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In defense of ENIC: a businessman's perspective on Tottenham Hotspur

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Tottenham Hotspur's ownership is constantly criticized for being overly secretive and opaque about club financial business, but the perception doesn't match the reality.

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Editor's note: Sometimes we at Cartilage Free Captain receive articles from outside our community that provide a different perspective from those of the writing staff and that we are happy to share. This is one of those times. SamZ is a London-born businessman currently living in the United States, and a life-long Spurs fan. His perspective is unique to anything that we can provide from the masthead.

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By no means do I think Daniel Levy and ENIC's record at Spurs is without fault. There are plenty of missteps and misgivings for us all to analyze and debate for days on end, without question. But even with plenty to debate regarding ENIC's reign, Tottenham Hotspur's ownership deserves to be cut some slack with regards to how the club is run financially.

This isn't the most popular view among supporters, I understand, but I believe I can offer a unique perspective on the matter. I am a 44 year old, London born and bred Spurs fan living in the States. Like most, I live for the romance and drama supporting Tottenham Hotspur invariably offers. Why else would I wake up at 5:30am on a Saturday match day like its Christmas morning?

However, I also possess more than 20 years of investment banking experience, which gives me an understanding of how business, banking and global capital markets function. While I may moan about the things I don't like about our team's structure, performances, transfer dealings and so forth; one thing is clear, whether or not you want to admit it: football is business. The sooner that we accept this then the sooner we can attempt to understand where Spurs are going, and perhaps also appreciate that in reality the club is run better than most.

Football is business.

Much has been written and said about the club's handling of the stadium development project at THFC and the openness (or otherwise) with which ENIC has conducted its business and informed the general public of developments. Few ENIC initiatives have come under as much scrutiny as our new stadium, and rightly so: the stadium & Northumberland Development Project (NDP) offer transformational change for both Tottenham Hotspur and the community surrounding White Hart Lane.

It may surprise you then how open the club has actually been about it. For those that believe the club has done a poor job of informing supporters of the stadium project, just visit the club's website where you will easily find the following:

  • Project update
  • New stadium details
  • Scheme details
  • Travel connection details
  • Key benefits
  • Photos
  • A section for feedback
  • FAQs

A club wanting to be secretive and share as little as possible would hardly present such information so openly and clearly. To claim or imply that nothing concrete has been disclosed to supporters is simply not true.

The most recent stadium plan is very similar in both scope and design to what was released in earlier announcements. The most notable exception was the design accommodations for NFL games, and the negotiation of this deal clearly prevented the club from making additional announcements until it was complete.

I've heard many complain about the lack of transparency regarding financial information. This mystifies me. The club's audited historical financial records have been published on the website for years for public perusal. The financials are a matter of public record even though the club is technically a private company. In addition to financials, information regarding the club's board and agent fees paid is also freely available online.

Naming rights are also a potential significant source of revenue for the club. Details regarding naming rights have never been released, neither publicly nor in a forced private matter, such as a result of the Archway Steel CPO proceedings. Furthermore, naming rights have not been agreed upon, and the only mention of it has been as a formative part of the stadium financing package, the same package in which ENIC announced its plan to fund the entire project internally without an impact on transfer window dealings.

Tottenham has hired Rothschild as its advisor with the goal to find the most efficient and sensible way to finance the stadium project. Without question ENIC will want to accomplish this task with as little equity infusion as possible.  This is purely my personal opinion, but supporters should get ready for the club to borrow money. But don't fret – banks will line up in droves to fund the project as the stadium will more than likely be used as collateral in structured financing (CMBS – collateralized mortgage backed securitization), senior secured bank financing, or other financing strategy. A large, brand new football ground in London offering multi-purpose functionality is an attractive asset to finance. The club itself will not be hocked, you can be assured in this regard.

Whatever the feeling towards the ownership, Tottenham Hotspur Football Club is run successfully – certainly more so than before ENIC took over. And when you run a successful business, you invariably attract interest from potential suitors. In September of last year, Levy got a knock on his door from Johnny Goldstein, the European Head of Cain Hoy, a private equity firm recently established by former executives from Guggenheim Partners. Goldstein is no stranger to Levy, nor Spurs: he is a long-time supporter and is well known in London finance circles. Cain Hoy never made any grand claims other than stating its interest in potentially making a cash offer for the club.

Fielding calls and having discussions with potential suitors is just part of the business of running a club. Cain Hoy was serious and wished to conduct due diligence which required a formal filing and subsequent public announcement. ENIC had to comply (more than likely happily), but throughout the process openly announced that the club was not for sale.

Cain Hoy backed away from the diligence process weeks before the deadline. Why? Because the club was never for sale. Frankly if it were for sale, structuring a deal at a crazy valuation (say $1bln+) would be very hard for a private equity firm to put together. I hope to write about private equity ownership and other potential owners in subsequent articles.

It may surprise you how open the club has actually been.

Some supporters have expressed disdain for the recent NFL agreement made with Spurs to play 20 games at the new stadium over the next 10 years. At the very least, many fans are understandably concerned that the "fabric of the club" will be destroyed by such a commercial venture. While I share the same concern with any business venture involving Tottenham, from a pure grass roots perspective, it is important to understand the economic impact of this deal on the historically disenfranchised area surrounding the football ground.

I encourage everyone to read up on the Northumberland Development Project. N17 is going to become a tourist destination and the level of investment into the neighborhood is extraordinary. I understand regeneration is not a perfect process, but what other ways can you make such a huge economic impact to the area? Infrastructure, jobs, entertainment, residential improvements, etc. are all critical components of the regeneration. How else can critical community needs be more dynamically affected in one fell swoop?

I am not a reporter, far from it, but there are few road blocks to get solid, accurate information regarding the stadium project and our club's financial situation and as already mentioned ENIC does a pretty good job of informing supporters. For the most part, when the club is withholding information such as stadium updates or naming rights there are typically business reasons for doing so.

Supporter distrust of ownership is an element present in countless professional sports franchises around the world. Distrust is present in all forms of life. It's natural, understandable and, dare I say it, important to have a level of distrust for any authority. Keep the bastards honest, right?

I recognize the potential evils of capitalism and greed. I understand the cynical, distrustful nature of supporters as it relates to ownership. We must never just accept the party line and be doubtful of what we are fed, but in this day and age of information and transparency it's not terribly difficult to get access to quality information.

If you really do the work, I believe you may find that ENIC is not so evil after all.

Thanks to SamZ for the article and unique perspective. Follow him on twitter at @ztranche.