Following the departure of Daniel Levy as chairman of Tottenham Hotspur, the Lewis Family have suggested that investment is coming to help the team succeed on the pitch.
Just recently, ENIC made it clear that they had rejected two approaches to buy the football club and that they had no intention of selling at this stage.
Meanwhile, reports elsewhere suggested that the Lewis Family were making their ambitions clear by claiming they ‘want more wins more often’.
So, with ENIC going nowhere and suddenly showing intent at Spurs, TBR Football spoke to the site’s finance expert, Adam Williams, to assess whether or not we could actually see the owners put their money where their mouth is.
Doubts raised over ENIC investing £100m into Tottenham
Sky Sports recently reported that the Lewis family ‘could put money into the club’, with the newly appointed CEO, Vinai Venkatesham, and his new leadership team deciding how that is spent.
But, TBR Football’s finance expert raises doubts as to whether ENIC would actually be prepared to invest the reported £100m sum into Tottenham Hotspur.
Williams told TBR Football: “There have clearly been a few friendly briefings about the Lewis family investing £100m in the club, but the language has all been very conditional, like ‘could’, ‘on course to…’
“Also, the line about them not taking a dividend is true, but it’s also true of every other Premier League club owner besides the Glazer family. So it’s not as if they’re being particularly charitable in that respect. In fact, there are only a handful of club owners who have invested less in their teams out of their own pocket.
“They have also just taken out what is effectively a short-term loan of £90m from Macquarie, which is secured against future Premier League TV revenues. That is going to have interest attached, which is money that the club, not the Lewis family, will repay at a later date.
“We don’t know the details, but we’ve seen other Premier League clubs have similar deals at an interest rate of 5-10 per cent, potentially higher. This is short-term borrowing for short-term costs – wages, other expenses and so on, not investment in transfers.”
“It’s a cash flow solution, and it’s becoming increasingly common for Premier League clubs. But if the Lewis family were ready to invest, why not do it as soon as possible? That way, you make a statement to usher in this new era and you save the club £5-10m in interest, which could otherwise be reinvested in the team in January.”
ENIC facing Premier League title investment dilemma
As history suggests, ENIC’s cost-benefit analysis suggests it’s tricky to see the owners putting in the necessary funds to have Tottenham competing right at the very top.
“The briefings to the press certainly make it clear that the Lewis family have plenty of liquid capital, and that is why they are not looking for a sale. Equally, that means there is no impediment to investing in the club via equity or no-interest loans,” added Williams.
“That to me suggests they aren’t quite as ready to pump money into the club freely in order to achieve more glory on the pitch as they are suggesting. I think it’s much, much more likely that they take on some minority investment and reinvest some of that cash, but we’re probably some way off that happening.
“Until then, I think it probably is ‘business as usual’, as Vinai Venkatesham put it. And by business as usual, I mean the club will reinvest what it earns. There’s nothing wrong with that model in isolation, especially given that Tottenham have huge revenue and therefore huge scope to reinvest. But when you have rivals who are willing to push the boundaries in terms of PSR and take the maximum possible funding from their owners, it means those clubs are catching up in terms of their total spending.
“What those clubs like Aston Villa and Newcastle lack in revenue, they make up for with owners who are willing and able to underwrite financial losses to fund investment in their squads.
“I have zero doubt that the Lewis family want more glory on the pitch. That is going to grow the club’s brand, create more revenue and inflate the value of the club, which they will one day sell for billions. But if it is a choice between a Premier League title or saving themselves the £500m or so in external investment that might be needed to get them there, I’m 100 per cent confident they would choose the latter. That’s the cost-benefit analysis which has been at the heart of everything they have done over the last 25 years.”