Baker Street, London -- Last night I went to watch Tottenham Hotspur (LSE: TTNM) play German team Kaiserslautern in the first leg of their UEFA Cup tie at White Hart Lane. This visit wasn't purely for pleasure. Earlier in the day Spurs had delivered their full time financial results. In the year to the end of July, turnover increased by an impressive 36.5% to £42.6m.
You could see why by just walking into the club's impressive stadium. Capacity has increased significantly in recent years. This has allowed the club to take more in gate receipts. Long runs in both domestic cup competitions last year also helped boost revenue as well. In total gate sales leapt 56% to £22.3m, over half of the club's total turnover.
But underpinning all this glamour in the glorious game, apart from the magical performances of players like David Ginola, has been the influx of money from television broadcaster BSkyB (LSE: BSY) amongst others. At present Sky pumps £743m into the game for the right to show live and highlighted coverage of the Premier League.
I didn't have a chance to chat with Tottenham chairman Sam Chisholm yesterday, being too gripped by the European dramatics on the pitch and particularly in the penalty box. Yet obviously either he, or another football financial boss has been chatting freely. Chisholm also used to chair BSkyB as well.
Surprising then that the day after the club reports its results the same correspondent who covered the figures in the FT should also report that Sky has offered £1b to extend its coverage of the Premiership for a further three years. The present contract currently has another 18 months to run.
Sky has apparently said that this offer will increase the amount of money premier league sides receive by 70%. Last season Spurs took £9m in television money, up 40.6% from the previous year. Under the new deal, the club would get a whopping £15.3m Sky handout annually from 2001 onwards.
What has prompted this pre-emptive move? In recent months media companies have been taking stakes of about 10% in football clubs. For example Granada (LSE: GAA) has a 9.9% holding in privately-owned Liverpool. Carlton (LSE: CCM) has been linked with OFEX-listed Arsenal and cable company NTL was reportedly keen on Newcastle (LSE: NCU). Most famously BSkyB itself bid £643m for Manchester United(LSE: MNU), only for the offer to be blocked by Trade Secretary Stephen Byers.
BSkyB was obviously scared that individual clubs would negotiate with their minority media shareholders about televising their games. And it tried to take control of the biggest and most successful franchise, Man U. But today's early strike suggests the mood has changed.
A year ago the Office of Fair Trading seemed keen to call BSkyB's deal uncompetitive since it restricted the commercial rights of individual clubs to negotiate the best deals. The Premier League managed to overturn this decision in the High Courts. Stephen Byers effectively signalled the end of media takeovers of football clubs by blocking BSkyB's agreed bid for Man U. Even the Reds chairman Martin Edwards has washed his hands of the matter selling half his stake in the club.
Expect a further flurry of offer announcements for the Premier League TV rights. OnDigital, the Carlton and Granada venture, look most likely to put their hat in the ring. The company is currently televising the European Champions League and has big ambitions to tackle Sky head-on.
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Other Breaking News
Financial stocks continue to be in play following NatWest's (LSE: NWB) rebuffal of the Bank of Scotland(LSE: BSCT) hostile £21b bid earlier in the week. Irish Life & Permanent are apparently circling NatWest's Ulster Bank arm, which the high street giant has said it wants to flog.
Also Alliance & Leicester (LSE: AL.) rose 23p, or 2.6%, to 896p on speculation that the former building society might make an offer for the Woolwich (LSE: WWH).
Golf club operator Clubhaus (LSE: CHA) has bought three more golf courses for £12.2m. However, the illiquid stock slipped 0.5p, or 0.7%, to 70.5p on no volume in early trading.
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