Tottenham Hotspur are at no risk of breaking the Premier League's Financial Fair Play (FFP) Profit and Sustainability Rules (PSR) despite their attempts to spend big under new head coach Thomas Frank.
Spurs announced the signing of West Ham's Mohammed Kudus on Thursday evening and this was quickly followed up by the news that Tottenham were keen to activate the release clause of Morgan Gibbs-White. Football.london understands that while there was hope of conducting the England international's medical on Friday, that has been delayed as Nottingham Forest consider legal action against the north London club.
It is understood that Forest think Spurs made an illegal move for Gibbs-White and have cut off all communication with Frank's recruitment team. At this stage, it is thought that this will merely delay Tottenham's bid for the midfielder and not cancel it altogether.
Having finished so lowly in the Premier League table, some have suggested that Spurs could be in danger of exceeding the £105m permittable losses from the past three seasons. However, our Chief Business of Football writer Dave Powell understands that this is not a concern which Tottenham supporters need to fear.
"The signing of Mohammed Kudus for £55m from West Ham United, and the willingness to pay the £60m release clause to acquire Gibbs-White, as well as the £30m permanent addition of Mathys Tel from Bayern Munich following his loan spell, the £5m signing of Kota Takai from Japanese J-League side Kawasaki Frontale, and the £12m signing of Luka Vuskovic from Hajduk Split, a deal agreed earlier this year but formalised recently, means the transfer outlay stands at £162m this summer," he explained.
"In terms of what that adds to the balance sheet, assuming those deals are amortised over the permitted five-year maximum by UEFA, then it will be a £32m charge on the balance sheet for Spurs annually. For 2023/24 the amortisation costs at the club stood at £135.8m, the fifth largest in the Premier League during the period - that was up 25 per cent from the previous year.
"Spurs’ 2024/25 financial year came to a close on June 30, prior to the addition of Kudus and Takai and the formalisation of a permanent deal for Tel, which started after his initial loan deal finished at the end of June. The signings of Dominic Solanke, Wilson Odobert, Archie Gray, Lucas Bergvall and Antonin Kinsky will all be accounted for during 2024/25, and that means that it’s likely the amortisation costs jump once more, especially given comparatively weak player trading for those exiting the club.
"However, Spurs are in a strong position when it comes to PSR, a position only emboldened further by them qualifying for the Champions League this coming season by virtue of winning last season’s Europa League. The future revenues for 2025/26 will be significantly impactful to the club’s bottom line.
"PSR assesses clubs over a three-year cycle, with losses capped at £105m. There are allowable deductions for such things as depreciation, investment in infrastructure, the academy, the women’s team and community initiatives.
"Spurs lost £95m in 2022/23 and £26m in 2023/24, but allowable deductions of £94m and £93m respectively, largely attributable to depreciation on the club’s stadium, meant that Spurs were actually PSR net positive for those two years by some £65m. That means the club could post losses for 2024/25 of more than £250m and still be compliant.
"That, of course, won’t happen, and while losses may be coming in 2024/25, the 2025/26 revenues that will include a shot in the arm thanks to the Champions League means that Spurs have, aside from Manchester City, have the largest PSR headroom of all the Premier League clubs. Frank has a healthy budget at hand, and the confidence in the financial forecasting for the current financial year that will be had due to Champions League football means that Daniel Levy will be more inclined to loosen the purse strings.
"The willingness to skip straight to activating Gibbs-White’s release clause rather than engage in negotiating with Forest over a lesser fee should be instructive as to how Spurs can operate if the right target becomes available."