Spurs stadium repayments is almost £50 million a year – but the increase in matchday income is even bigger
25 March 2019 7:55 AM
Photo: Getty Images Tottenham Hotspurs' new stadium was tested on Sunday in a U/18 match with a big crowd watching. Repayments of the stadium loan is almost £50 million a year for Spurs - but the increase in matchday income is even bigger.
New calculations on the stadium repayments. Seems like the club can spend money in the summer transfer market.
Spurs have the opportunity to do what Manchester United did a few years ago by converting some of the loan to bonds.
Still the annual accounts from the club in april will offer more info on the increased stadium building costs.
ALEX MILLER [email protected]
Tottenham’s £637 million stadium debt will cost the club an estimated £50 million a year in interest and loan repayments.
Leading sports-based accountants have estimated that the club will have to pay £47.8 million a year in repayments.
The calculations have been based on information the club have given to date.
The club’s loan facility from Bank of America Merrill Lynch, Goldman Sachs and HSBC stands at £637 million - it was increased from £400 million in October 2018.
Interest rate might have gone up
Although terms have not been confirmed, the previous £400 million facility had an interest rate close to 3.5 per cent, while the increased loan appears to be a simple extension of the previous loan, which has a final repayment in 2022.
Accountants, who wished to remain anonymous, told offthepitch.com they believed the structure of the increased facility has remained the same and that the financing was secured by the new stadium and related commercial and match day revenues.
The interest rate on the increased loan may have gone up following increases in the Bank of England base rate since 2017.
Based on the club drawing down the full £637 million loan facility - and that the previous interest rate of 3.5 per cent has been maintained - the club will have to pay back £22.3 million a year in interest.
Working on the basis that the club pay back the £637 million loan amount over 25 years, Spurs will pay back a further £25.5 million a year to reduce the loan amount.
Combined, Spurs will have to pay annual finance costs of £47.8 million.
Renenues will dramatically increase
However, these amounts (repayments and interest payments) would fall every year, as the outstanding debt amount decreases.
Spurs’ final season at White Hart Lane (with Champions League games played at Wembley) produced match day revenues of £45.3 million.
The new stadium will dramatically increase the club’s revenues.
Spurs officials have said they expect £100 million in match day revenues at the new stadium, in line with what Woolwich make from the Emirates.
That represents a £55 million a year revenue increase - more than enough to cover the stadium repayments.
The club will earn additional income if they manage to attract a stadium-naming partner, plus NFL games and non-sporting events, such as concerts.
Tottenham chairman Daniel Levy has also confirmed the club want to refinance the loan by converting some of the loan into bonds (as Manchester United did in 2010, when they raised £500 million) at the end of the loan deal.
Reducing payments gradually
If successful, that would raise money by offering to pay it back to investors on a specific date and to make periodic interest payments at lower interest rates than banks command.
That method could be a way of reducing the club’s repayments below the £47.8 million a year figure, affording the club greater cashflow.
The club may shed more light on the debt structure in their next set of accounts, which are expected to be published at the beginning of April. Included in the accounts could be additional annual costs related to the increases in stadium building costs.
Experts close to the build have estimated the final stadium build costs could reach £1.2 billion - although the club has refuted that estimate.
The club will continue to spend money on the stadium build until summer 2020, when a final costing will be possible.
Old article. Two major points to make :
1. Annual interest rate has fallen with the bond issue, difficult to be precise but circa £22m pa
2. There are a series of bonds with varying repayment dates from 15 years inwards. In the Trust minutes Levy says the bonds are covenant light with only a minimum EBITDA ( earnings) covenant, so it maybe that Spurs do not need to put money aside each year to repay the bond. That means that for the next few years Spurs can spend the surplus revenues from the new stadium over the interest repayment as they like.
Initially ( say next 2 years) I'd expect a healthy amount to be spent on players, past that date the stadium surplus may well be split - part spent on new players, part on property investment to generate profits on property development to help repay loans and part simply putting cash aside to build up funds to repay the bonds.
