News from US could impact Tottenham takeover as £2.6bn deal now possible

07/02/2024 11:45 AM

The latest financial developments in the United States could have a material impact on future investment in Tottenham.

Chairman and co-owner Daniel Levy revealed that he is looking for fresh investment in the club in the preamble to Spurs’ accounts for the 2022-23 campaign.

Four different groups have been linked with either a full or partial takeover, with Spurs not having clarified exactly what scale of investment they are seeking.

Among those investors are US private equity companies, such as MSP Sports Capital.

Their interest in a full takeover is believed to have waned, but the private equity sector’s broader interest in Premier League clubs remains high.

However, market forces stateside might mean that a takeover from a US private equity source is now less likely.

Rising interest rates could shrink Spurs investment pool

Private equity companies often use loans from commercial lenders to finance acquisitions – take 777 Partner’s failed takeover of Everton, for example.

In the US, with interest rates set by the Federal Reserve, private equity activity slows down when the cost of borrowing rises.

And as reported by the Financial Times, Federal Reserve official Michelle Bowman has forecasted that the institution may be forced to raise interest rates in the near future.

This would lead to greater problems with debt financing for private equity firms, which could in turn reduce the pool of investors capable of engineering a Tottenham takeover.

And while there are firms for whom a Spurs takeover would be within reach even with higher interest rates, the overall effect of a smaller pool would reduce the enterprise value of the club.

That might make Levy and company less inclined to sell.

ENIC are in no hurry to sell any equity and will wait for the opportune moment to ensure a maximum return.

READ MORE TOTTENHAM FINANCE NEWS: Tottenham to smash £228m record as two new off-pitch deals announced

Spurs valued at £2.6bn

According to a range of analytical approaches, Spurs are worth somewhere around the £2.6bn mark.

Huge investment in the stadium and other facilities such as a huge new on-site hotel have contributed to this value.

Their operating income is strong, as is their EBITDA (earnings before interest, tax, depreciation and amortisation), which is a key way of appraising clubs.