Why Tottenham may need to make key transfers despite clever PSR plan

Tottenham Hotspur don’t have any concerns when it comes to the Premier League’s profit and sustainability rules (PSR) this summer, but they still will likely have to sell players to recruit.

Spurs, who despite a dismal domestic season under head coach Ange Postecoglou, with the 5-1 loss to Premier League champions Liverpool keeping them 16th but with the very real chance of finishing the campaign one spot above the drop zone, can still make next season’s UEFA Champions League if they win the Europa League this season.

Spurs face a two-legged semi-final with Norwegian side FK Bodø/Glimt, with the prize on offer for the victors, and then the winners overall, being a spot in European club football’s most lucrative knockout club competition.

Success would be a major boon for Spurs and would allow them to invest more than they otherwise would this coming summer thanks to the guaranteed sums that will come their way thanks to the expanded and revamped competition. Aston Villa, for example, with all things taken into account such as participation fees, prize money and additional matchday revenue, bagged some £90m this season.

But for all the good that could do, know they will have to make some plans for a season without those kind of funds, with two different kinds of shortlist likely drawn up when it comes to transfers.

But why, when the club are one of the Premier League sides with the most PSR headroom, which is around £200m, do they face the prospect of a transfer policy of having to offload before recruiting this summer?

READ MORE:

READ MORE:

Much of Spurs’ transfer debt has been on credit in recent years, and as of the 2023/24 accounts, published last month, the transfer payables, which is the money the club owes to other clubs still for transfer fees, stood at £337m, an increase of around £250m from the £88m it stood at back in 2019, the year they moved into their new Tottenham Hotspur Stadium home. Sitting behind only Chelsea’s £479m, Spurs’ transfer debt is the second largest in the Premier League.

In terms of what is coming the other way, Spurs are owed £58m in transfer receivables from clubs, meaning that there is a £279m difference between the two, and that is not insignificant.

Given the way that PSR looks at allowable losses of £105m with permitted deductions for investment into infrastructure, the women’s team, the academy and community initiatives, Spurs’ heavy debt, much of it attributable to the new stadium, means that they are still in a good PSR spot, especially given their significant commercial and matchday revenue, and the low wages to revenue ratio that they have.

But cash in the bank as of March 31, 2024, stood at £79m, down from £198m the previous financial year. Spurs have been eating into the cash reserve in the past 18 months, and with the potential of another lean year if they miss out on the Champions League through failure to win the Europa League, that could have to continue.

Owners, ENIC, have not regularly pumped in cash. In fact, , only £122.1m has arrived in owner funding since they acquired the club in 2001, the majority coming from a £97.5m share issue in May of 2022. If they don’t step in to bridge the gap then sales will be likely if the plan is to refresh the team.

That is because, like all football clubs, Spurs are a business, and businesses have to be cashflowed. With such heavy transfer debt, even with the £79m being the second highest cash balance in the bank among Premier League clubs, Spurs have a large amount of transfer payables to meet in the coming seasons, with instalments due to various clubs at different stages of the calendar year.

Rather than continuing to add to that transfer debt, and especially given the low amount of transfer receivables due in comparison, focusing on moving on some high-earning players that still carry healthy market value will be impactful.

The club can spend, but with transfer debt hanging over them, they won’t want to increase that yet again without starting to recoup more in the other direction. If that trend were to continue, and with the very real threat of some time away from European football if they don’t succeed in the Europa League this season, that would start to challenge chairman Daniel Levy’s assertions that the club are operating on a sustainable level.

There will also be the not-so-insignificant matter of who will be the head coach come the start of next season, and whether or not severance pay will be required.