Is the financial burden worth the risk?

The clubs pushing for a spot in the top four have to try and compete both on and off the pitch. Whilst in terms of recent achievements on the pitch teams like Liverpool and Tottenham are falling behind their rivals, both have invested time in considering a new stadium to better compete at the top of the Premier League and in Europe. But should both clubs consider the perils of investing heavily in a new ground?

Building a new, bigger stadium would on the face of it be a huge bonus with increased gate receipts and larger revenues that improved infrastructure can generate. The growth of teams often comes hand in hand with investment on and off the pitch. In recent months both Tottenham and Liverpool have been reportedly keen on building new stadiums. The disappointment over missing out on the Olympic Stadium has not deterred Spurs and Daniel Levy from believing that a new ground is essential to Tottenham’s future growth. Liverpool have been weighing up the prospects of redeveloping Anfield or building a completely new stadium. But would the financial burden of a new ground come at the cost in other areas of the clubs?

Arsenal’s move to the Emirates from Highbury in 2006 was a fantastic long-term move for the Gunners but the project cost £390million with a reported loan of £260million to finance the move. The burden of debt (thought to reach nearly £318million at Arsenal in recent years but now slashed considerably) will always have an impact of financial resources and free cash available in other areas of the club, most notable to fans would be transfer fees and wages. Loans taken out for new stadiums mean interest rates and repayments are a continued issue. The true effect of the debt on spending will only be known by the Gunners’ hierarchy but Arsenal’s conscientious spending on new players in recent years has meant that whilst their infrastructure has improved greatly, they have not developed sufficiently on the pitch.

But there are fantastic benefits of having a new ground. The Gunners are reaping the awards of increased gate revenues and being able to sustain competitiveness with an impressive stadium. There is no doubt that to expand, infrastructure is often key. The fact that Arsenal can generate nearly £94million from a 60,000-seat stadium compared to just under £37million in the 36,000 capacity White Hart Lane hit Spurs hard. But clubs like Tottenham and Liverpool must consider whether they are happy being potentially uncompetitive in the transfer market until sufficient revenues could be generated from any move?

Plans for Spurs’ new £400million stadium will need to be properly financed so there is no long-term debt effect. Tottenham have applied for public funding whilst another possible option reported last month was asking supporters to pay some of their fees for long-term contracts upfront that would effectively part fund any new stadium and hopefully pay off any debt quickly, thus reducing any impact on player investment.

Liverpool are facing the same issue as Spurs and are considering whether redevelop their famous home Anfield or build a new ground in their push for growth. The Reds’ plans have hit many stumbling blocks recently in their desire to increase Anfield’s 45,000 capacity. A potential move to Stanley Park would be an ideal way for Liverpool FC to continue to expand as a brand and business but the financial burden for a club riddled with recent money problems would be a huge risk for the current owners to take.

The prospect of a new stadium is exciting for any club but for teams like Liverpool and Tottenham, chasing the top tier of the Premier League both on and off the pitch is risky business. The burden of stadium debt may take a toll on other areas of the club and like Arsenal have shown, a new ground doesn’t generate instant success on the pitch. Fans may be looking forward to watching their team in an impressive new stadium in years to come but the true scale of such an investment may come at a cost to more than just the bank balance of clubs.

Should Liverpool and Spurs burden themselves with debt for a new stadium? If you want to read more of my bite size, 140 character views and thoughts follow me on Twitter @jennyk5