January 20, 2024

When it comes to January arrivals, the Premier League managers’ comments are not encouraging.


Despite being owned by one of the richest sovereign wealth funds in the world, Newcastle United manager Eddie Howe has made it known that the team might not be able to do much in the way of transfers in January.


Due to Liverpool’s more conservative approach to spending on transfers, it is anticipated that they will take a backseat. Meanwhile, Arsenal, Chelsea, and Manchester United are preoccupied with trying to clear out players before considering potential additions, as they fear that they may violate the Premier League’s Profit and Sustainability Regulations (PSR) for the current fiscal year. It seems more reasonable for them to spend their money in the summer.


Fears about spending take hold in the Premier League

Twelve months ago, Liverpool signed Cody Gakpo from PSV Eindhoven for £45 million, Newcastle added Anthony Gordon for a similar fee from Everton, and Chelsea committed more than £300 million in January to new additions, shattering the British transfer record to acquire Enzo Fernandez from Benfica for £106.8 million. Arsenal added Leandro Trossard, Jakub Kiwior, Jorginho, and Leandro Trossard for a total of £59 million.


However, there are some worries around this January. Premier League executives were shocked by the harshness of Everton’s punishment, which included a 10-point deduction for violating PSR. As a result, the executives were forced to take their own PSR positions very seriously in order to prevent a repeat of this outcome.


A second accusation was brought against Everton on Monday, while there was also a breach against Nottingham Forest. The punishment, if any, for both clubs has been sent to an impartial commission, and they will learn what it is before the season ends. Everton is currently contesting the independent commission’s ruling about the initial violation.


With less than two weeks remaining in the January transfer window, just one Premier League team—and from a relatively comfortable position in comparison to almost all of their competitors—has been actively looking to bolster their roster.


Spurs surpass competitors

Undoubtedly, some of the ire directed at Tottenham Hotspur chairman Daniel Levy in previous years has subsided due to the style of football being played under Ange Postecoglou this season. Spurs’ position as one of the few teams active in the market this month—having paid £26 million for Radu Dragusin of Genoa and agreed to a loan agreement for Timo Werner of RB Leipzig, which has the potential to become a permanent £15 million deal—has suggested that things may be shifting in the team’s favor.


Swiss Ramble, a football financial expert, presented figures last year that examined each Premier League club’s prospective PSR situation and the maximum amount of loss that would not put them in violation of the rules.


While the margins were acceptable for some, Spurs’ position was relatively calm in comparison to the rest of the League thanks to a well-thought-out transfer strategy and the fact that the construction of the £1 billion new stadium is largely responsible for the club’s losses, which can be written off in terms of PSR. Liverpool performed admirably as well; they have a solid balance sheet and a comparable frugal spending policy.


With allowable losses of £276 million, Spurs emerged as the Premier League’s best PSR position. This number was made possible by the fact that the majority of the losses the club has been associated with are related to the construction of the Tottenham Hotspur Stadium (THS), as stadium and infrastructure costs are not taken into account when calculating PSR. With a permitted loss of £156 million, Liverpool was the next best, followed by Manchester City at £139 million.


An appropriate new stadium

The centerpiece of the Spurs’ Levy-era strategy has been the cutting-edge, 62,850-capacity THS. When work on the massive project to construct the greatest football stadium in the world got underway in 2015, the financial situation was quite different. The cost of borrowing was less expensive, and Everton was not directly impacted by geopolitical concerns like the military invasion of Ukraine, which increased the price of steel and increased logistics expenses.


2018 stadium building including (L-R) Mayor Sadiq Khan, NFL Chief Mark Waller, and Daniel Levy


From the beginning to the end, the project required almost eighteen years of brainstorming different strategies to increase profits. Spurs have jumped ahead of many of their competitors by taking the brave decision to take on a large debt load at the same time as them. Chelsea, Manchester United, Everton, and other teams that were forced to take on high levels of borrowing without having the strict financial structure in place to manage that, were among those faced with extremely costly rebuilding projects or new stadium plans.


In the current environment, a stadium with the size and capacity for revenue generation that THS has probably would not have been feasible, or at the very least, would have required more stringent regulations and greater borrowing costs in order to maintain PSR compliance while maintaining competitiveness on the field.

Levy said in March of last year, “Debt isn’t really a problem for anyone that understands finance, provided you can match long-term income streams with long-term debt,” when addressing University of Cambridge students at the Cambridge Union. It is not an issue as long as it is adequately sponsored.


“It’s essentially a very cheap interest 30-year mortgage.” It’s not at all problematic. There are several components needed to develop a club and create lasting value. One is profitability; since some clubs are highly valued but unprofitable, revenue becomes crucial. Success on the field and material resources are interdependent; you cannot have one without the other.


Spurs are seeing a turn in the tide.

One of the main points of complaint for Spurs supporters about Levy’s tenure as chairman has been the team’s lack of on-field success and their perception of his lack of commitment to the playing squad. Out of the “Big Six,” Spurs have only existed on the periphery, dabbling in the occasional moment of greatness before being stymied by a deficiency in playing consistency. However, there is nothing that some of their adversaries can do to stop what may be about to become the tide.


The Spurs have been putting things together for a while now. The club is expected to have one of the best outlooks in the Premier League going into the next ten years thanks to a combination of factors including the new stadium, additional revenue from deals with the NFL and the Formula One Experience, a strict pay structure, and a reluctance to pay exorbitant transfer fees.


Tottenham has established itself as an NFL London Series regular host


Manchester United, in spite of Sir Jim Ratcliffe’s arrival as a minority stakeholder, lacks a strategy, has a large payroll, and is faced with the daunting task of deciding whether to pursue a new stadium or invest in Old Trafford at a time when borrowing costs are extremely high. Meanwhile, Manchester City faces 115 charges related to alleged PSR breaches. PSR is an issue for Chelsea and Arsenal, and both teams need to rebuild Stamford Bridge.


With their infrastructure investment completed and strict transfer market criteria in place, along with the arrival of what will essentially be wage control through current UEFA Squad Cost Ratio rules—which the Premier League is likely to adopt in time to replace PSR—Liverpool, whose owners Fenway Sports Group have taken a similarly business-minded approach to Levy during their time at the helm, will also have some hope for a successful decade to come.


However, this window has demonstrated Spurs’ ability to respond in the market if needed. They can accomplish this to a degree that some of their competitors simply cannot. Consider the stadium naming rights issue: Spurs are in such good financial standing that they are able to wait for the best deal to be offered, rather than having to sell to the highest bidder in a deflated market to satisfy PSR rules that would otherwise prevent them from signing a team member.


Spurs are playing a long game; the money has been invested, and the profits will follow. As they enter a very uncertain few years, they are the envy of many club owners. They are in a good position to make huge progress in the upcoming seasons if they can find the proper blend on the pitch, where they have seen some green shoots this season. They won’t have to worry about having to comply with laws that are making almost everyone else nervous.


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