It’s amazing how news of Harry Kane’s bumper new contract wiped previous rumblings from memory.
“There’s loadsamoney” quickly turned into “Where is all this money going to come from?”
Did Levy rob a bank?
Have we already agreed to sell half the squad to pay for Kane’s rise?
Has Uncle Joe finally realised how completely unfair it is of him to deny us fans his hard earned wealth?
I’m sorry to disappoint, but the truth is rather dull, simple maffs.
Well run football clubs try to maintain a wages to turnover ratio of around 50%. If a clubs revenue increases, this means the the wage bill can increase too.
That’s it. Rather simple, rather boring.
Tottenham Hotspur Football Club’s results for the financial year ending June 16 were as follows:
Total revenue £209.8mil
Total wages £100mil
This gave wages to revenue ratio of around 48%
The end of financial year June 17, and the most recent record shows the following results:
Total revenue £306.3mil
Total wages £126.9mil
This gave wages to revenue ratio of around 41.5%
As you can see, a massive increase in revenue, and a year on year increase in wages of £27 million, yet a DECREASE in wages to revenue ratio from 48% to 41.5%.
What this means in essence is that, if we were to maintain a wages to revenue ratio of 48%, as per the previous year, there is a surplus of available wages totalling around £20million.
Harry Kane’s new contract is worth an extra 5.2mil per year, so around a quarter of the surplus as explained above. Comfortably affordable, and plenty spare for other player/staff contract increases (such as the new contracts for Poch, Jesus and the gang).
But it doesn’t stop there……
The above results and calculations are based on financial year ending June 2017, and it’s now June 2018. Since then, we have played every home game at Wembley which will no doubt show a huge increase in matchday revenue, especially as the last year at WHL was with a reduced capacity. Then there’s the extra money earned for our exploits in the CL, compared to the previous year. Plus the new Nike deal, and no doubt other increases in commercial deals.
Our revenue increase from year ending June 16 to year ending June 17 was a whopping 46%. I wouldn’t be surprised if we see a similar increase when the next results are published, but lets be pessimistic (for a change) and suggest that our revenue only increased by 20%. This would mean the following:
Suggested revenue year ending June 18 £367.6mil
If we maintain a healthy 48% wages to revenue ratio, our wage bill would be around £176.4mil
That means an increase of £49.5mil in available wages.
Kane’s new contract £5.2mil.
It looks tight, but I reckon we can just about get away with it.