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Despite the noises coming from Tottenham’s owners over the last two weeks, Adam Williams has major doubts over fresh internal investment from the Lewis family.
Since Daniel Levy’s exit, we have heard plenty of reports suggesting that ENIC want to usher in a new era of on-pitch success at Tottenham and are ready to signal their ambition.
We have even seen reports that the Lewis family are ready to inject over £100m into Tottenham so that the Lilywhites can go toe-to-toe with the biggest clubs in Europe.
However, the reality remains that ENIC have invested only £122.1m into Tottenham since buying the club in 2001, and recent developments suggest that we may not see that change.
Adam Williams questions why Tottenham have borrowed more money
Last week, it emerged that Tottenham have raised £90m through a receivables financing deal with Macquarie Group Ltd.
Adam Williams has questioned why the Lewis family has not invested their own money and has instead chosen to put the club in debt by borrowing.
When asked about reports that ENIC are ready to invest 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.”
Williams says winning trophies are not the priority for ENIC
Despite the encouraging press briefings that the Lewis family has held since Levy’s departure, Williams insisted that there is little evidence to suggest they will prioritise success over the club’s bottom line.
He suggested that ENIC are much more likely to seek minority investment from a third party than pump their own funds into the club.
The football finance expert added: “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.
“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.”
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