Tottenham Hotspur borrowed over £800million to build their stadium and secured a low interest rate, but Kieran Maguire is rightly worried that this could spike should relegation occur.
Daniel Levy made Spurs take multiple bank loans in the process of building the Tottenham Hotspur Stadium, with millions of debt left to pay.
The Lilywhites have seen their yearly losses increase since the move, which is only adding to the debt bill.
While the Tottenham Hotspur Stadium rakes in an improved matchday revenue over White Hart Lane, the money that was borrowed to make it still looms over ENIC till this day.
Relegation could be catastrophic for Tottenham’s finances as Maguire questions whether these loans will need to be paid off even quicker if the club drops out of the Premier League.
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Kieran Maguire raises important question on interest for loan payments
Tottenham know they will lose millions from relegation almost instantly, with multiple issues like broadcasting, sponsorship, and matchday revenue all predicted to plummet.
ENIC have chosen Roberto De Zerbi as the man to go with as Igor Tudor’s successor, and will be praying that the Italian can keep Spurs in the top-flight with just seven games to go.
While speaking on The Price of Football podcast, finance expert Maguire revealed some interesting figures on Spurs’ current incomings, but asked a frightening interest rate question.
Maguire said: “The issue with Spurs is that they borrowed over 800million from banks but they got this brand new stadium, and because the negotiated a very low interest rate, around 3.6% Spurs are paying interest of £27-28m per year.
“But their Matchday revenue is up by £90m a year, and their commercial revenue is up by £100m. One concern I have with Spurs is, is there a clause which says relegation means a break in the loan? Either it has to be renegotiated at a much higher rate, or the lender says we want our money back.”
Either way, for this specific matter, relegation looks like a lose-lose situation for Spurs in terms of their bank loan repayments, if a relegation clause were included in the loan deals.
It’s hard to see how ENIC could pay back an increased rate for the debt while receiving less revenue on the whole, which is expected in the Championship.
Tottenham Hotspur Stadium has ruined this club
The Tottenham Hotspur Stadium was one of the worst moves that the club has ever made. It seems like it was built on the foundation of expectancy for success, which is ironic, as the club had to wait almost 20 years for any type of silverware.
Matchday revenue has increased, but the running costs and more that ENIC now have to pay were always going to be unsustainable if the club were to drop out of the Champions League, let alone the Premier League.
It’s fair that no one saw a threat of relegation coming, because who truly did, but it will be the stadium before anything else that runs Spurs into the ground financially.
Maybe ENIC have some lightbulb idea that will reverse the yearly losses, but as Maguire alluded to, so long as the banks were footballing smart when lending the Lilywhites money, it could be curtains if relegation happens.