Football: Prophets see past the profits

THERE is little indication in the financial performance of Tottenham Hotspur plc in the last 18 months as to why Alan Sugar wanted to dismiss Terry Venables as chief executive.

After losing money in the two financial years ending 31 May 1990 and 1991 - the years immediately preceding the takeover of the club by Venables and Alan Sugar - Tottenham returned to profit for the 12 months ending last May. Things were looking good for this year as well. Profits for the first six months running from May to November totalled pounds 3.3m.

Even more impressively, Tottenham paid a dividend. Most decent companies give some part of the profits earned back to the people who own the company - shareholders. In addition, it is usually a sign that the directors of the company have confidence in future prospects. Tottenham paid out 3p per share last October. Profits of pounds 5m were expected for the full 12-month period which closes at the end of this month.

The full picture, however, is not quite as rosy. In the period from May to November 1992 operating profits - those earned in the normal course of business, rather than profits inflated by one-offs like cash from the sale of Paul Gascoigne - were sharply reduced.

Serious stockmarket investors had in fact lost interest in Tottenham long before yesterday's boardroom convulsions. The reaction of the share price told the story. Their value was unchanged at 89p as city dealers brushed aside the news of yesterday's events with a nonchalant laugh. Anyone with a realistic interest in making money has given Tottenham Hotspur a wide berth for years.

It is conceivable that the split that surfaced between Venables and Sugar was caused by the recent drop in operating profits. It is certainly likely that the two disagreed when it came to buying players. It seems likely that Venables would have been tempted to spend a little freely when it came to new playing staff. But Sugar takes a firmer line.

As he said yesterday: 'Whilst I have control of the company, it will never have any financial problems.' Tellingly, he added a phrase that points to his caution. He said that money would be available 'as is appropriate to a football club'.

Whatever the final outcome, it is likely that both Venables and Sugar will be the losers financially. Sugar built his 48 per cent stake of shares paying up to 125p per share. It will be a long while before he finds anyone who will buy them off him at a better price than that.

Venables has shorter term problems. He now owns 22 per cent of Tottenham, but he borrowed money to buy shares at the artificially inflated price of 125p.