Samuel kul

SecLlon 0301

1oLLenham PoLspur plc

lounded ln 1882 Lhe 1oLLenham PoLspur looLball Club was one of Lhe oldesL Leams ln Lhe
remlershlp 1he club became Lhe flrsL publlclyowned fooLball club ln Lngland when lL llsLed on Lhe
London SLock Lxchange ln 1983 and was also Lhe flrsL Lo lnLroduce corporaLe hosplLallLy boxes aL Lhelr
sLadlum uanlel Levy Lewls's parLner aL LnlC had served as chalrman of Lhe club slnce 2001 afLer LnlC
lnLernaLlonal LLd boughL a conLrolllng lnLeresL ln Lhe club
Levy who had formerly served as a dlrecLor of Lhe ScoLLlsh fooLball club 8angers was a llfelong
1oLLenham fan buL undersLood Lhe dynamlcs of fooLball clubs and ran Lhe club Lo endure flnanclal
sLablllLy and longevlLy Levy focused on Lhree plllars LhaL he felL could help esLabllsh a foundaLlon of
longrun success Lhe developmenL of a new sLadlum Lhe bulldlng of a new pracLlce faclllLy and Lhe
conLlnual lmprovemenL of Lhe club Lhrough prudenL player acqulslLlons durlng 1he club had a
provlslonal agreemenL already ln place Lo bulld Lhe new Lralnlng ground [usL ouLslde of London 1he
club vlewed Lhe Lralnlng ground as cruclal Lo Lhe Lhlrd plllar whlch was Lo conLlnually lmprove Lhe
quallLy of Lhe Leam Pavlng a sLaLeofLhearL Lralnlng ground was a ma[or selllng polnL ln recrulLlng new
players boLh young players whom Lhey hoped Lo develop as well as sLar players from oLher clubs or
counLrles
1he Leam had a passlonaLe fan base numberlng an esLlmaLed 20 mllllon people worldwlde
lncludlng 21 mllllon ln Lhe unlLed klngdom 1he sLadlum aL WhlLe ParL Lane was sold ouL for every
game and Lhere was a walLlng llsL for season LlckeLs of over 20000 people 1he Leam recelved revenues
from four ma[or sources aLLendance sponsorshlp rlghLs merchandlse sales and broadcasL rlghLs lLs
maln cosLs conslsLed of player salarles and cosLs of operaLlng Lhe sLadlum remlershlp Leams were
ranked accordlng Lo Lhelr wlnLleloss record by Lhe end of Lhe season A Leam's record affecLed dlrecLly
lLs revenue sources AddlLlonally Lhe Lop four Leams were lnvlLed Lo play ln Lhe Champlon's League
whlch earned Lhem addlLlonal revenue from aLLendance and broadcasL rlghLs
1he offlclal club sponsors were Mansloncom and uma buL Lhe club had a serles of oLher
commerclal parLnershlps as well and vlewed sponsorshlp revenue ln general as a ma[or poLenLlal
growLh area golng forward 1he club's merchandlse sales had also grown subsLanLlally ln recenL years
ln parL Lhrough Lhe new unlforms LhaL were redeslgned for Lhe Leam each year and Lhen sold Lo fans
lor Lhe pasL several years revenue growLh ln Lhe remlershlp had been averaglng 9 per year across all
sources whereas player salarles were growlng even more rapldly aL 10 per year 8oLh were expecLed
Lo conLlnue aL Lhelr currenL raLes for anoLher dozen years
WhlLe ParL Lane had been refurblshed several Llmes over Lhe pasL 100 years buL Levy felL LhaL
Lhe only way Lo Lruly modernlze Lhe club's maLchday faclllLles was Lo bulld a new sLadlum 1he currenL
sLadlum housed only 36300 fans and Lhe club was hoplng Lo accommodaLe up Lo 60000 1he club
ulLlmaLely favored a plan whlch would bulld a sLadlum ln a locaLlon ad[acenL Lo Lhelr currenL ground
8egardless of whaL sLadlum lL had 1oLLenham could anLlclpaLe a malnLenance caplLal expendlLure LhaL
was currenLly 33 ln 2007 and was expecLed Lo grow aL 4 per year uepreclaLlon was 22 ln 2007 and
was also expecLed Lo grow aL 4 ln addlLlon Lhe Leam currenLly held over 26 of excess cash LhaL
could help fund fuLure lnvesLmenLs pay down debL or be pald ouL Lo shareholders 1he new sLadlum
would Lake Lwo years Lo bulld aL a LoLal cosL of 230 whlch would be pald ln roughly equal lnsLallmenLs
aL Lhe end of Lhe flrsL and second years of consLrucLlon A speclal Lax lncenLlve would allow Lhe Leam Lo
depreclaLe Lhe 230 of consLrucLlon cosLs over a 10year perlod followlng compleLlon Moreover
1oLLenham had pald sufflclenLly hlgh Laxes ln prevlous years Lo lmmedlaLely capLure as Lax refunds any
Lax credlLs assoclaLed wlLh neL operaLlng losses WlLh Lhe new sLadlum Lhe club expecLed aLLendance
revenue sponsorshlp revenues and sLadlum operaLlng expenses Lo lncrease by 40 20 14 relaLlve
Lo forecasLs respecLlvely
Levy felL LhaL a new sLadlum was a cruclal componenL of longrun success ln Lhe remlershlp
because Lhe added revenues would allow Lhe club Lo compeLe more aggresslvely ln Lhe acqulslLlon
markeL for supersLar lnLernaLlonal players 1oLLenham would need Lo pay for Lhe rlghLs Lo Lhe player
and Lhen negoLlaLe a new conLracL wlLh hlm 8oLh Lhe Lransfer fee and Lhe conLracL were guaranLeed ln
LhaL ln Lhe evenL of ln[ury Lo Lhe player 1oLLenham could recover no porLlon of Lhe Lransfer fee and
would have Lo conLlnue paylng hls salary lf Lhe new player remalned healLhy 1oLLenham would be
expecLed Lo lncrease lLs neL number of goals per season 8y lmprovlng Lhe Leam's ranklng ln Lhe
remlershlp lncreases ln a Leam's neL goals and hence lLs polnL LoLal led Lo greaLer revenues WlLhouL a
larger sLadlum LhaL was comparable Lo Lhose of Lhe oLher LopLler Leams 1oLLenham would only capLure
onequarLer of Lhe anLlclpaLed revenue lmprovemenLs assoclaLed wlLh Lhe Leam's expecLed
lmprovemenL WlLh all Lhe conslderaLlons Levy had Lo declde lf Lhe beneflLs of a new sLadlum were
worLh Lhe subsLanLlal commlLmenL of Llme and resources LhaL lLs consLrucLlon would enLall