Like many major businesses, Tottenham Hotspur is facing financial challenges during the Covid-19 pandemic.
The club has secured £175 million in short-term loans through the Covid Corporate Finance Facility in order to address these challenges. This move isn’t an indication of the long-term financial prospects of the club, however.
The Facility Helps Address Short-Term Financial Needs
The Covid Corporate Finance Facility was developed by the UK government to help major firms that are facing short-term financial challenges on account of the current Covid-19 pandemic. Firms must demonstrate that they make a meaningful contribution to the economy and had a good financial rating at the start of March in order to qualify and the funds are intended to help manage cash flow issues that may arise during this time.
In qualifying for the £175 million finance, Tottenham demonstrated that it met all applicable criteria. They will use the funds to give them greater financial flexibility and working capital at this key time when not only are there no spectators at the matches as the season resumes and the Club has seen the cancellation of non-football events at the club’s stadium.
Non-football events account for a sizeable amount now that the new stadium brings in some of country’s largest events. Thus far, Tottenham has seen the cancellation of a Guns N’ Roses concert, Lady Gaga concert, Capital Summertime Ball, Antony Joshua versus Kubrat Pulev boxing match, Saracens versus Harlequins rugby match and England versus Australia rugby match.
The move to secure the loans was seen as the best decision to properly position the club for whatever other financial challenges this pandemic might bring, particularly given there is no way of knowing how long it will be before spectators can attend live events again.
Unlike other Covid-related programs, the CCFF doesn’t offer free money to firms. Instead, the funds secured are all short-term commercial debts that Tottenham will have to repay. Like most other commercial debt, these loans come with standard interest rates.
Tottenham Remains in Solid Financial Position
In order to qualify for the £175 million facility, Tottenham had to show that it was in a strong financial position before the Covid pandemic. Even with the current unsettled state and significant event cancellations, the club continues to be in a strong financial position.
From a football operations perspective, Tottenham Hotspur FC has done exceedingly well over Daniel Levy’s 19-year tenure as chairman. The club has improved from a mid-table team to one of the Premier League’s best, regularly competing in the Champions League as well. This success has grown the club into an entertainment and sports organisation with global recognition, which has created new revenue opportunities in turn.
The most notable new opportunities have stemmed from the state-of-the-art stadium that Levy has helped the club erect. The finest stadium in the Premier League has created new opportunities to hold all sorts of major events. While immediately scheduled ones have been cancelled, the stadium remains contracted to host two American football matches from the National Football League annually for 10 years and has numerous other events scheduled.
Diversification Provides the Club with Long-Term Sustainability
While the £175 million facility might be used to cover short-term cash flow needs, the long-term sustainability of Tottenham remains extremely strong. The diversification of revenue streams that the club was pursuing have continued during this time and will prove invaluable in the future.
And it’s a Club that cares…
The short-term loans that Tottenham Hotspur has secured through this programme will be not be used for player acquisitions but rather they will allow the Club to continue to support the investment it has already made to date in the local area. Tottenham’s new stadium is widely-regarded as the flagship development kick-starting the regeneration of one of the most deprived boroughs in London. To date the Clubs developments have led to nearly 4000 jobs, and delivered homes and schools.
In the midst of all of this the club has stepped up to play its part in supported the NHS during the COVID-19 pandemic – the new stadium is currently being used as a COVID-19 Testing site, a food distribution hub, and temporary home to a maternity outpatient unit from the local hospital.
