Why I don’t believe the financial records of Portsmouth and Tottenham

Today’s Sponsor: “Making the Arsenal”. A book utterly unlike any other book ever written about Arsenal FC. If you have ever wanted to know what it is that is so utterly incomprehensibly special and different from every other club, this book will go some way to explain that.


I am going to start by stressing that this article is based on a set of questions, not a set of answers.  It contains personal opinion not a wholesale accusation of things that are untoward.  I am quite happy to be told, as a result of this article, that I have got all my financial knowledge wrong, and that there is nothing amiss with the financial reports coming out of the two semi-finalists who play today (Sunday 11th April – the eve of World Cosmonaut Day in case you are interested).

The story presented by each of the two clubs is the opposite in terms of financial wherewithal, but neither make any sense.

The Tiny Totts claim to be making lots and lots of profit, despite all their transfers.  In fact they are so good at running the story that they are making a profit that even newspapers like the Guardian which does finances better than most, recently used the story of Tottenham’s financial magnificenceas a way of bashing Liverpool.  Look, they say, Tottenham can make money and buy players why can’t the Insolvency do the same?

But that story was so eccentric in its reporting that several people (and it wasn’t just me using different names) wrote in to say that this was crazy.  The paper doesn’t seem to have replied.  I wonder if they know what’s going on, but can’t say, or if they haven’t realised that something is very odd.

The fact is that for years Tottenyham (which actually was a typo but I’ve left it in because it amused me) have been spending money on players – it is not just an Arry thing.

So when the Tinies financial statements suggest that they buy all these players and then make a mega profit on transfers people begin to wonder.

According to Transfer Market web site the Totts comings and goings for just 2009/10 alone were

Transfer revenue: £26.820.000

Transfer expenditures: £36.270.000

Loss: £9.450.000

In fact over the past three seasons they have spent an amazing £130 million more than they have received and yet they still made a profit!  And that takes into account the profit they made on Berbatov.   In other words, Arry has done his usual, as he did at Portsmouth, and the debts are there to prove the point (£55m net loss last season alone).

And still they declare profits all the time.

So how do they do this? I have no idea.  I have looked at the figures – and as I have admitted before I am not an accountant, and I don’t work in accounts.  In the real world I employ accountants who present me with figures for my company and then patiently answer my questions when I try and work out what they mean and what my company should do about these figures.  If I were running Tottenham, the meeting, I fear, would be a long one.

How can they make all this profit when they are wasting a fortune year after year after year on transfers?  That is my simple question.

(Incidentally, and to pause before we go on to Portsmouth, Arsenal’s record for the season is

Transfer revenue: £42.930.000

Transfer expenditures: £9.000.000

Profit £33.930.000)

The year before we lost £14m, and in 2007.8 we made £16.5m so roughly over the 3 year period we made around £36m.

Now on to Portsmouth. This season they have made £34.8m on transfers.   Last season they made a profit £24.2m  and the season before that they lost £26.4m    So overall they are showing a three year profit of around £32m.  And yet they are utterly, totally bust in every meaning of the word.

Let’s summarise this:

  • Tottenham’s 3 year transfer record is a loss of £130m.
  • Arsenal’s transfer record is a profit of £36m.
  • Portsmouth’s transfer record is a profit of £32m.

And yet all the financial reports are that Portsmouth are so bust they have to pay off most of their staff, and that Tottenham are so flush with profits they are building a new training ground and hoping to build a new stadium.

What the hell is going on here?

The connecting factor between Portsmouth and Tottenham is the manager, and I insist, I make no accusations here.  He is due his day in court soon, as are two other Portsmouth people – Maderic and Storrie – and it would be wrong to spread rumour and gossip before the trials where the accuser is Revenue and Customs.  The issue is about the tax these people pay, not about what happens in the club they used to be at.

So what I am now doing is asking someone who is cleverer than I am to relate the Tottenham and Portsmouth accounts to these transfer figures and explain how Tottenham, who don’t have the benefit of a 60,000 stadium with maximised numbers of boxes and exec arrangements, who don’t have Champs League income, and who generally don’t finish high up the league and so don’t get Arsenal’s TV money – how do they make a profit, despite their buying and selling.

And while we are at it, although Portsmouth have a small ground with no facilities how do they get into this financial mess when their transfer dealings are under control?

I am open to suggestions.

Tony Attwood

The index of past articles is still running a few days old but there are some good pieces there if you flick back – but I am hoping early next week we can get that sorted without destroying the new layout!

Meanwhile on the Making the Arsenal site we have got to the moment 100 years ago when Arsenal themselves almost went bust.  It was down to the results in the last 3 games of the season.

30 Replies to “Why I don’t believe the financial records of Portsmouth and Tottenham”

  1. I believe that ‘Arry has a lot to answer for.

    This guy has been at 4 clubs that have financial issues, with 2 of them having gone into administration.

    Why isn’t Redknapp being hauled into the dock for career incompetence? The fella leaves debris wherever he goes.

    Once is a mistake, twice a coincidence, and three times it’s bang out of order.

    So long as Levy and his chronies hide their accounts in tax havens abroad, we’ll never know how the Spuds make the profits.

  2. ‘Arry is the worst thing that has ever happened to Tottenham. Give it a couple more years, and Arsenal fans will have even more reason to gloat.

    It’s sad because knowing his luck, I bet the next post he gets will be England manager. (Well, unless he gets convicted of tax evasion…oh wait…).

  3. Harry went into the press to defend his Pompey transfers this week claiming that he had no idea of what the players were earning. Ok, lets assume that that nonsense is true.

    The player he kept talking about was Diarra who was signed from Arsenal (£5.5m) and then sold to Real Madrid for £18.8m. What he MUST know (surely) is that Arsenal held a sell on clause of 50%, and that that clause was the only way Pompey could sign such a player. Arsenal accepted £9.9m for the Real Madrid transfer leaving Pompey with a profit of £4.5m on the player.

    Harry knows this. He is lying.

  4. Good Article (Again!!) I’m with Darius & Tim (and also Tony!) on this one I’d Actually like to know what exactly is going here, its surreal how no one else (the Media) wants to investigate further

  5. Some good questions that need answering. But will we ever hear the answers ? maybe when Arry leaves Tottenham ?

  6. Creative accounting at it’s very best.

    Spuds are helped by the likes of Lewis who has some very deep pockets.

    Failure to make the champions league this season, should put the cats amongst the pigeons.

  7. I have always said that Arry is a walking, talking farce; bad for business, terrible for football. What happened to Pompey is ugly and scandalous.
    But will the Tax man get his day…..?

  8. Apart from the reported ‘creative accounting’ profit who in UEFA will be checking balance sheets to make sure that clubs are actually living within their means and not just reporting that this is so. If ‘They who shall not be Named’ make it into an UEFA competition that is?

  9. The Spurs position is explained in part by the way accounting standards work.

    On selling a player, the amount received goes straight to the profit and loss account – in their last set of accounts they received £72m, which gave them a profit of £56.5m on the players sold.

    For purchases, they set up an intangible asset, which means the cost goes to the profit and loss account over the length of the contract signed. Thus, they signed players for £119.3m, but this just gave them a charge of £37.3m in the year, the remainder carried forward to charge against future years’ profits.

    Hence, in cash terms they made a loss, but in accountancy terms, they made a profit. However, it does store up costs in the accounts for the future.

  10. Transfers are only part of the story, salaries are the reason why Tottenham can spend lavishly in transfers and still stay profitable. They pay very little in salaries. It’s why they lose good players.

    Arsenal have the 3rd or 4th highest payroll in the league but we also have a 60,000 seat arena. We also have European football and are a top television draw which boosts our income by +£40m a year. Basically we sink all of our money into payroll and transfers are paid for by selling players out.

    Tottenham have a much smaller arena and a much smaller payroll (less than half of Arsenal’s) they still make a lot of money but instead of keeping players with good salaries, they prospect for players with transfers.

    In the FA Cup winning season, Pompey had an annual salary of £60m and a 20,000 seat arena with some of the lowest ticket prices in the league. So, yeah, when Harry says they made £60m in transfers he’s right, but over his tenure they were paying through the nose in salaries and that’s how he bankrupted that club.

    Just like he did the others he mis-managed…


  11. Amazing cup semi-final, Portsmouth scoring in extra time, then Crouch having his goal disallowed for reasons that were not exactly clear. 17 minutes left and I would not be surprised if the Tinies get one, but with luck they will be fairly tired by wednesday.

    The Wembley pitch looks pretty poor as well.

    1-0 to Portsmouth at half time in extra time. There must be half a million Arsenal fans watching this desperately wanting Portsmouth wanting to hold on

  12. tots are out, amazing amazing amazing…..i think it must be the first time a team in administration is in fa cup final…just amazing….

  13. I just do not believe it: Man U held to a goalless draw, and the Tinies knocked out of the cup by Portsmouth 2-0/

    What state will they be in on Wednesday

  14. Well, from a neutral point of view Spurs have been screwed. Legal goal disallowed, wrong penalty decision… but I am an Arsenal supporter so I am just going to gloat and laugh at good ‘ol Arry!

  15. i m not just happy for arsenal but also for avram grant who was NOT BIG ENOUGH TO MANAGE CHARITY FC….and of course kudos to spirit of pompey…

    if their is any blues left after barca drubbing in arsenal dressing room, just take a look at the pompey’s spirit…and get INSPIRED……..

    TITLE TO PLAY FOR – come on gunners…

  16. What ever we think of Portsmouth and the mess they are in one has to acknowledge that they (the players) are fighting with all that is left in them.
    Now I really hope that Avram Grant winns the FA cup. He started at Portsmouth when they were in deep trouble and he got them so far. One can only take off your head and make a bow for him.

    Damned I should have put my TV on but after the goalles draw of Utd I was thinking that 2 good results would be to much.

  17. Crazy day!!!! I just got back home and what do I see?? Fantastic. Now what state of mind will Spurs be in this week? The other HUGE match this week is Wigan-Portsmouth on Wednesday. We play Wigan next week and if they win on Wednesday then they are probably safe from the drop, so our match at Wigan becomes easier.

    I saw rumours that Bassong and Palacios might miss the match. Anyone know if there is truth to this?

  18. Well, Palacios has triggered the two game ban attached to amassing 10 yellow cards in domestic matches. So we wont be seeing him on wednesday. Great news! I am not sure about Bassong.

  19. On Tottenham’s finances; Having lost the chance to win the FA cup, fast losing that hold on the brass ring called the 4th place Champs League spot, will levy have to do a mjor clear out over the summer to balance the books?

    From reading the Spurs blogs, one can sense that the distrust of Harry is lurking very close to the surface and they too are fearing that they like Pompey will eventually go bust. As long as the going wass good they were willing to go along for the ride. But don’t be surprised if they turn on him overnight.

    Arsenal this Wednesday, then he is going to court later in the week, no? One loss already, two to go. This a very big week Harry Houdini.

  20. Richardr above has perfectly explained the way that the accounting treatment of purchased players is not fully reflected in that year’s profit and loss account.

    As he says, this can be better seen in the cash flow statement, which has been consistently negative at Tottenham. For example, in the year to 30 June 2009, when the media loudly proclaimed Spurs’ record profits of £33.4m, the cash outflow was £15.7m. Of course, as time goes by, amortisation from Redknapp’s transfer spend increases, thus reducing the reported profits. And this is indeed what is happening at Spurs.

    In fact, they reported a loss of £6.1m in their last interim accounts (six months up to 31 December 2009), though you would be forgiven for overlooking this, as their press release suddenly switched to highlighting the “profit from operations before football trading and amortisation”, which was “consistent with the same period last year at £4.9m”, instead of the overall loss. It’s almost as if they want to emphasise the good news, while glossing over the bad news …

    I think that many of the questions you have will be answered in my comprehensive analysis of Spurs’ financial results at http://bleacherreport.com/articles/371461-are-tottenhams-results-too-good-to-be-true

  21. What i had heard a few months back when the scum reports were released, was (i dont if this is true) that they were estimating players values, and this was the main reason for their recent financial profits, though nobody can make heads or tails of the situation. But that is whay i have heard, their estimating their players values and that is how they keep turnin a profit (again i dont know how they are doing it). Fantastic read up, i always read all the storys from you guys, i always wait for a new story. Keep up the good work. C’mon you gunners!!!!

  22. Oh by the way, someone should really take note of Rednapp’s spending during his time at Pompey using that site as well.

  23. Shifty,

    I’m afraid that’s not correct.

    Costs associated with buying players are capitalised as intangible fixed assets and written-off over the length of the contract. As an example, if Carlos Kickaball is bought for £12m on a 4 year contract, it has no immediate impact on the profits, but the value is written-off over the length of the contract, i.e. £3m costs are booked to the accounts in each of the next 4 years. The accounting assumption is that the player would have no value after his contract expires, as he could then leave on a “free”.

    If Carlos were then sold after 3 years for £16m, the accounts would show a profit of £13m, which is equal to the sales proceeds of £16m less the remaining value in the accounts of £3m (the original cost of £12m less £9m – 3 years amortisation x £3m).

    The only revaluation that a club is allowed to do in the accounts is for impairment, i.e. downwards, if it is considered that a player’s value has reduced – for example, if a player has been permanently excluded from the squad.

    That’s probably more accounting than anyone requires on a Monday morning, but hope that explanation helps.

  24. Oh, I used the site that Tony linked and compiled Harry Rednapp, the future England manager’s amazing transfer record at Portsmouth (he needs to be a national manager or else he’ll destroy clubs, but lets hope he destroys Tottenham first eh?), with numbers rounded to 2 significant figures. Don’t forget about the players’ wages too which are omitted from such figures; Campbell is still being owed money from Pompey apparently…
    02-03 Season: -1.49 million pounds
    03-04: -6.14m
    04-05: +0.16m (He was at Southampton that season)
    05-06: -5.92m
    06-07: -7.07m
    07-08: -26.42m
    Then after his trail of devastation, Pompey had to sell…
    08-09: +24.26m
    09-10: +34.9m
    And they’re still in debt? Oh and what about the Tottenyham? I don’t wanna write it down, here’s the link to the pure red financial records in the transfer market.
    It’s just amazing how they spend so much and they’re not in administration… Unless Daniel Levy has spare cash like Abramovich.

    Just a point for those who don’t wanna click that link.. Since the turn of the millenia (I gave up calculating beyond that), their net transfer spending has been a whopping negative 270million pounds. Sounds like Liverpool’s debt size.

  25. Never have I read a blog and found so many informative and well written articles.

    Tony and Walter – I salute you both for providing such quality on a daily basis. Keep up the good work.

  26. Cheers swiss rambler, makes sense glad i am not an accountant not excatly my strong point. Thanks for the clear up, i heard it from somewhere i didnt know if it was true about the player valuations. But alteast now i know for sure it aint true.

  27. Good one- have often wondered about this myself – Spurs always seem to be spending like money is no object- the amount they have spent alone on getting rid of managers in recent years must be substantial. How is their wage bill so much smaller than ours when they have a very strong bought squad including several England internationals-something does not seem right.

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