Chairman's statement from West Ham programme
Tottenham Hotspur (Spurs) Football Club is located in North London. The club is also known as Spurs. Tottenham's home ground is White Hart Lane. The club motto is Audere est Facere (To dare is to do).
Following the release of our preliminary financial results for the year to June 30, 2002, chairman Daniel Levy issued the following statement:
A Year of Change
The conclusion of the purchase of shares in this Company by ENIC plc in February 2001, which resulted in ENIC plc owning a 29.9% stake, represented the start of a significant period of change for the business.
Your Board is firmly focussed on the development of new business opportunities, whilst at the same time devoting the necessary attention to addressing operational issues. All these changes are being made in order to create long-term benefits to the club. As part of these changes, from October, my role became an executive one. This has enabled me to oversee our strategic plans and at the same time make changes to improve the efficiency of the day-to-day running of the business.
Turning to the industry over the last year, the most notable changes have been in the media sector. Nationally we have witnessed the collapse of the ITV Digital broadcasting deal with the Football League. Internationally, media deals have collapsed in both Italy and Germany. Elsewhere, in December of last year, the Premier League narrowly averted a players strike. We take all these issues seriously and are conscious of the need to factor these risks into our business plans.
All these changes, whether domestic or European, have led to a dramatic change in the football transfer market over the last six months. Coupled with this, in the UK, we are now experiencing the new phenomenon of the transfer window. This has resulted in an even greater need for sensible salary and transfer negotiation.
Despite some obvious disappointments, I believe that this has been a season of progress for the Club. Although the Worthington Cup Final defeat was a setback, I am pleased that we reached a major Cup Final and the quarter final of the FA Cup in Glenn Hoddle’s first full season.
We have, in Glenn Hoddle, an extremely talented Team Coach. Glenn is committed to delivering exciting football and returning domestic and European honours to White Hart Lane. The style of football played has been more in the true traditions of the Club. A number of the younger players have flourished and the success of the youth team in reaching the Semi-Final of the FA Youth Cup is encouraging for the Club’s long-term future. This shows the strength and depth we are trying to develop, particularly as we continue to put great emphasis on investing in the development of our youth.
We are confident that this Summer’s signings of Robbie Keane, Jamie Redknapp and Milenko Acimovic will form part of a winning team. In addition to this we have continued our policy of identifying the best young players available and to this end we have invested in Jonathan Blondel, the Belgium Under-19 captain.
We thank the players who left this summer for their service to the Club in the past. Chris Armstrong and Oyvind Leonhardsen were released in the summer and we wish them well in their new careers at Bolton and Aston Villa respectively.
We have worked hard with Glenn to ensure a balanced squad. We do not believe that we have fully achieved this yet, although we believe that we have made good progress. This summer has been a very challenging market place. Whilst the next transfer window is not until January, we will be working diligently to ensure we have a squad capable of sustained success.
In this reporting period we have successfully negotiated our two major sponsorship contracts for our shirt and kit sponsor. I am very pleased to have the association with Thomson and Kappa respectively and I am looking forward to a successful relationship with them both.
We have agreed a two-year deal with Thomson, our shirt sponsor. Of great significance is that this is a link up between two leisure companies and we are working with Thomson to develop several initiatives to benefit all parties; the Club, Thomson and our fans.
We agreed a four-year deal with Kappa, as the official kit supplier and leisure wear partner. Kappa is at the forefront of sports apparel technology and design. Kappa’s design team has a proven track record and provides the award-winning kit for the Italian National Team, along with that of AS Roma, Real Zaragoza and Feyenoord.
I would like to take this opportunity to thank our former partners, Holsten and adidas, for their contribution to the business over the last three years.
Customer Service, Communication and Marketing
Our focus this year has been to improve attention paid to customer care. As part of our commitment to customer service, we have published a Ticket Charter, which has served to make the Club’s ticketing policies much more transparent. We are proud to be the first Premiership club to produce such a document. We are striving to ensure that our ticket office delivers a first class service to all. Our ticket pricing changes, issued this Spring, were intended to address some of the imbalance in prices across the Stadium. For this reason, there were a number of large increases in certain areas of the stadium and none in others. In spite of these increases, I am delighted to confirm that for the forthcoming season we will have a record number of season ticket holders.
In order to make the purchase of tickets easier, we have launched an online web based ticket sales system. We are proud to be the first club to have taken this initiative which we believe will greatly improve the service to our members with web access who are now able to see a three-dimensional view from each seat in the stadium, and then buy specific seats via our website. This facility will also help alleviate pressure on the ticket office, ensuring a greater level of service for those members who still wish to book tickets by telephone. This is just one of many benefits we offer to our members.
The Internet is a key resource available to the business for both communication and marketing. Football is in a unique position as a business in that a substantial number of the clubs’ customers regularly use the club website to obtain the latest news and information, in addition to the purchase of tickets and merchandise.
We recognise that in order to capitalise on the business opportunities associated with this we need to ensure that our site is well designed and regularly updated.
Our website continues to evolve with new sections being added, most recently including the launch of an auction page where items of memorabilia are sold.
The value of the Internet as a commercial channel continues to develop. The bulk of our mail order sales are now placed on line and 75% of the advance orders for our new first team home kit were also placed over the Internet. Although the dot-com bubble has burst, I am convinced that business opportunities on the Internet are there to those who are suitably inventive and who have a robust business model.
Your Board recognises the need to create and encourage the next generation of fans by encouraging youngsters to the ground. To help achieve this, we have a number of schemes, including the Junior Spurs Members Club, holiday football coaching courses and forthcoming initiatives with Thomson. In addition, to promote football as a day out for all the family, during the last season we designated six games as family games.
In addition, we have capped the number of season tickets to ensure there are sufficient match day tickets available to encourage young fans to attend matches.
During the last year we established a dedicated marketing department.
To support this function we have sourced a Customer Relationship Management system (‘CRM’). This CRM software will merge the different databases from Ticket Office, Members, Corporate Hospitality and Mail Order departments, giving a comprehensive overview of our supporter database.
The first phase has seen the introduction of this software to our commercial and corporate hospitality business and includes the establishment of a computerised booking system. In the coming months the database will be extended to capture our ticketing, membership and mail order databases. By consolidating our data, we will gain an insight into customers’ profiles and historical spend and then create targeted promotions with real benefits to both our corporate customers and our fans.
The internal reporting structure was reorganised last October. We are now ready to embark on the second phase of this process. Paul Viner, our newly appointed Finance Director, is currently in the process of refining our group finance function.
Additionally, the conference centre and corporate hospitality departments have been merged. We believe that both these measures will result in increased operational efficiencies for the group.
I should like to take this opportunity to thank all our staff for their efforts last season, particularly with the heavy league and cup programme in the early part of this year.
Dividends and Share Capital
Your Board still hold the view that any surplus profits are currently best re-invested in the Company. We review this policy annually.
Shortly, shareholders will receive a Circular seeking their permission to renew the authority to allow the Board to purchase shares up to 10% of the issued share capital of the Company in the market. Whilst this authority was sought but not used last year the Board believe that this authority should be renewed to allow the Company to utilise this flexibility if it is deemed to be in the interest of shareholders.
We have started the process of building the brand internationally. The World Cup finals greatly enhanced the exposure of our players to the Far Eastern market and this will, inevitably, increase commercial opportunities for leading clubs such as Tottenham.
We have appointed an International Marketing Consultancy to advise us on the best strategy to exploit those international opportunities.
Although this is initially a cost to the business, we believe that it will pay dividends in the longer term.
We are currently planning an entry to target countries with a multi-strand programme that will include promotional work, skills schools, merchandise marketing and first team tours. This will be under-pinned with solid research, which should ensure that the gain is real and long-term.
We still have all our media rights intact. The FA Premier League is still a year away from renegotiating their TV deal with Sky, which terminates in May 2004. In the meantime, we will continue to exploit our own Internet rights and consider all possibilities for 2004.
Our most important current long-term focus is with the development of the Football Academy and the expansion of our White Hart Lane Stadium. We have appointed a firm of property consultants to oversee a clear ten to fifteen year vision of where this Company should be directing its resources in terms of both the development of the stadium and of the Academy.
The Academy has been earmarked for a site in Abridge in Essex. To date, we have secured an option on the land of 54 acres and our plans have been submitted to Epping Forest District Council and detailed negotiations continue to obtain the appropriate consent. I hope to be able to report on the preliminary findings from the planning authority at the time of our interim report next year and provide further details on the proposed joint venture we will undertake with the adjacent Golf Club.
In the meantime, our first team and youth teams will continue to train at our Chigwell site. If we are successful in our planning application, once the new facility at Abridge is in use, the current Spurs Lodge training ground will become the home of our successful Football in the Community scheme. This will be the biggest centre of its kind in the UK and will be available for use by local schools, community groups, clubs and athletes.
In my statement last year, I was able to report to Shareholders that we had secured planning permission for the East Stand. This was a project that I inherited. Upon review, your Board believe that alternative projects exist which will have a greater benefit to the Company.
The aim is to ensure that we have a cohesive plan that will optimise stadium capacity combined with a clear investment rationale and a sensible financial payback.
This strategic plan requires consultation with local and central Government, the Mayor’s office and Transport for London. Consultations of this nature tend to be drawn out and laborious, and it is unlikely that I will be in a position to report further for some time.
Before the Company can approve any expansion of the stadium your Board requires commitment from the various Government departments to invest in the regeneration of the local area. There is no sense in us increasing the capacity of the stadium if our fans are unable to get to and from the ground.
Your Board continues to examine all potential sources of long term financing for the group, particularly for the support of major projects such as those outlined above. This includes equity finance in the form of ordinary or preference shares and debt instruments.
You will have found, in this statement, details of a number of significant measures we have introduced this year to take the business forward. At the same time, we have worked diligently on our long-term objectives in order to give the necessary infrastructure to the manager to continue to develop a winning team.
This Board has a very clear vision of where it wants to take this football club. All associated with this Company are working very hard to position this Club with the elite of European Club football.