English Premier League football club Tottenham Hotspur has agreed a refinancing package for the £637m (€722m/$792.7m) in loans taken out to support the development of its new stadium, with the move set to address concerns that paying off the debt would overly impact its other business areas.
Tottenham borrowed £637m from Bank of America Merrill Lynch, Goldman Sachs and HSBC to help develop its £1bn stadium, which having initially been scheduled to open in September 2018 staged its first Premier League game in April.
The bank facility was due to be paid back by April 2022, potentially creating a significant financial issue for the North London club. However, Tottenham has now completed a private placement in the US, converting £525m of its debt into bonds, with staggered maturities of between 15 and 30 years.
A first-time issuer in the US Private Placement market, the club said its strong profile globally realised extensive support and oversubscription from a range of leading Private Placement investors actively supporting the sports sector. The average maturity of the total debt package of £637m is now 23 years and the interest rate, including the new bank facilities, is 2.66 per cent.
The proceeds from the issue will be used to repay the short-term bank debt which was raised during the construction phase of the stadium from Bank of America Merrill Lynch, Goldman Sachs and HSBC.
“We have continued to develop Tottenham Hotspur in line with prudent financial management and investment into the club’s key infrastructure and our fast-growing global brand, successfully matching long-term assets with long-term financing,” Tottenham chairman Daniel Levy said in a statement.
“It is a tribute to the team on and off the pitch that we have achieved what is considered to be one of the most attractive financing deals in the world of sport. Our club is extremely well positioned as we move forward delivering the excitement and entertainment of Premier League and Champions League football, NFL, rugby, concerts and much more.”
In April, Tottenham reported record profits, breaking the mark for world football set by Liverpool in February. In its financial results for the year ending June 30, 2018, the club reported an after tax profit of £113m, up from £36.2m for the previous year. Profit before interest and taxation stood at £157.1m, up from £72.9m.
Spurs also reported record revenues of £380.7m, an increase of £71m over the previous 12 months. This included significant increases in gate receipts, £42.6m over £19m, as the club profited from its temporary stay at Wembley Stadium, pulling in average attendances of 68,500 for the financial year.
In an interview with the Financial Times, Levy said the refinancing of the stadium debt, plus the ability of its new 62,062-seat home to generate revenue, would continue to grant Tottenham a strong position in the European football market.
However, he added: “I understand, as I am a fan, clearly you want to win on the pitch. But we have been trying to look at this slightly differently, in that we want to make sure we ensure an infrastructure here to stand the test of time.
“We could have easily spent more money on players. Who knows if that would have bought us more success or not… the right approach is to build from the bottom up. There is no quick fix to becoming a much more significant global club.”