Tottenham could suffer the biggest drop in revenue ever seen in world football if they are relegated from the Premier League.
Spurs face dropping to the Championship in the coming weeks, as they sit one point above the bottom three with seven games to go.
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Their dismal campaign continues to get worse and worse, and the unthinkable is looking like becoming more of a reality.
And for the club, who are one of the Premier League’s ‘Big Six’ and play their football in a £1billion, 62,000-seater stadium, the impact of being relegated from the top-flight would be paramount.
Sports lawyer and financial expert Stefan Borson joined eSPORTY’s live Tottenham special on Wednesday night to break down the full concerning ramifications of an unprecedented relegation.
Borson began: “It definitely will be the largest single-year drop in revenue that any club in the world has had, not just in England.
“You’re looking at something in the order of a £200-250m drop.
“Ironically, it’s going to be a drop off from this season, which, despite everything that’s been going on on the pitch, has been a record revenue year financially and probably has been quite a profitable year, bizarrely.
“You’ve had the well-managed wage bill and then Champions League football, which when you make it to the last 16, is worth close to £100m when you add in matchday revenue and UEFA.”
He continued: “So they’ve got this double whammy if the worst does happen and they do get relegated.
“It’s that double whammy of not just losing Premier League status but also having no European football.
“The financial structure of Spurs next season in the Championship is not going to look anything like today,” Borson later admitted.
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“With that £250m loss, you’re going to see losses on matchday revenue, you’re not going to be able to sell out all of the hospitality when you’ve got teams like Lincoln City, Stevenage coming.
“They’re going to be very lucky if they get to £100m of matchday revenue when they’re currently at around £140m.
“They’re going to also lose £150m on broadcast revenue and the big question is what’s going to happen to their commercial revenue?
“They’re going to go into next season where they’re negotiating a new front-of-shirt sponsor, we know that AIA are going to vacate that product…
“But if you’re trying to sell that as a Championship team, it’s a lot harder and that’s £14m a season or even more.”
How will Spurs manage the losses?
For Tottenham to be losing so much money would be a crucial moment and one they will need to deal with as best as possible – but that may sadly mean some staff lose their jobs.
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Borson explained: “We know from some of the reporting that they do have wage decreases in the contracts if they are relegated.
“That should save like-for-like, something in the order of £100m off the wage bill and of course, you’re also going to want to cut the cost of some of the other highest earners anyway, and some of those players are going to want to leave.
“So, that’s the first thing you want to look at and clearly there’s going to have to be some cost adjustment in the rest of the organisation.
“We don’t know how bloated the organisation is, but it’s been set up for having Premier League football, combined with non-football events, combined with European football and what that typically means is that the organisation is quite big in terms of people, wage costs and other operating expenses.
“So there’s going to have to be an adjustment of that and unfortunately, it’s likely to mean that people will lose their jobs.”
He added: “Straight away, you’re looking at cost-cutting, straight away there’s going to be a perception with some people that Daniel Levy would have been the perfect person to handle the adjustment.
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“But ultimately, they’re going to have to have some money put in at the top, there won’t be enough cash to go around as this is an organisation that is not set up for Championship football.
“It’s set up to be in the Premier League and to have up to 30 non-football event days, none of that comes cheap.”
Impact on potential takeover
The Lewis Family, who own Tottenham, have stated that the club is not for sale, despite Daniel Levy’s departure in September.
However, if they do end up looking to sell or speak to investors amid fan unrest towards them, playing in the Championship could end up ruling out any interest.
Borson said: “This sort of situation was not meant to happen…to fall down and get relegated is a big shock and that will have an impact on the valuation of Spurs, not just in the short-term, but long-term.
“It takes Spurs from a club that will try and sell itself from a Premier League franchise, to moving them to a team that might not be there and from a valuation perspective, that’s transformational.”
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“It’s ironic that it’s come at the time where the key driver to get rid of Daniel Levy was to loosen the purse strings,” he continued.
“But now what’s ended up happening is that they’re now going to have to tighten the purse strings even more and they’re going to have to reset.
“The commercial revenue, which is a key driver of why a third party might be interested in buying Spurs, is going to be damaged over a longer-term period than matchday or broadcasting revenue.”
What happens if Spurs stay up?
Spurs, of course, haven’t yet been relegated and in fact, they’re not even in the Premier League’s bottom three as things stand.
So, there remains a possibility that they stay up, however, their poor campaign is still going to impact them financially.
“If they stay up, they have already suffered a relegation of sorts for next season with the lack of UEFA competition,” Borson said.
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“Not only do we have this relegation issue at the bottom of the table, but we also have the relegation issue out of European competition and particularly out of the Champions League.
“That’s something that potentially one of Chelsea or Liverpool may suffer for next season.
“And because of the scale of the Champions League now, the numbers you’re missing out on are actually not far off what happens if you get relegated.
“The problem here is that Spurs have got both if they do get relegated and that’s a lot to deal with.”
