Tottenham Hotspur’s Issue of Money
Professional sports are a business and at the end of the day it’s all about one thing and that’s money. At times I believe some people don’t see a professional athletic club in the same light as a Microsoft or a Google. But of course they need money to survive. The more you want to succeed, the more money will require in rising to the top. This is the case for Tottenham Hotspur. Tottenham in the last few years have been attempting to challenge the established leaders in the English Premier League. In doing so they are going up against some of the wealthiest clubs in England. not to mention Europe. Granted Tottenham’s revenues have been increasing but not enough as compared to other big clubs. For Tottenham to successful break the old guard they need to address the serious issue in how they generate money to compete in this demanding sport.
One of the most obvious issues the club needs to address is their stadium, White Hart Lane. White Hart Lane can accommodate roughly 36,000 fans. That’s a rather low number when comparing to other top clubs: Old Trafford ~ 76,000, Emirates Stadium ~ 60,000, Etihad Stadium (The City of Manchester Stadium) ~ 48,000, Anfield ~ 45,000 and Stamford Bridge ~ 41,000. Both Chelsea and Liverpool have expressed desires and plans to expand their seating capacity to 50,000 plus. Harry Redknapp has expressed on several occasions the difficulty to compete against clubs that can accommodate more than 36,000 fans. It’s about all those match day ticket receipts. Manchester United generated £100 million on match day gate receipts and Arsenal took in £94 million, based on last season figures (2010-11). While Tottenham collected £27 million on match day ticket sales. That is an increase from £20 million in 2009-10. Plans have been in the works since 2007 to address the need for a larger stadium, so more can be gained in ticket sales.
The first and most realistic plan is the Northumberland Development Project. This plan would create a new stadium that could accommodate roughly 56,000 fans, which is a dramatic increase from 36,000. The project calls for the construction of 200 homes, a hotel with 150 rooms with a restaurant, club mega store, club museum, café, new offices for the club, and a supermarket. Aside from ticket sales the other aspects of the project would generate a great deal of money for the club as well. No doubt increasing the commercial activity of the club certainly would be a positive move. Also, the project would have a public square for events such as ice skating and street markets. In addition there are plans for historical restoration of local buildings. This is very familiar to what has been done with Major League Baseball stadiums in the United States, which has been successful in creating more money and restoring economic life to the downtown cities. The Northumberland Project would be constructed in the area around White Hart Lane so the need to re-locate wouldn’t be an issue. However, the issue not having a convenient underground station near the stadium would still continue to be a problem. The green light was given to the project by the Mayor of London in November 2010. The plan was to move into the new stadium (partially constructed) for the 2012-2013 season, with it being fully constructed by the 2013-2014 season. As a Spurs supporter this project sounds like a very sound and positive proposal to help restore economic strength to the club. However, something else caught the chairman’s eye, the Olympic Stadium.
London will be hosting the 2012 Summer Olympic but once the Olympics have concluded, the stadium will be available for use. Tottenham along with other clubs made a bid for the stadium. The Olympic Stadium certainly has some very attractive qualities. I think the most attractive thing about the stadium is its 80,000 person seating, which would make it the largest stadium in the Premier League replacing Old Trafford. The proceeds from the tickets would be amazing and could provide several millions of pounds per-home game, depending on ticket prices. The location would be central with easy access via public transportation. Depending on how one feels about location loyalty that could provide an issue with some fans. The Olympic Park Legacy Company awarded the stadium to West Ham United on November 12, 2010. Tottenham lost their judicial appeal in June 2011 but were given new hope in July when it was discovered when an employee of the Olympic Park Legacy Company acted as an agent for West Ham United. Tottenham sought another judicial review in hopes of overturning the original decision. Putting aside the final outcome of the decision, I believe the best option for Tottenham is to go forward with The Northumberland Project. Despite the stadium seating, I think Levy should back off the Olympic Stadium. The increase from 36,000 to 56,000 is a massive leap forward and along with the other commercial activity associated with the project will generate the necessary revenue for the club in the long term. Plus, for the sake of tradition and history the stadium would remain in the Tottenham neighborhood.
Payrolls form one of the biggest parts of a club’s budgets. Tottenham has been dealing with the issue of surplus players for while. Several players weren’t featured in first team last season or if they were saw very little playing time, but were still on the payroll. The most obvious thing is to loan out the players or just sell them, which Tottenham hadn’t been doing. A lot of that had to do with Levy demanding too much in the sale of players. I was please during last summer’s transfer when the club finally decided to sell or loan out players, thus reducing the wage burden on the club. If a player is no longer in the future plans of the club sell off the player. If you think the player requires more training or experience then loan them out. Just off loading Robbie Keane removed the highest paying player from the payroll (80,000 per week). Levy needs to understand a player will only get what the market is asking or demanding. Just because you brought a player at 10 million pounds doesn’t mean you’re going to get that back in a few years. It really depends on the perceived view of the player’s ability and the needs of a club. There is no point holding onto to players you no longer want, get the best available price and move to the next deal. I hope Levy is beginning to understand this idea.
I believe one of the areas that Tottenham needs to improve is their international appeal. There can be no doubt that Manchester United has been extremely successful in marketing their image. Success on the pitch creates success off the pitch. As a club they have so much going for them. Before his departure David Beckham certainly left a lasting impact on the club. David Beckham was able to make himself something more than just a player, he became a pop icon. His marriage to Victoria (“Posh Spice”) only added to their success. No doubt the sales and marketing people at United were amazed and delighted with what was taking place and the success it brought to Manchester. The sales of club apparel/merchandise worldwide took off, Asia one of the most successful markets. People may have not known much about Manchester United or football but they knew David Beckham. In 2002 “Bend it Like Beckham” was released and just added to the success of the Beckham/United brand. Manchester United has 200 officially recognized branches of the Manchester United Supporters Club (MUSC) in twenty four countries. The Daily Mail reported on June 24, 2010 there could be as many as 333 million fans worldwide. October 2011 United will offer an IPO on the Singapore Exchange to expand club business in Asia and to help with their mounting debt. Many of the Manchester United supporters are attracted only by their success that is true of any sport look at the New York Yankees. I have met many individuals in the United States who support Manchester United and I get the same response, they like them because they are winners, simple as that. People can debate the whole issue of glory seekers but success equals popularity. However, that success translates into profit and people like winners. Does anyone really believe the management of Manchester United care if they have glory seekers in the world, as long as they watch/attend the games and buy their gear they are happy. Under Harry Redknapp, Tottenham have improved but they need to take it a step further and I think Manchester United offers a very nice blueprint.
Despite the economic turmoil in the world the United States is still the strongest market to sell in. Americans love to spend even with a decline in overall personal spending there is a turnaround in Americans regaining their purchasing power. Arsenal, Chelsea and Manchester United either have supporters clubs or mega stores in the United States to accommodate their US supporters. In the last two years Manchester United has participated in per-season summer tours in the US. I don’t think there can be any argument in the marketing success of those summer tours. If you watched the games the stadiums were filled with Manchester United supporters. I went the Manchester United and Seattle Sounders match and the place was pack with over 67,000 fans and saw rows of red shirts. While this was going on Tottenham did a tour of South Africa, which I am sure they had a good time and the fans enjoyed the matches. From an economic standpoint I really don’t see the point and see it as a waste of time. You want to travel to locations that will provide you with the greatest exposure and the opportunity to cash in. What does South Africa really offer Tottenham? The per-capita income of an average South African is around $10,000 and a 25% unemployment rate. Not much for disposable income. In the United States the per-capita income is close to $50,000 with an unemployment rate hovering around 9%. If Tottenham want to increase their international appeal it must be done in the United States or perhaps Asia. China and along with the rest of Asia, despite the current economic problems remain a growing economic region in the world. Chelsea did an Asia tour during the summer, which I think was a good marketing strategy to help further their appeal. With the political, economic and uncontrollable drug trade associated with Mexico, Central and South America I don’t really see this region as strong base for Tottenham to exploit. Plus, South America has very strong domestic leagues with fans all around the world.
With United having concluded two consecutive tours I doubt they will be back in the United States for the time being and most likely will tour Asia during the next summer per-season. I think this presents Tottenham with a wonderful opportunity to fill that vacuum. They should plan and launch a five or six city tour of the United States. I am sure there will competition from other clubs for US fixtures but early planning and targeting key US markets/cities is just what Spurs require. I would suggest two cities on each coast and one or two in the central part of the country. Perhaps being the opponent for the MLS All Star Game. Tottenham are affiliated with the San Jose Earthquakes so I would think they would be on their schedule and plus it would cover the entire bay area. Seattle has been proven to be a popular market for soccer and could be considered as well. Places like Washington DC, New York, Chicago, Dallas or New England would be very good selections as well. It would be ideal to have MLS support with their clubs in the matches but if they refuse. Work with other international clubs to play in the US during the summer. In the process Spurs should begin to organize their fan base in the US in the fashion that United have done. Further, the creation of a Spurs super or mega store in the US would be extremely helpful in furthering the merchandising of their product.
Television/broadcasting is another way for the club to enhance their resources. I know some clubs brush off the League Cup with more focus on the FA Cup and title race. Some clubs see Europa League in the same fashion. Harry Redknapp hasn’t been quiet concerning his feelings on that subject. I would like to see Spurs put every effort in all cup and Europa League matches. The more you stay in the competition the more you gain from broadcasting rights. The further you go in the Europa League the more money you make, there is your incentive. The addition of any silverware to a club is another selling point to future players and fans to demonstrate a commitment for success. Whether the Champions or Europa League the thrill of playing against top quality teams in Europe is what players and fans both want.
Tottenham don’t have an icon player like Beckham to feed off and they don’t have billionaire owners either. They need to find other ways to increase revenues so they can compete with the higher wage clubs. You want to give players a reason to play for you. Football players are no different than other working persons; they want the best possible wage and work for the best. Players go to Manchester City or Chelsea because they can pay high wages and the hope of winning. Almost no player joins a club because of the history or the tradition, that would be nice but it’s not the reality. It’s all about the money.