrease. So that is very favourable for the clubs point of view. Most likely this 706 or 857 million pounds will be peanuts in few years time. Of course this inflation rate will not last forever. And central banks will increase the price of money which will mean our interest payments will increase, but I have no doubt that financial person Levy is, our interest rates are fixed / hedged in large part.
So we are in VERY-VERY good position financially. We got an equity injection by owners but on top of this we have significant cash buffer and our yearly cashflows will support future investments/expenditure as well.
Now lets hope the club can use these resources wisely and spend on players in better fashion than we have in recent past.