So, we’ve all got an opinion of Daniel Levy’s decision to furlough non-playing staff at Tottenham Hotspur, so I may as well vent mine.
First, I think we have to say that profits don’t amount to cash available. So the profit we made and what cash is available to pay players and non-playing staff and our other commitments, are two different things. Cash flow can be problematic in the short term and possibly long term, I think we need to understand that. So Levy has had to look at available cash and see what has to be paid.
Players as are contracted and he cannot break those contracts, and secondly, he cannot get Government help in their wages. Then the debt payments have to be paid otherwise we get severe penalties. Then he has to estimate how long this is likely to continue and see what cash flow he has, nothing to do with profit. It’s worth noting here, he has said this before, there is not a lot of liquidity available as most of the profit is tied up in assets, and transfers of players is always on a basis of what we old folk call ‘tick’ not cash.
As for getting 80% paid by the Government, well, while it seems bad it, isn’t as bad as it is being out to be. 550 workers some of them on higher wages, like scouting, trainers, admin, all sorts of workers, its not just the catering staff, so the cost to the club will be immense. But I would think its more about cash flow.
Was the club wrong to place staff on furlough?
So the next argument is players contributing. Firstly Levy cannot stick around waiting for the players to decide. Every day without revenue has major implications on cash flow and on the club long term. The players knew the impact weeks ago, and nothing came up. They knew as Italian clubs took cuts etc so they had every opportunity to speak up and offer help. What was Levy suppose to do, sit and wait? Secondly, the problem with players helping out, do they all want to help the club, I’m not sure. Maybe many of them prefer to help the NHS directly? Either way, Levy had to act according to his cash flow and the long term impact it would have on the pitch. Let’s get it into perspective about asking the Government for 80%. A well known superstore is about to go into administration if things don’t improve very soon. That tells you about how companies are struggling regardless of profit, its about cashflow, available cash.
The next argument is our owner. Well until now, owner’s are not able to put money in due to Financial Fair Play, although I believe they are relaxing that so owners can now help out. Levy took the action before that was relaxed and I’m not sure if it’s been relaxed yet or only talked about.
Many large companies will be asking for Government help with the 80% but it won’t be publicised, but because it’s football it’s gone public. My guess is big companies will be using the Government scheme because at the end of the day, it’s about cash, but also about protecting their companies. Have MPs taken pay cuts? From a business point of view Levy is not prepared to lose out and why should he. The Government have neglected this country for a long time and they will stand after this, but businesses will fold and struggle, and businesses like football clubs who have worked their socks off to build themselves up will not see why they should lose out when it’s not their fault. It could be argued that the spread of this virus might not have been so bad had the Government had acted faster.