N17 or Olympic Stadium? Show Me The Money!
The spin and politics involved in the Tottenham stadium decision is becoming clearer to many people now, there are MPs, councils, press secretaries, communication directors, protest groups all trying to get their messages out, but there is one I will look at briefly now, which is the statement being bandied around that “As the Olympic Stadium would be £150 million cheaper, that means the club has £150 million to invest in the team”. It is economic logic like that worldwide that has lead to some of the conditions most of us are feeling at the moment, but lets not go there – instead have a look at that sentence in a bit more detail.
Firstly, and I don’t know where it originated from in that form, there have been a number of vague statements from the club about increasing costs and why Stratford would be cheaper, but somewhere somebody has added the second bit on about the funds therefore being available for players. It certainly hasn’t come from the club in an official statement, but they are doing nothing to quell the rumour, after all it makes everyone feel good doesn’t it – team doing well, world class players, and apparently enough money to buy whoever we want (if we move to the OS).
Now, to move on to the bones here – £150 million less on the ground, whichever ground it is, does not impact on the budget for players in anything like an equal amount, despite what various spinning of figures are used. As a club we are going to get a new ground, and it will be in N17 or at the Olympic site, and this will be paid for by a mix of government money, bond issues, bank finance, ENIC money and a multitude of other investors. The vast majority of this money, plus interest, will be paid back over terms varying from a year to probably ten or twenty year loans – not in the way that the Glazers have done to Man Utd (we hope) but in a structured way, the bottom line is that it will be paid back.
There is a very easy way of looking at this, think of it like a mortgage on your house, or a car loan. If you want to buy a house for £200,000 you will put a deposit down and borrow the rest from the bank. Say you put down £20,000, you now owe £180,000 over 25 years, and for those of us with or looking to get mortgages never look at the total amount repayable, it is terrifying! But, your wife decides on a different house in Scotland that only costs £100,000. Same scenario, you put down a £20,000 deposit and now owe the bank £80,000 over 25 years. A lower monthly payment is obviously part of the deal as you owe the bank a lot less money.
Using the logic from the statement “As the Olympic Stadium would be £150 million cheaper, that means the club has £150 million to invest in the team” by buying the house in Scotland you have £100,000 to spend on cars and holidays. Can you see that money anywhere? No, because it doesn’t exist, you never had it and never borrowed it.
You will be better off a little each month, and if you save the difference (plus interest to account for inflation) in 25 years you will have £100,000 to spend on whatever you like. The crucial point is that you do not have £100,000 to spend at the start of the time period, or at any time during it.
Where the money will come from is not really for discussion here, as long as the debt is not shifted on to the club like the various Americans have done up the North of the country, the main thing to remember is that the club does not have the money laying around to build either stadium, it will be financed, and the massive figures that are spoken of are not as related to the budget for the squad as some may have you believe.
Submitted by THFC1882.
/ 7 hours ago
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