Gold as an investment

BREAKING: ENIC investing additional £150m into Tottenham Hotspur

Sep 23, 2022

Although Tottenham Hotspur have been dropping hints that they plan to invest heavily in player transfers when the summer transfer window opens next month, a lot of observers were (rightly) wondering just where that money was coming from. After all, the club may now have a solid year of new stadium revenue under its belt, but it’s still coming out of the COVID-19 financial hit.

Now we think we know. Today, the club announced that ENIC, the company owned by Joe Lewis that has controlling shares in the club, is increasing its stake in the club by 1.9%, which represents an immediate investment of £150m.

Club announcement - Tottenham Hotspur Limited agrees a £150m capital increase.

— Tottenham Hotspur (@SpursOfficial) May 24, 2022

Tottenham Hotspur Limited (the “Club” or “Spurs”) has, today, Tuesday 24 May 2022, agreed a capital increase of up to £150m from majority shareholder, ENIC Sports Inc (“ENIC”), via the issue of convertible A Shares and accompanying warrants.

The equity injection provides the Premier League Club with greater financial flexibility and the ability to further invest on and off the pitch.

The investment represents permanent capital, with no ongoing interest cost to the Club, and which may be drawn in tranches until the end of the year. The Club’s independent directors have benefited from its majority shareholder’s ability to invest directly, swiftly and without the extensive due diligence and documentation involved in third party funding.

Under the agreed structure the A Shares can be converted into ordinary shares. The number of ordinary shares granted to ENIC as a result of the capital increase will vary depending on when the A Ordinary Shares are converted, when the warrants are exercised and valuations at the time. If drawn in full, and based on assumptions regarding the above, ENIC’s ownership of the Club could see an increase from its current level of 85.6% to circa 87.5% on conversion. Any dilutive impact is dependent on the number of shares granted and will be shared by all shareholders proportionately and principally by ENIC, the majority shareholder.

— Statement, Tottenham Hotspur

This is HUGELY exciting. This is basically what curmudgeonly Spurs fans have been yelling at ENIC to do basically since they bought the club in 2001. While I am not a Business Understander™ and a lot of the legalese is flying directly and permanently over my head, what I can glean (and what others have told me) is, in short: Uncle Joe Lewis has decided, after decades of Tottenham Hotspur bootstrapping its way up to becoming one of the top clubs in the Premier League, to open his pocketbook and put some skin in the game.

This comes on the heels of Tottenham clinching Champions League football for the first time in three years, and can be viewed as a public declaration that the club is ready to match the ambition shown by current head coach Antonio Conte, who has asked for significant investment in the transfer window in order to close the gap on clubs like Manchester City, Liverpool, and Chelsea.

We don’t know for a fact that this £150m is all going to the transfer budget for this summer. In fact, it’s probably not — I’d probably assume that some of it will be used for capital or other expenses (the Cheese Room? Finally?), and a £150 capital investment into the club probably wouldn’t translate directly into £150m in cash for players anyway. We’ll probably find out more once the journalists have a chance to dig into this story (we’ll be watching for something from the Athletic on this in the coming days). But I think we can safely assume that at least some of this money is going to a WAR CHEST, both for transfer fees and also the wage bill.

I just want to point out here that this never happens. In fact, the entire #ENICOUT wing of Spurs fandom owes its very existence to the fact that Joe Lewis never bails out or sinks money into the club. In that sense Lewis has been the anti-Abramovich — he has sat back and let his investment accrue for 21 years now, letting smart management and fiscal prudence dictate a slow and steady increase in club stature. It hasn’t led to many trophies, but it has led to a sustainable, well-run football club.

Also interesting is buried in the math — if we assume that £150m represents ~2% of the club’s worth, then ENIC as a company is valuing the club at £7.5 BILLION. That is a LOT (though it’s almost certainly a vastly inflated number) and should serve as a watermark for any future conglomerates (or sovereign wealth funds) that may harbor an interest in buying the club.

Basically: Tottenham Hotspur just told the world that Antonio Conte is being backed this summer. They’ve shoved the boat into deep water and are starting to row to the far shore. Start getting excited, because this summer is going to be BONKERS and SO MUCH FUN!

EDIT (11:36 a.m. ET): According to Alasdair Gold, the majority of the cash injection from ENIC is to be used for player transfers this summer. LET’S EFFING GO.

A big piece on what today's £150m cash injection into Spurs means for Antonio Conte and Fabio Paratici's summer transfer plans. Understand the bulk of the £150m, as well as funds from sales, will be ploughed into backing Conte in this coming window. https://t.co/Gz9lSbzH03

— Alasdair Gold (@AlasdairGold) May 24, 2022

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