Untold Arsenal: Arsenal News. Supporting the Lord Wenger in all he does » Arsenal’s financial collapse, EPL financial collapse, Man U financial collapse
by Tony Attwood, and the guy who writes Le Grove
Three linked financial matters.
First, the EPL is haemorrhaging cash on salaries. Secondly most Arsenal season ticket holders are giving up their season tickets, and third the Glazer Gang’s other businesses have all come unstuck so they have no choice but to hang on to Man IOU because it is their only source of income.
Oh, and one of these stories might be a hoax.
Anyway, starting at the start. Last year the EPL accumulated debt increased from £3.2bn to £3.3bn. The total revenue of the EPL was £2bn.
Really there’s not much further to go on this. Income £2bn. Debts £3.3bn. Those debts are not going to be paid off, are they?
Anyway, here’s the facts…
Wages in the EPL are now 67% of income – although considerably less in Arsenal’s case. (Much more of this, and football will be on a par with schooling in the UK – where wages account for 80% of income across the nation’s 29,000 sch0ols).
The Championship however remains the ultimate basket case. Although it is the third best attended league in Europe, it has a wages‑revenue ratio of 90%. Talk about being silly! Well! Really!
By comparison, Germany, Spain and Italy each had turnovers of £1.3bn and France had a turnover of £0.9bn.
The EPL operating profits were £79m of which the bulk came from Arsenal.
So everything’s in a mess – including it seems Arsenal. There is an article on Le Grove today which includes this bit…
A Grover told us yesterday that he went down from 46,000th on the waiting list to 16,000th, take note Ivan, the warning signs are there, Arsene may leave you with the legacy of no fans, add that to the thousands that are renting theirs out, you might start to see a pattern emerging. BEWARE!
Now I am sure that the facts are well-established by Le Grove’s editorial board, and they wouldn’t have printed this without clarifying the source, so we can base quite a few prognostications on this piece of info.
First, this means that last year, when the “Grover” was at number 46,000 we had a waiting list bigger than the number of seats for season tickets in the whole stadium. 46,000 waiting, 40,000 season tickets seats. An extraordinary achievement in itself for such an unsuccessful club.
Second, it also means that although Arsenal only closed season ticket renewals on 1 June, by 9 June they knew that 30,000 of the 40,000 people with season tickets had not renewed. (We know it can’t be a case of people on the season ticket waiting list above the “Grover” deciding not to take up the offer of a seat yet, because that service takes weeks and weeks to progress – I know, I did it a year ago. Very few if any applicants who have reached the top of the tree will have been given the chance of saying yes or no to a seat as yet).
We can also discount people dropping off the waiting list during the year. Having paid your £15 or whatever it is now to go on the waiting list, there’s no annual charge – you just stay there. So clearly the 30,000 people that have moved on, to allow the Grover to go up the season ticket waiting list by 30,000 are season ticket holders. OK some will have moved and a few, sadly, died, but the number will be tiny. Those who do drop out, drop out when offered a seat, and realise they can’t afford it.
So, amazingly 75% of the current season ticket holders at Arsenal are not renewing. But in fact this excludes club level, diamond level, supermario level and every other level except top and bottom (they are registered and counted separately), so for those two levels the churn rate is now 80%.
This is far higher than any estimate given anywhere – 80% of Arsenal season ticket holders have given up their tickets! It is amazing that it is not shock horror front page news in the Daily Mail, with a quote by Arshavin to the effect that he didn’t like the fans anyway. (And it puts all those touts who swarmed around the ground last season out of business too).
It also means that my request to move my season tickets to get away from the anti-Bendtner moron who sits 2 rows behind me, will be granted despite the note from the club when I applied to the effect that the chance was remote.
And it means Arsenal are in serious trouble, because a churn rate in 2011 of even half of this year’s amazing 80% bugger-off level is going to leave the club with thousands of empty spaces all over the ground.
Which is why Lady Bracewell Smith can’t sell her shares to that man from Nigeria, and why no one wants to put in a bid to buy the club. The shares will be trading at 3p each when Le-Grove’s story becomes general knowledge, and of course it is my duty to ensure that everyone knows of their revelation.
So Arsenal are in real trouble, but at least I get the seats I want near the half way line (always assuming that Le Grove is right, and hasn’t been the subject of a hoax, just like everyone was over Arshavin and his income tax. But no one would do that, would they? No, surely not. They must check).
However maybe we are not in as much trouble as serial basket makers, Manchester IOU whose owners, we now know, have other loss making businesses. The reason they can’t sell Man IOU is because it is the only source of income that they have. By paying themselves more than a banker on heat (£22.9m so far, and still going up like a chimney sweep whose just discovered that the fire has been lit beneath him) they can live their lifestyle, and that’s what they love.
As Panorama and the Guardian found, the Glazer Gang own First Allied Corporation, which owns shopping malls in America. 98.4% of the shopping malls are mortgaged. That’s not bad in itself – the Ems is mortgaged (although as Le Grove shows us, we won’t be able to pay the mortgage in a year’s time).
But the Glazer Gang are defaulting on these mortgages and the receivers have taken over at least 15% of the centres – and 44% are on the bankers “watchlist” with another 25% earning less money from rent than it costs to pay the mortgage.
Lots of the mortgages were taken out with our old chums and utter total crooks who should be first up against the wall when the revolution comes: Lehman Brothers, who went bust in 2008. These mortgages were used as collateral when The Glazer Gang came up with £272m in cash for Man IOU. (Funny isn’t it – crooks doing deals with crooks. You just don’t know who to trust do you?)
Panorama says the Glazers have $567m outstanding in mortgages, and the total rent they received from its tenants meant the company made $9.7m before tax last year after paying off the interest on the mortgages. But that’s not enough to pay the $30m a year interest on the PIK loans that needs to be paid.
Thus we see that in fact the Glazers are not super whizzo financiers after all, just as they are not the Man IOU Messiahs of Football. They are not even just a bunch of very naughty boys. They are just fairly poor at business.
What they did was they borrowed money to buy, and they now don’t have even enough money to pay the interest on the loans. Let’s stress that – they can’t pay the interest on the loans – we are not talking about paying off the debt. And because they can’t pay off the interest on the loans, their properties are being repossessed.
And this is why the Glazer Gang must keep Man IOU – it is the only source of cash they have, and the only way to pay the interest on the 14.5% PIK loans of £220million.
The PIKs will carry a 16.25% interest rate from August, and unless any payments are made these loans will spiral to £600million by 2017.
Here’s the rub: if the club is sold, the Glazer’s have no source of income. They might want to rent my spare bedroom of course, but I am not sure they could afford it.
If the club is NOT sold they have to pay off the PIK loans – and the only way to do that, is to continue to raid Man IOU’s finances. Sir Alex might want a player, but they have to pay the PIKs first using Man IOU funds. Sorry Alex baby – no dosh. But there’s some spare season tickets at Arsenal apparently.
Panorama said the Glazer Gang’s debts are more than £1.1billion – £700m with Man IOU, £388m on mortgages the shops, and £66m with the Bucs. The Glazer Gang say they are ok with this – and of course they are. It’s all other people’s money.
So there it is. Everyone’s lost. There’s just one bit of hope left on the horizon. It is just possible that one of the three stories (EPL debt, Arsenal lose 30,000 season ticket holders in one year, Man IOU bankrupt) is a hoax.
Which one?
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Just 15 copies of the first edition of Making the Arsenal left in stock. It will be reprinted, but if you think first editions are good, you might want one.