Monday, September 27th, 2010 « Untold Arsenal: Arsenal News. Supporting the Lord Wenger in all he does
Read between the lines.
By Terence McGovern
So the annual financial figures are in and all is rosy in the garden. It is notable however that many Arsenal fans are not exactly overcome with enthusiasm about it and so we should ask ourselves, what we want from these figures and really at the end of it all what are they going to do for us the supporters.
Let’s break it down and keep it simple. I would point out that I might be a few quid or a year out here or there and if you wish to be pedantic about it and jump on a slight inaccuracy, please don’t bother. My articles are in the main authored from a philosophical point of view and thus a mil/year or so out is irrelevant.
So we have made a bundle from the property sales and with 60 units or so left to sell (20 or so being sold since the closing of the last set of accounts) we will have more profit to add from the remaining sales. We have over £125 million in the bank although about £40 million of that is held both as a guarantee towards our stadium financing for the next 21 years and also an allotment towards new developments on our remaining 3 sites. Still that does leave us £85 million or so which fans of most clubs would kill for but a large segment of our support is unenthusiastic about.
In a sense, it is understandable for a certain type of fan to be thinking that if we have it then why are we not spending it? They are thinking that we could spend £20 million on a goalkeeper and the world would be a better place etc. It is unfortunate that we have fans that will only be appeased be the “idea” of spending large sums regardless of whether they are needed or not. They want the temporary addictive lift it brings and the questionable bragging rights that anybody can claim at the start of a new season.
Now I could point out that the year we went unbeaten we spent less than £1 million in the market but that was spent on a keeper and not wanting the debate to get skewed I will avoid the keeper issue like the plague.
Here is my take on what this profitability gives to our club and to us the supporters.
For a start we can bask in the warm glow of financial security whilst we watch Liverpool go down in flames. We can also look at the distant horizon and detect a slight plume of smoke over Manchester. If you are close enough, please blow on it . The way that Arsenal has operated and carefully guarded our money means that it would take years and years of mismanagement(highly unlikely unless the lunatics take over the asylum) for our fortunes to slide to the detrimental state of these two historic giants of the game. Pretty soon history may be all their fans have.
The club has spent some money although not wildly, but at first glance seem to have spent cleverly. Koscielny was our largest outlay somewhere in the £8 million range and most were initially uninspired by the purchase. However, it would take the most stubborn malcontented fan to deny that he has had some outstanding performances especially given he was literally thrown in at the deep end.
Squillaci is still an unknown quantity but his performances so far seem assured and calm because his positioning has been meticulously observed. Then we come to Chamakh who was on a free but as we know from Sol’s days these ‘free’ players have a large loyalty payment paid each year on top of their impressive salaries. It would not be a surprise if Chamakh is on similar money to Cesc. There was a time when we were accused of not paying comparable wages to other clubs but that day has long passed.
This is an expensive business.
The club has, over the last year, extended a raft of player contracts with a mind to securing the long term stability of the team. That is to say that if they continue playing together, they will improve as a team without constant chopping and changing. This of course has been an expensive process also.
There is no doubt that should the need arise or be perceived by the manager in January, then the club will spend to solve that need. Arshavin and Reyes are examples of this. We are suffering from a lot of injuries as usual and although the wonderful victory at WHL against the Totts showed that more than any other club in the EPL we have strength in depth. If it gets any worse we may need to increase the squad. Tony has already made the point that due to several players breaching the “over 21” barrier we may have to shuffle a few in and out anyway. Either way the cash is there if we need it.
Where the cash will be used and must be used is to remedy an obvious shortfall in the Arsenal business model. Our commercial revenue is severely lagging behind that of our EPL peers and also our European counterparts. The reason for this is simple. We needed money to get the Emirates stadium project off the ground and Emirates provided a £100 million deal but it was front loaded and as we are in the second half of the 15 year deal, the income from it is now declining year by year so it is almost negligible.
Similarly our shirt deal with Nike was struck from a poor bargaining position and renewed based on a clause in the original deal so whilst better than the Emirates deal it is not as good as that of say Liverpool or Man Utd. These deals had to be done and we will simply have to deal with them until 2004 and 2017 respectively.
That all being said we have a new commercial operations executive, Tom Fox who has worked with the NBA and Nike specifically in Asia. This appointment is a declaration of intent. The Far East is where the market expansion potential is and this guy knows the territory. Arsenal will be expanding their retail operations in India, and in China and other parts of the Far East. We will be increasing our brand exposure through football academies and other development projects all over the world including throughout Africa. On top of that there is a huge drive to find media and internet partners particularly examining the sale of high definition internet live streams of games. (See the link at the end of this article for the Untold Arsenal piece on Arsenal’s drive to HD Broadband).
How that will stack up long term versus the TV deals and conflicts of interest is anyone’s guess but I would venture that the first to establish a viable internet following globally, will steal a serious march on the opposition.
It is worth noting that I recently watched a reserves game courtesy of an official Man city stream that I would probably pay for if it was available from my own club so the powers that be take note. One camera with an internet link could yield some extra cash.
All this development takes money and promoting a global brand against other global brands that have billions at their disposal is no easy task but as long as the football is superb there will be a market for it and long term, the rewards will be great. It is worth noting that Sky couldn’t wait to tie the EPL down for a new bigger deal that included overseas broadcasting before somebody else got in on the action or the clubs took matters into their own hands individually or collectively. The market there is potentially worth several times what it is worth here so watch that space over the next 5-10 years.
It is crucial that the club gets in on the action in this part of the world as quickly as possible because doing so will catch us up with our competitor in commercial income here.
Now there are those who will say that all this is doing is lining the pockets of the sharaeholders. Well yes and no.
Yes the shareholders will become richer via the increased value of their shareholding.
You have only to look at what David Dein paid for his shares and the amount that he sold out to Alisher Usamov for to see the vast sums that can be made this way.
No the shareholders cannot touch any of this money. It is there as a resources for use by the club for the club. Arsenal shareholders do not receive a dividend nor do they have any access to club funds for any personal use or security. Anybody who states otherwise is speaking from a position of ignorance and through their arse.
Will some evil despot take over the club and plunge us into some leveraged buy out hell? It is possible but unlikely from the current set up. Stan has just purchased the Rams in the US and supports plural ownership and the self sustaining model. Usamov is more unknown but vastly richer and wouldn’t need to borrow to buy in theory. To be honest neither seems anxious to make a move as things stand and anyway we are in no position to intervene unless one of you is a secret billionaire with an extra billion to spare. That is a bridge that we will have to cross when we come to it …if we come to it.
Personally I think that all concerned will see the figures today as an accelerator for their share value and be happy. Promoting theories that it will activate some go order for a hostile takeover is both counter-productive and without foundation.
Still there are those that like to rail without foundation. They don’t care about overseas growth because they don’t speak English over there and they are foreigners so who cares. They don’t care that the new signings are performing beyond most reasonable hopes. They don’t care about financial figures that bring a wealth of respect to our club internationally. They don’t care that every club that buys the type of players that they want, the way that they want Arsenal to buy, is in dire financial straits or at in danger of excluding themselves from European competition.
They want big signings whether good or bad. They want Arsenal to buy players that they have seen 5 minute segments of on YouTube. They want players with big price tags so that they can boast to their equally retarded mates.
They want it now daddy!
Thankfully, they do not run the club and their ilk never will. That is why we are on the rise whilst our historic rivals fall. That is why our future is secure and that is why, 10 years and 20 years from now in an expanding global and competitive domestic marketplace, Arsenal will still be competing at the top table of domestic and European football.
We all want trophies of course but some of us realise that some you win and some you lose no matter how good you are or how much you spend.
How much comfort is Portsmouth’s FA Cup victory to their fans now that they realise it cost them a premiership standing that may never return.
Will Liverpool’s trophy room be any compensation when the banks move in, their few good players are sold and they slip down the table or maybe worse?
We will have to ask them because those who generated those financial figures today through foresight, planning and discipline will never let it happen to us and they will take those actions in spite of what some Arsenal fans demand.