Tottenham Hotspur Football Club - Case Study Example

(Google Finance) Most of the revenues of Tottenham also known as Spurs are generated from TV broadcasting rights and ticket sales at its home ground White Hart Lane. Despite the efforts for expanding the team facilities and the stadium capacity the company is yet to make a breakthrough in this respect. The company is headed by Chairman Daniel Levy who controls 66 percent of the team by his investments through ENIC International. (Hoover) Based on the detailed financial performance analysed for the period from the fiscal year ending 30th June 2002 to 30th June 2006, the company has turned around its position during the fiscal year and has made remarkable improvement in the turnover and the pretax profits.

The turnover has registered a growth of 28.95 million (2006: 74.14m) which is equivalent to 39.05 percent increase over the past year. The pretax at 27.72 m for the year 2007 shows an absolutely significant performance with the company making a loss of 15.75 m for the year 2006. This has resulted in a positive earnings per share of 4p per share (2006: (1.7p) per share). The company could pay a dividend of 4p per share while it could not pay any dividend in the year 2006 due to the losses the company made.

The company's financial performance has been a turbulent one in the five years under review. The company could make some significant earnings in the year 2005, while the company had reported a net loss after interest and taxation for the year 2006. As seen above the company could reverse the position in the year 2007. There has been no consistency in the operations of the company which is evident from the varying ratios as indicated in the above table. Especially despite the higher turnover the company could not earn a good return for the shareholders.

This can be seen from the ROE ratio over the last five years. Since the profitability of the company is largely dependent on the gate receipts for the premier league matches and the broadcasting rights which are very volatile depending on the class of matches and the quality of the players, there is bound to be a variation in the revenues for all the clubs. Moreover