Football Finance expert, Kieran Maguire, has explained to Football Insider that Tottenham Hotspur might not have to repay their new £250m loan for another decade or two.
It has been well documented that Tottenham’s finances have been hit badly by the COVID-19 pandemic, owing to the substantial debt that has been accrued on the building of the new stadium.
It remains to be seen what that could mean for the club’s transfer plans, with some reports indicating that players have to be sold to raise money for transfer targets.
One of the ways in which Spurs covered their costs was by borrowing a £175m loan, taken out via the Bank of England’s Covid Corporate Financing Facility last year.
It emerged two weeks ago that the club had raised £250m for the sale of private placements made through the Bank of America, a boost which would also help them to repay the short term £175m loan (Football.London).
Maguire explained that Tottenham are likely to continue finding more lenders in the future and spread the repayment over the long term.
When asked about the £250m raised by the North London club, he said: “Effectively what they’ve done is issue long-term IOUs to two lenders at relatively low-interest rates.
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“These will be interest-only arrangements, so they won’t have to be repaid for probably at least a decade.
“The benefit from Spurs’ point of view is A) they no longer have the Bank of England [via CCFF] in their hair and B) they know exactly how much they’ve got to payout.
“What will happen in all probability is that when these loan notes are due for repayment, they’ll find another lender and kick it down the road for another 10 years. This sort of arrangement is very common in business.”
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