Tottenham Hotspur News: £1 Billion Price Tag For Premier League Club?

The American influence on the English Premier League could be about to deepen yet further, with U.S. private investment firm Cain Hoy announcing interest in making a bid for Tottenham Hotspur. Although the north London club initially insisted it was not in negotiations with the firm, Cain Hoy has now entered an official bidding period and has until Oct. 10 to make an offer. Yet, if the group is to make Tottenham the sixth Premier League team under American control, they may have to match an asking price of a little shy of £1 billion ($1.62 billion), as reported by the Telegraph.

It is a huge sum for a club that finished just sixth in the Premier League last season, and one that is valued at $514 million by Forbes. Still, there are reasons for owner Joe Lewis to feel justified in his valuation.

There was some initial skepticism when Cain Hoy’s interest in Tottenham came just hours after it announced the launch of its operations. But the identity of one of the men behind Cain Hoy gives the approach serious credence. Todd Boehly, a co-founder of Cain Hoy, is also the president of Guggenheim Partners, which provided a minority investment in the new firm. In 2012, Guggenheim spent $2.15 billion to acquire the Los Angeles Dodgers, the highest fee ever paid for a sports franchise, topping the $1.47 billion paid by the American Glazer family for Manchester United in 2005.

The sporting pedigree is certainly there, although the timing of a potential bid comes at a precarious time. When denying its negotiations, Tottenham revealed that its only contact with Cain Hoy had been regarding investment in a new stadium. The club has hired investment bank Rothschild to help find financers for a project that is expected to cost between £400 million ($649 million) and £450 million ($730 million), according to the BBC, and factor into the value Lewis, who bought Tottenham via his ENIC Group in 2001, has placed on the club. Just a day before the interest from Cain Hoy emerged, the plans to move from its existing White Hart Lane home, with a capacity of 32,000, to a new 56,250-capacity stadium, were dealt a blow by a legal challenge from an owner of property on the proposed site. It means that the original aim of having the stadium ready for the start of the 2017-2018 season has been scrapped, leaving Tottenham now looking for a temporary venue to play home games for a year.

A new stadium is essential for Tottenham to compete with the biggest clubs in England and ultimately in Europe. For the 2012-13 season, Tottenham collected £33 million ($54 million) from gate and matchday income, a figure that pales into comparison to the £109 million ($177 million) received by Manchester United and the £93 million ($151 million) taken in by Tottenham’s local rivals Arsenal, which moved into a 60,000-capacity stadium in 2006. Ensuring that the plans for a new stadium remain viable and on track will surely be a prerequisite to any bid from Cain Hoy.

If that new home is set, then it's easy to see why Tottenham are a hugely attractive proposition. Being based in London would not only be an advantage to attracting supporters and filling corporate boxes but also provide an ever-more-telling sporting advantage. Simply put, it is far easier to sell the idea of living in London to a soccer player from overseas than it would be northern cities like Liverpool or Manchester, regardless of the rich histories of the teams there.

England clubs already need all the help they can get in attracting players, with Europeans and Latin Americans often drawn to the big clubs in Spain, like Barcelona and Real Madrid. But while the Premier League may have a hard time luring the top stars, there's little doubt that it remains the top attraction for investors.

No sports league in the world has been as successful at marketing itself both at home and across the globe. The current three-season television deal earns the Premier League just over £3 billion ($4.9 billion) from U.K. broadcasters and £2.3 billion ($3.7 billion) internationally. All the signs are that both figures will increase sharply when the next TV deal is negotiated for the 2016-2017 season.

In the UK, the long-held dominance of BSkyB , owned by Rupert Murdoch’s 21st Century Fox, is now being challenged by British-Telecommunication-owned BT Sport. Analysts expect the price paid by U.K. broadcasters to increase by 40 percent, reports the Guardian. Overseas, the U.S. is a major part of the growing revenue from global TV rights. NBC paid $250 million for a three-year agreement to show the Premier League, beginning last season, more than three times the previous figure paid by Fox. In its first season of coverage, NBC achieved double the viewers as the final season on Fox and ESPN, strongly suggesting that the league’s value will continue to rise stateside.

Undoubtedly, though, prominent in Cain Hoy’s thinking will be the prospect of getting Tottenham into the UEFA Champions League and earning the vast riches on offer in the world’s premier club competition. Only the top four ranked teams in England get access and, despite finishing in the top six in seven of the last nine seasons, Tottenham have only competed in the prestigious tournament once (2010-2011). But the signs are that Cain Hoy would be determined to do what it takes to push them back into the top quartet. In its first year of owning the Dodgers, Guggenheim increased salaries by more than $600 million, according to Forbes.

Should Spurs increase their payroll, and establish success in England and in European competition, it would be a boon for the club's image. Tottenham owners could potentially see a windfall in profits off jersey sales, attendance and sponsorship deals. Though the pool of championship-contending Premier League clubs seems confined to three or four, the opportunity still exists to climb the table and become a consistent title threat.

Cain Hoy will certainly have plenty of competition if they enter the Premier League. Manchester United are ranked by Forbes as the world’s third-most-valuable sports team, Chelsea is bankrolled by Russian billionaire Roman Abramovich and current English champions Manchester City have been transformed by the wealth of Sheikh Mansour bin Zayed Al Nahyan, a member Abu Dhabi ruling family.

But new Financial Fair Play rules instituted by European soccer’s governing body UEFA limiting the scale of losses clubs can endure have altered the landscape. It means investors in clubs with strong existing infrastructures can now compete in the Premier League and Champions League and rake in the resulting large sums of cash without having to be bankrolled by billionaire benefactors or plunge themselves into vast debt. Tottenham’s new stadium would put them right in the mix, explaining both why Lewis would value the club so highly and why Cain Hoy see it as an ideal sporting investment.