Football is big business these days, particularly at the top level, where multi-millions are generated from the three main sources available to clubs: commercial, broadcasting and matchday revenue. Matchday revenue includes gate receipts including season tickets and memberships. Broadcasting income includes revenue from domestic and international competitions. Commercial revenue incorporates sponsorships and merchandising. Income through the gate is a football club’s most controllable revenue stream.
Deloitte, the business consultants, has been collecting data on football clubs’ wealth for many years. It has just published its 14th Football Money League. As well as indicating how clubs can afford to pay £50m to secure the services of a top striker, it also underlines why two clubs fought to win approval to become the preferred anchor tenant at the Olympic Stadium in east London.
Tottenham Hotspur FC are constrained in their matchday revenue stream. With a capacity of only 36,240, Spurs’ stadium at White Hart Lane offers limited scope to boost income from this source. Even so, the club has risen three places to 12th in the Money League, thanks to increased commercial and broadcasting revenue. Spurs’ income per home game, however, at £1.5m is £2m lower than that of Arsenal, its local rival. Tottenham’s total matchday revenue last season was ‘only’ £36.8m.
By contrast, Arsenal FC are in 3rd place in the Money League on this measure alone, falling to 5th place when all sources of income are considered. Moving to the Emirates Stadium in 2006/07, with its 60,000 capacity, dramatically increased the club’s earning power. Last season’s revenues were almost 70% higher than five years ago, with total matchday revenue at £93.9m.
This is a frustration for Spurs who feel they are poised to become a big hitter in European football. Hence their two-pronged attack on raising their profile and income by having a bigger home ground. The first option was to move to the Olympic Park. The Olympic site is, of course, designed for track and field athletics in the main. Many feel that this makes it unsuitable as a football stadium, due to the large running track that hugs the perimeter of the grassed surface. Spurs’ answer to this was to knock it down and build a new one.
To many observers this sounded like a huge waste of resources and money. Why bother, many asked, going to the trouble of bidding for the 2012 Olympics, if its centrepiece is to be demolished straight after the Games? And what about the legacy the Games were meant to leave for the community and future generations? Tottenham’s plans tried to overcome this objection by pledging to redevelop Crystal Palace athletics stadium as the home of British track and field for years to come. Many of those involved in the 2012 bidding process said Britain would be seen as betraying its promises if it gave up on its legacy plans for the Olympic Stadium.
The decision of the Olympic Park Legacy Company to favour West Ham FC’s bid to become the anchor tenant has brought Spurs’ first option to an end, it seems. Their second option is the Northumberland Development Project, which involves replacing White Hart Lane with a 56,250 capacity stadium alongside the club’s former home, incorporating 200 homes, a hotel and public square. Planning permission for the project was given last September. Many football observers believe that one of the main purposes of Spurs’ first option was to bring pressure to bear on Haringey Council to approve the project plans in option two.
Which brings us to West Ham FC: the club says it will spend £95m to convert the Olympic Stadium from an 80,000-seat athletics venue to a 60,000-seat venue for football, athletics and cricket. The club will get £35m of that sum from the Olympic Delivery Authority. They will also receive a £40m loan arranged by Newham Council. The remainder will come from the sale of the club’s current home, Upton Park. But, importantly, the running track will be preserved, meaning that West Ham fans will have to watch their club’s home game from considerably further away than most football fans. Warnings have come from former athletes, architects acting for Spurs, and of course Tottenham themselves, not to allow West Ham to renege on its promises regarding the running track.
But we have not yet reached the end of this story. Legal challenges could still be made to halt the stadium tenancy proposal. One less reported problem could involve Leyton Orient FC. As this story makes clear, Premier League rules prevent clubs relocating to an area which would adversely affect another club’s interests. The Olympic Park is around two miles from Leyton Orient’s Brisbane Road ground. Barry Hearn, the club’s chairman, is thought highly likely to fight West Ham’s plans. Plenty of legs left in this one, then!