Spiralling wages meant Tottenham's operating profits remained flat at pounds 7.4m despite a sharp rise in television income from a new contract with BSkyB, the satellite broadcaster.
Wage costs are due to rise even higher in the second half. A spate of recent signings including Jurgen Klinsman, the German international striker from Sampdoria, Moussa Saib, the Algerian midfielder who joined from Valencia for pounds 2.5m, and Nicola Berti, the Italian midfielder signed from Inter Milan, will push annual player and match expenses well over the pounds 15m mark. The club has also been forced to install a new coaching team to replace departing manager Gerry Francis, including his successor Christian Gross from Grasshopper Zurich, and David Pleat as director of football.
John Sedgwick, Spurs' finance director, said yesterday: "We have basically doubled our wages by adding new players. We believe these costs are necessary to fight off relegation."
Tottenham is currently fourth from bottom in the Premiership and faces a dramatic slump in profits if fails to stave off relegation. The club estimates it will lose at least pounds 3m in television income as a member of Nationwide Division One.
Sales of replica shirts and club merchandise have already suffered from the club's poor league form. Mr Sedgwick also pointed out that the demand for sportswear looks to have peaked, with suppliers left with spare stock on their hands. He believes that the market is bound to fall by up to 10 per cent.
However Tottenham believes its merchandise sales could double, or even triple, if it can survive the drop and make it to the top three in the Premiership next season.
Alan Sugar, Tottenham's chairman, had been looking at making acquisitions abroad and forming partnerships with foreign clubs. Those plans have taken a back seat until the club's Premiership fate has been decided. Tottenham is also unlikely to follow the lead of Manchester United and set up its own TV channel.
Tottenham's pre-tax profits fell to pounds 4m (pounds 6m) reflecting a sharp rise in transfer fees to pounds 3.4m. Gate receipts edged up to pounds 8.8m (pounds 8.7m) but should get a fillip from the opening of a new North Stand which will increase the capacity of the ground to 36,500. Tottenham's shares rose 2p to 70p yesterday but have almost halved in value since peaking in 1997.
Spurs face a crucial showdown with fellow strugglers Crystal Palace this weekend.Reuse content