Arsenal News » Champions League: who’s having a laugh?

Top Four? by Simon Bailey

As the clock ticked round to 90 minutes on Saturday, my friend John grimly declared that if the score stayed as it was we could kiss the league goodbye. My first instinct was to agree. My next thought was that we have been written off twice already this season. My third was that I didn’t really care. And then B52 scored from Denilson’s rebound and all the ‘half empty’ thoughts disappeared. The glass is at least half full.

Not so if you’re a Liverpool fan. Who would have thought that this time last year they thumped United 4-1 with a team that is substantially unchanged from their current squad? Who can see them repeating it this year? Last season they got a good start which flattered to deceive, but this season’s results have been woeful. An embarrassing exit at the group stages of the champions league is one thing, but the impending failure to qualify for next year’s competition shows how low they have sunk this year.

Despite their recent 4 -1 victory over Portsmouth, it has been suggested that Benitez’ form is dipping, much like Houlier’s before him, and if this is true then there are doubts that Rafa will be at Anfield next season. There is also the small matter of 100 million quid that has to be found this summer to keep the banks happy.

Are Liverpool still a top four team? Are these problems just the symptoms of a blip or are they doomed to mid table mediocrity for the forseeable future?

Absolutely not if you believe the latest news from Anfield. Apparently their head honcho has been trawling the market for investors to buy some or all of the Americans’ share in the club. In a scenario reminiscent of the Dragons Den, it has been said that they have been offered £110 million for 40% of the club by an American investment business.  No deal has been struck yet because they’re looking for other investors to invest more for less.

The above figures value the club at £275 million, a figure that seemingly is hotly contested by the two American owners, especially in the light of a potential £1.5 billion offer for United.

The Liverpool plan is simple. Use the incoming money to pay RBS et al. This will raise their credit rating so they can then borrow to build their new ground and everything is tickety-boo. They can use what’s left to purchase the four players that Torres reckons they need, or five if he goes.

If we compare this to our own model, there are some glaring holes in their plan. When we borrowed money for the Stadium, our credit rating was good and the terms of the loan were excellent. It is doubtful that, in this current market and with their considerable debts, Liverpool will be able to strike such a good deal. Inevitably the cost of building a new stadium will impact on on-field performance. This wouldn’t be a problem if there was a constant influx of young and cheap players rising through the ranks to counter excessive spending on the transfer market like we have at Arsenal. Whether they go ahead with this refinancing and new stadium idea or not, I believe that Liverpool won’t be getting Champions league football in the near future.

So, who will make up the top four and qualify for Champions League in seasons to come?  At the moment, ‘top four’ is synonymous with CL qualification and will remain so for the near future at least.

By now most Premier league clubs have realised that future success will depend on financial stability. I very much doubt that we will witness the Portsmouth scenario in the Premier league again. It is also doubtful that when or if United and Liverpool manage to balance their books, they will burden themselves with their current levels of debt again.

Chelsea and City have both converted debt into equity which shows that they are at least heading in the right direction. Wether they can actually turn a profit will remain to be seen. Villa have some financial re-arrangement to do before thay can realistically break even over a given season, and the spuds hide all their figures bar their bottom line so we can never be sure where their money comes from.

United are in an interesting situation right now. The current owners have leveraged the club with £500+ million worth of debt, not to mention the PIK loans that they are personally responsible for. If this situation continues, and all of their profit goes to paying massive interest bills, things will continue to deteriorate. However, if the Red Knights successfully manage to buy united from the Glazers, things will be altogether different.

The club will be debt free with money in the bank for transfers and or infrastructure investment. Their yearly profit will be able to fund transfers instead of debt, and to cap it all the supporters will have a substantial share in the club and a say in how the club is run. All of this coupled with Uniteds’ global brand will see them continue to play at the highest level for the forseeable future.

It is patently obvious from their recent prospectus that the only reason the Glazers got involved with United was to make money, lots of money. I think they will find it hard to turn down the rumoured £1.5Billion offer.

Chelsea are at a crossroads too. Although they have some young players of worth, a lot of their talent is fast reaching its sell-by date. As we have experienced when the Invicibles came to an end, it is very difficult to build a new team overnight even if you have the luxury of a world class scouting and youth development system. If they are going to significantly re-build over the course of the next few years, they won’t pay for it all out of player sales, which means that profit or investment will be required. Abramovich has already said that he has put in enough money and that he expects the club to stand on its own two feet, but it remains to be be seen if this is true or not.

Recently, Mark Hughes said that at the beginning of this season, his brief was to take city into sixth place this year. The implication being that next season they would be challenging for a CL spot or Premier league title. City’s conversion of their debt to their owner into equity indicates that they also want to toe the financial line. I find it hard to believe that operating as they currently are, any of  City, Villa or the spuds will be able to balance their books without continued contributions from their owners. Unless they can get their hands on Champions league money.

The next couple of seasons are crucial. If any of these pretenders want to realistically get into the top four on a permanent basis, they need to do it now before the rules are changed. The money earned over a couple of champions league seasons may be enough to balance the books  and satisfy Uefa. That is if they can stand the pace of the competition when they get there.

Thats a lot of ifs and buts and maybes though. If the Glazers sell United, or if Liverpool attract new investors, they could theoretically qualify. Maybe Chelsea and City will be able to run without any more money from their owners. Perhaps Villa or the Spuds will earn enough from Europe before the rules are changed.

The only certainty in all of this is that Arsenal are the only club that ticks all the boxes. Do we have a current squad that can compete realistically in all competitions ? Yes. Do we have a constant influx of talent coming up through the ranks? Yes. Are we turning enough profit to service our debts and operate in the transfer market when required? Yes. Will we qualify under Uefa’s new rules? Yes. Do we have a proven Champions league record? Yes.

As far as the ‘top four’ is concerned, there’s us, and, well it’s just us really. All the rest of the clubs have so many issues that a place in the top four and Europe can’t be guaranteed for any of them.

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