What’s happening at the lane?

Posted on August 19, 2011

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“You either sell him, go out and bring three or four players in and have a better team, probably, in all honesty, or you keep him,” 

This is what Harry Redknapp said most recently about the Luka Modric transfer saga. The diminutive Croatian has made his intention clear to leave Tottenham and join Chelsea, going so far as to claim that Spurs Chairman Daniel Levy went back on his word. But, till the last statement from Redknapp, both his and Levy’s stand was very clear that they would not allow Modric to leave White Hart Lane. What has now propelled Redknapp to come out with such a statement? Why does he think he needs three or four more players? Why hasn’t there been much activity on the transfer side from Spurs? Lets delve in…

The last few seasons have shown that Spurs prefer to do their business fairly early (save for Rafael van der Vaart) and usually there is quite a big turn-around in the number of players that go in and come out of the White Hart Lane doors. The last 7 seasons has seen Spurs spend around £266m on transfers . The amount recouped by player sales has been somewhere around £160m. This works to a net spend of £15m every year. While this doesn’t sound much in the current transfer spend scenario, over an extended period of time this is quite a big number. Daniel Levy is well known to get top dollar for his players and this time around he has rejected bids of £22m and £27m for Luka Modric from Chelsea.

After their heady heights of a 4th place finish in the 2009/10 season, Spurs had a successful campaign in the Champions League, reaching the quarterfinals where they lost comprehensively to Real Madrid. Their successful foray in the Champions League netted them a financial windfall of around £19m in participation and prize money in addition to the share in the television broadcast revenue from the Champions League. And this is the type of money Spurs will not be receiving this time around due to them finishing only 5th last season. Though a 5th place finish doesn’t sound bad, the financial implications of not being in Champions League and playing its surrogate sister, the Europa league could be telling. For example, even if Spurs win every single game they play in the Europa League and lift the Championship, they would get only £6.25m as prize and participation money. Obviously the stake from the television revenue would be much lesser compared to the Champions League.

Spurs had a record income of £119.8m in FY2009/10 and that was enough for them to move 3 places to the 12th spot in Deloitte’s Football Money League study. This was a £6.8m over the previous year and though the year ended with Spurs incurring a Loss of £6.5m (before tax), the interim report that was declared in March ’11 shows that this number has become a profit of £4.2m, no doubt to their successful foray in the Champions League. Spurs have a net debt of £65m but they will not be impacted because of UEFA’s Financial Fair Play rules. Spurs have been intelligent in securing two shirt sponsors (Autonomy for PL matches and Investec for cup matches) that nets them £12.5m every year for the next two years. The wages to turnover ratio, a key indicator on a club’s financial position is 56% – one of the lowest in the league. The club’s wage bill, though it has increased to £67m is very low compared to the likes of the clubs in the Top 8. This is due to Spurs’ stringent wage policy, yet another reason why Modric wants out.

Spurs have one of the biggest squads in the Premier League and this has resulted in their increased wage bill and Spurs are also 4th in the list of fees paid to the agents. Spurs’ matchday revenue was around £39.4m which is not bad by any means but is far too less when compared to their North London rivals Arsenal, who netted a cool £100m. This is no doubt because of the limited capacity of White Hart Lane. Spurs claim that they sold out all their home matches and the wait list for season tickets is around 35,000 – the capacity at White Hart Lane. Hence, they are pushing forward with plans for a new stadium. Their attempt to move into the Olympic Stadium flopped and since then they have gone ahead with the initially proposed Northumberland Development Project which would give them a stadium with around 57,000 seats. This venture will definitely set them back by atleast £300m but part of it could be realized by selling the White Hart Lane and properties owned by Spurs near the stadium and selling of the naming rights of the new stadium. Spurs also lag behind the likes of Arsenal, Manchester United, Chelsea and Liverpool in broadcast revenue.

Spurs have a very good squad except in the striking department. Their current strike force comprises of Jermaine Defoe, Peter Crouch and Roman Pavlyuchenko with Robbie Keane having completed his £3m “Dream” move to LA Galaxy. Peter Crouch is rumored to be interesting Fulham and Stoke and I guess Daniel Levy will be open to selling him. That would leave Defoe  and Pav as the only experienced strikers in the team. Defoe scores in spurts and Pav is a bit unpredictable in terms of his form. Spurs were linked with FC Twente’s Bryan Ruiz but nothing came off it and they are currently locked in talks with Manchester City over taking ex-Arsenal striker Emmanuel Adebayor on loan. Adebayor is reportedly on a £170,000 weekly salary and unless Manchester City foot most of his wages, Spurs would not be able to have him on board.

The other players Spurs have been continuously linked are Real Madrid’s Lasanna Diarra and Valencia’s Juan Manuel Mata. These two moves are baffling given that Spurs already have a burgeoning midfield. Redknapp does like buying players he already has managed as he did with Defoe, Crouch, Kaboul and Keane, but surely I don’t think Levy would be too keen on over staffing his already available midfield options. With a firm eye on the Financial Fair play and the impending debt due to the move to a new stadium, one cannot blame Daniel Levy to be cautious the in transfer market.

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Posted in: EPL