Football finance expert Stefan Borson has given a grim analysis of Tottenham’s current financial position and has explained why Daniel Levy may be helpless heading into the summer transfer window.
When Tottenham released their financial numbers last month, Levy warned the fans that the club’s transfer spending is unsustainable.
Over recent days, various outlets have claimed that Spurs have to sell players before they can buy this summer after spending large amounts in previous transfer windows.
It was revealed that the club’s net transfer debt currently stands at £279.3, thus making it impossible for them to spend big this summer unless there is a significant injection of cash from ENIC.
Stefan Borson says Daniel Levy is helpless this summer
Borson pointed out that while Tottenham Hotspur are not at the risk of falling foul of the PSR rules like some other clubs in the division, they simply do not have the cash flow to sanction a big summer spending spree.
When asked if he is surprised to hear that Spurs are such a precarious situation, the finance guru told talkSPORT: “All it does is confirm what Simon said a few weeks ago about cashflow. You have to separate a few things including Financial Fair Play – they’re clear on PSR and so there’s no issue there.
“From a budgetary perspective, they’re £30m or maybe £40m down on where they’re expected to be. They could finish 17th and they probably expected seventh as a worst case – they’re ten points off and so they’re £30m off their budget for merit payments.
“Of course, they may get Champions League but if they don’t then they have a huge hole in the P&L [profit and loss] for next season as well because I expect that they budgeted for at least Conference, maybe Europa, and that might have been worth £20m for next season, but there’s going to be a zero if there’s no Europe at all.
“So you’ve got the PSR situation, the budget situation and then you’ve got Simon’s point which is all about cash. It’s all well and good having this capacity but actually, if you don’t have the pounds and pence for what’s due which is around £250m in historic transfer fees, instalments on those, the wages, the debt service and the running costs to the club.
“They are very, very significant here. Daniel Levy is not in a position to put any more money in. He’s a very wealthy guy because of his holding of shares, but unless he sells those shares he doesn’t have the cash to put into the club.
“That leaves the Lewis Trust – not Joe Lewis himself – the Lewis Trust being effectively the only funder around for Spurs from a cash perspective because they can’t raise any more debt.
“On top of that, they potentially have some covenant issues and so the problem they’re going to have is nothing to do with Financial Fair Play, it’s to do with actual cash. How do they actually pay for things? Unless they either raise money from one of their shareholders or sell some footballers, they won’t have the cash to pay for new footballers.”
Tottenham’s situation is not critical yet
A few clubs in the Premier League have flirted dangerously close to not complying with the PSR rules and have even had to sell players on quick notice to escape a points deduction.
Borson explained that Tottenham’s situation is not critical yet and the club can navigate the window without selling their best players as long as they operate smartly.
He added: “When we talk about selling players, they don’t have to be selling their best players for cash. It’s not a case of needing to make a profit on Richarlison, for example. They could afford to sell Richarlison for a loss from a financial PSR perspective.
“If they sold him to Saudi for £20m, that would still give them what they need in terms of the £20m and of course, they’ll have to take the impact from a P&L perspective – profit loss – which they can absorb. It’s not a critical situation from a survival of the club point of view.”