Matthew Collecott - Tottenham Hotspur
Thursday, 4th October 2007 by Christian Doherty
Ok, they're not in Europe (yet) but in the stormy world of premiership finances, Tottenham Hotspur is, relatively speaking, a rock of stability. FD Matthew Collecott shows us how to keep a club in the black.
Football is a lousy business. Unless you’re a global super-brand like Manchester United, you can’t really make any money. OK, so not every club has to implode financially like Leeds United. But at the majority of clubs, egotistical chairmen, yearning fans and overpaid players leave precious little room for an FD to eke out solid profitability.
Unless you’re at Tottenham Hotspur, of course. The big names are still around – former chairman Alan Sugar retains a sizeable equity slice. The fans are no less demanding. And the club operates in the same labour market as Arsenal, Liverpool and Real Madrid. But Spurs has consistently delivered reassuringly positive results over the past few years and remains a model Premiership club – at least in business terms.
Mind you, one might have expected FD Matthew Collecott to be under a bit of a cloud on the day I went to visit him. After all, Tottenham had been knocked out of the FA Cup at Newcastle the day before (on the back of some questionable refereeing decisions, it must be said). But he is surprisingly upbeat. After all, he’d only budgeted for the two cup games this season, so he’s already exceeded the forecast.
10AM Collecott’s been in since 9am and he’s already chaired a staff meeting. When I arrive, he is assessing the impact of Spurs’ exit from the cup. As a fan (“I was born in Bishop’s Stortford, so it’s my local club”), he’s disappointed. And it’s not great news as an FD either.
The cup exit means Tottenham will miss out on about £600,000 in gate receipts and likely TV coverage. Collecott takes it in his stride, however. “From about this point in the season [mid-March], we’re pretty much focused on next season,” he says.
For the team manager, that means scouting likely transfer targets for the summer. For the FD, it’s getting started on training pitches and a new academy as well as improvements to White Hart Lane, the club’s North London ground. Collecott and stadium manager John Babbs arrange to tour the stadium at the end of the day to assess necessary work.
10.30AM The FD takes a call about the forthcoming interims announcement. While Tottenham is a listed club, his investor relations role is relatively small. And IR, for Collecott, would necessarily involve self-reflection – he’s an executive director of ENIC, the club’s largest shareholder. “[After ENIC], there’s Alan Sugar and about three other large shareholders,” says Collecott. “The institutional shareholders are pretty minor and we have about 20,000 individuals, most of whom own one share. We’re pretty close to the institutions.” Still, the interims will be of interest to the City, the press, and of course, the fans – so the messages will have to be spot on.
10.50AM We head down through the bowels of the stadium to the ticket office. The FD is meeting ticketing manager Karen Murphy to talk through the finer points of the seating arrangements in the stadium. The club is currently running at around 99.6 per cent capacity for its home games. That’s one of the best figures in the Premiership – but it does present a classic FD’s dilemma. If you’ve reached capacity, where do you go from there?
“In terms of maximising the revenues from the stadium, it means we’ve got to have conferencing here and it means hospitality has got to work,” says Collecott. But it also means looking at what the customers will take in terms of pricing.
“Season ticket holders know the pressures we’re under,” he says. “There are areas where we have to raise prices because there’s excess demand. I know which parts of the ground will see an inflationary rise of maybe two or three per cent, which might work out at only £20 a ticket. But I know that £15 or £20 extra on 20,000 season tickets is near enough £400,000. So I have to keep driving it to get everything I can out of it.”
Raising ticket prices is a thorny subject, especially given that the FD is due to meet representatives of the Tottenham Hotspur Supporters’ Trust later on in the day. Everyone knows there’s a fine balance between keeping the club solvent, being able to pay the best players and keeping prices within reach of the fans. Plus, some areas of the ground are more popular than others and will bear higher prices. So changes to pricing will need to be handled sensitively and quickly – season ticket renewal forms go out in a few weeks’ time.
11.30AM Group financial controller Andrew Fearn stops into the FD’s office for a run-through of the figures. Fearn, an avid fan with near-perfect recall of Spurs’s history, handles most of the day-to-day finance issues, freeing Collecott up take a more operational and strategic role. “I was operationally involved from the start and all of the ops departments effectively report into me,” Collecott says. “We probaby do need another ops director here to help out.”
He and Fearn discuss the effect of losing out on the potential cup income. The finance department budgets for just two away games each season in the various cups – the worst-case scenario, assuming they get an away tie and lose in the first round in both domestic knock-out tournaments – so it’s not a disaster.
The 38 Premier League matches are a fixed revenue stream (more or less – at least you know you’re going to play Arsenal twice a season, come what may). But there’s also a split between fixed and variable costs to manage.
“I changed the whole budget process when I arrived here because we couldn’t get the right comparatives for each department,” says Collecott. “You’ve got a relatively fixed cost base – putting players aside, where there can be huge variations. I know what I’m going to spend on the stadium in the close-season, I know what it’s going to cost to do up a couple of lounges. And it’s the same with revenue because you know what the TV revenue is going to be, pretty much. You budget for 14th place, then you know where you’re going to be in terms of cash.”
Actually, TV income has been a bit less predictable this season. The FD and his financial controller discuss whether it’s worth lodging a protest with the Premier League over the number of live games in which Tottenham has featured. They feel, given their league position, that they’ve been short-changed. And given that being live on Sky Sports brings a bounty of around £300,000, it’s a significant issue.
12PM Mike Eldridge from HSBC is in to get an update from the FD on the interims. HSBC doesn’t bank many football clubs and you can tell Eldridge relishes the chance to get the low-down on what’s happening at White Hart Lane.
It helps that Spurs is one of the best-run clubs in the Premiership. Since ENIC bought a majority stake, Tottenham has been stabilised and streamlined. The biggest outgoing from the Spurs coffers is, of course, wages – player salaries account for 55 per cent of THFC’s £66.3m turnover.
But Spurs is leading the charge within the industry to keep this percentage as low as possible. While previous regimes have looked to spend millions buying established players, the strategy now is to buy young, preferably British players. The club’s top priority is opening its Academy, designed to get a production line of new players coming through.
There are drawbacks. “The problem with younger players is you don’t know whether they’re going to make it or not,” says Collecott. Then there’s the profit lag as older, pricier players are sold off. The club posted a £1.5m loss in 2003-04 when it traded away two of its more experienced players. But Tottenham expects that the temporary hit will clear the way for new blood, ensuring future profitability.
Collecott explains that the club has had to change its internal culture from demanding short-term success to planning three or four years down the line. “At quarterly board meetings we all sit down and [director of football] Frank Arnesen has two bits of paper,” Collecott says. “And he says, ‘This is my team now and this is the player behind him and this is the youngster I want to bring through. I know what he costs and what his salary is going to be’.” It’ll be interesting to see whether the novel concept of business planning will catch on at other clubs.
1PM We break for lunch in the Steve Perryman suite (named after Spurs’ longest serving player, non-fans). Talk turns to football’s general financial state and Collecott reckons there’s been an upturn in governance across the game. “No question, it’s getting better,” he says. “The guys I speak to at the Premier League Finance Directors Group are very clever. They need to be. We’re seeing more and more businesses now, like Aston Villa for example, that are really well-run and that generate cash. And we’re running it as part fans and part businessmen, which perhaps wasn’t always the case.”
So, no temptation to shoot for the moon in a Peter Ridsdale-style grand folly? The FD is pretty hard-nosed on the issue (and displays little sympathy for Leeds United’s demise). “There is a conflict between wanting to spend money on players and maintaining a solid business underneath,” he says. “This club’s main driver is EBITDA and cash generation is key. We know our commitments to the players, so it’s not that complicated a business in terms of finance. It’s only really the merit payments [£450,000 per place in the division] that can be a variable. So we budget prudently and hope to God we get European football.”
2PM Eldridge heads off and the FD returns to his desk. He checks a couple of emails, then we head over to meet the Supporters’ Trust. Collecott takes this once-a-year meeting to address the concerns of Tottenham’s core “customers”, the fans. These are the guys who travel 275 miles to Newcastle on a Sunday for a lunchtime kick-off, often to see their team lose – or, worse, manage a dreary 0-0.
The agenda covers every possible fan concern, from ticket prices to the office phone number. Collecott, Murphy from the ticket office and her deputy Tony Peck get stuck into the detail. This side of the FD’s remit is an interesting contrast with the need to deal with the banks. It’s street-level stuff. And on this performance, Collecott looks like a consummate communicator.
Managing expectations is a recurring issue for FDs, and Collecott’s got 20,000 season ticket holders to keep happy. (Spurs fans aren’t exactly known for their patience.) But after nearly two years as FD, he seems to have a reasonable handle on the supporters’ issues. “It’s a bit of a balancing act – they’d love for us to make it free entry and then go spend millions on players,” he says. “But the relationship with the Trust is really good now. It used to be diabolical – it was very them-and-us. Now it’s all about relationship-building.”
4.30PM Collecott takes a call about the club’s online ticketing venture. Spurs went into partnership with an internet-based ticketing provider and the FD now has to oversee the next stage of the contract. “They wanted to recoup some of their investment,” he says. “They get 25p for every ticket we sell online, up to the first 100,000 – which they said was part of their in-cost. Once it gets to the limit, then it goes free. We’re now at 93,000. I think they underestimated the number of people who would go online and buy a ticket. It’s been a good one for us, really!”
Then the FD heads into a meeting with Tottenham chair and fellow ENIC board member Daniel Levy. The two men have been working together for seven years. They collaberate particularly closely on the club’s relations with the Premier League. Levy has a reputation as a tough negotiator, essential in the ultra-competitive world of top-flight football. Collecott, for his part, works more closely with the competition – other Premiership club FDs.
“At the end of the day, we’re paying each other money all the time, so there’s a fair bit of contact,” Collecott says. “Players move around so it’s helpful to be able to pick up the phone and settle transfers quickly.” He gives me an example: Spurs buys a player from one club and he’s able to get the FD on the phone and say, “Look, you’re in trouble, we owe £1.5m for the transfer. I’ll pay you £1.2m tomorrow and we’ll say no more.” There’s nothing like talking turkey, FD to FD…
5.15PM Before the stadium tour, Collecott provides his signature to a notary to make his directorship of Slavia Prague official. Once that’s out of the way, it’s time to take a look at what’s going to be in the budget for renovations at White Hart Lane this summer. We collect stadium manager John Babbs and head off to inspect the executive boxes. The FD needs to concentrate on this area: the boxes make a big contribution to the bottom line. It’s easy to think of the stadium as a cash cow, but Collecott and Babbs need to make sure the place is kept up-to-date and looking smart.
“We had about £500,000 capex on improvements to the stadium last year,” he says. “Now we have to sit down and work out what we need to do this year and next. There are some major problems – one obvious concern is stand redevelopment. But we’re not doing that this season. Refurbish 30 executive boxes and you’re talking about £300,000 alone.”
Collecott’s earlier concern to maximise the revenue per seat gets clearer now. Major re- development of the ground is unlikely given the limitations of the surrounding property – and despite pressure from Arsenal’s ambitious new stadium development. (Apparently, a nearby property is owned by an Arsenal fan who’s unlikely to sell up to help Spurs expand its capacity!)
And Collecott? He’s showing no signs of leaving the club he loves. “I’m a fan but I’m not an obsessive,” he says. “I’m not sure about the future really, we’ll see what happens.” As I leave, Collecott’s still gazing around the ground he hopes will host some of Europe’s top teams in the near future. He’ll be there to watch – but he’ll have half an eye on that bottom line.
ENIC: Tottenham in Europe?
ENIC was an acquisitive player on the European football scene three or four years ago when it snapped up stakes in clubs across the continent. ENIC invested to varying degrees in Rangers, Vicenza Calcio, AEK Athens and Slavia Prague. It was on the brink of becoming the dominant club owner on the continent.
Until the authorities stepped in, that is. Given that virtually all the clubs were playing in UEFA competitions at one time or another, the potential for a conflict of interest was obvious. UEFA’s rules dictate that no two clubs with the same majority owners can play each other in its tournaments, so it meant a rethink for the FD.
“The conflict of interest was a big issue,” Collecott admits. “We went to arbitration on the whole issue of clubs playing each other in the same competition. Effectively we lost the battle so we had to divest from some of them.”
Since then, ENIC has sold its 20 per cent stake in Glasgow Rangers back to David Murray, as well as diluting its stakes in Vicenza and AEK Athens. Tottenham is now the jewel in the ENIC crown, the biggest club of the four and the one receiving the most investment. Slavia Prague offered the best synergies for the company, so ENIC has retained an executive role in the running of the club.
“I’m on the board of Slavia Prague, one of the top two clubs in the Czech Republic,” Collecott says. “There are better synergies there. For instance the reserve keeper here is Czerny, the Czech Republic’s number two keeper, and he came from Slavia Prague. And we’ve done some joint ventures with them on player sales and so on.” Collecott visits the Czech capital once a month to attend board meetings. But his key focus now is to get Spurs back among the European elite.
