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N17 or Olympic Stadium? Show Me The Money!

white hart lane

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.

6 Comments

6 Comments

  1. mummy

    December 3, 2010 at 9:35 am

    …north london ! lalala…we might seek stadium sponsor over 25 yrs up to £300 million ? futuristic fantastic, alot more from haringey & government a contribution ? like wembely & emirates assistance …ICC inter city casuals.

  2. davspurs

    December 3, 2010 at 9:54 am

    This is a very good argument but one i don’t agree with ,we cant move away from our history and roots just so we can spend money on players. The Tottenham stadium will leave a legacy but players only leave leave History and memories. I could move from my house and have about 50,,000 in the bank but the problem is i would not be happy and the same scenario would happen to our fans . I dont live in Tottenham and live four hours away but i believe a team belongs surrounded by the spirits of its past. We could save money on players by seeing who can become the next Lennon or Bale with our last under 18 Team. Bostock Caulker Townsend Parrett Rose Walker Obika Mpoku Livermoore Kane . This is far more rewarding than doing a City just look at Lennon Huddlestone Bale Dawson we have watched them grow with every year work out what we paid and it would come to less than paid for David Bentley this is my case for staying where we belong Tottenham.

  3. RobbieSpursN17

    December 3, 2010 at 10:18 am

    well said Davespurs, i totally agree with you, we belong in Tottenham no matter wot. COYS

  4. John White

    December 3, 2010 at 10:46 am

    The point is not that if we can get something £150 million cheaper, we will have £150 million to spend. That is an argument only the mentally deficient would propose. I have not heard this argument put other than by those who want to argue against it.
    The real argument for moving to what is now the Olympic Stadium is that we would get a stadium equally as good, to our own design, and possibly even better than the current project at Northumberland Park, with world class travel facilities, against the chaos at WHL even before expansion, and all this for up to £150 million less, with a financial partner already in place.
    Unless the cost of a new ground is funded by share capital, which I’d suggest is unlikely, then it will be funded by debt (after funds from property sales and seat debentures), a concept the dangers of which we are all gradually becoming more familiar with, in a personal, national, and indeed football sense.
    My wish for Tottenham Hotspur is that it continues to be increasingly successful, and does so while remaining solvent. A £450 million millstone around the Club’s neck will not help that for some considerable time, possibly even a generation.
    Other things being equal I’d prefer to stay at WHL, but other things are not equal. Tottenham Hotspur is about its history and its traditions and its football culture, much less about place. The stadium and surrounding areas have changed beyond all recognition in the last 50 years. It is not the same place it was when I started supporting Spurs in 1955, by any stretch of the imagination.
    Some of you need to sort out your priorities.
    And in any event West Ham may beat us to it.

  5. SG

    December 3, 2010 at 11:59 am

    I’m sorry but it is that type of logic that has caused so many problems in this country. The attitude that adding money to the debt is fine because its not real money is completely flawed. It all has to be repaid in time and an additional £150m is a huge difference. If the loan is to be repaid over 25 years then it means paying an ADDITIONAL £6m a year on capital repayments alone, let alone the interest plus the remainder (and probably larger part) of the loan. Of course it will have a huge impact on our transfer budget as we cannot sustain that level of debt whilst maintaining our current transfer budget.

    Yes we would all like to stay in Tottenham, but personally I would rather move 5 miles down the road and have a stadium with superb infrastructure that doesn’t financially cripple the club as opposed to remaining in Tottenham but being unable to compete with the rest of the Premier League

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