Untold Arsenal » Does Arsenal need more money?

At the moment I’m writing this Ade is an Arsenal player. But the time you read it he might not be.

Let’s assume for a mo that he goes. In another summer all the anti-Wenger people would be out shouting “Arsenal are a selling club”.

Except that Villa lost Barry, Manchester lost Ronaldo and KGB Fulham might even lose Terry while all sorts of people seem to be ready to jump ship at Liverpool. Seems we’re all selling clubs now.

Then there’s the fact that we don’t like Ade anymore. Just like when Cole went (although not quite so much).

Which just goes to show how much emotion affects the way we see our club and the world of football around it. And that of course is how it should be.

Except that there are some things when maybe we ought to be a bit more grounded in facts. Like economics for example.

Trouble is, economics is that most mystical of sciences. Every year we get a budget, the Chancellor waves that funny little bag of his which contains his sandwiches, and every year the government gets it wrong and have to correct it the following year. And if the government can’t get their sums right, how can we expect a football club to do so? Especially as its main “property” are a bunch of footballers who can lose form, get injured, or just lack motivation.

You may well have seen Robert Peston (BBC’s Business Editor) report on Arsenal economics comparing the financial analysis of Lazard Brothers for Ms Usmanov with the analysis by Rothschild on behalf of the board. Two different sides, two different views.

One interesting difference between the two analysis is what was included. The Arsenal analysis included within its review the attitude of people within the club – including Arsene Wenger – while the Usmanov report worked only on financial issues. Was it right to include Wenger? I’d say yes, because the motivation and belief of the people doing the deals is a fundamental factor influencing the success or failure of those deals. Besides he’s got a degree in economics.

So in short, your view of football is based on whatever assumptions you make. Here’s a few examples:

Football never makes money for anyone – it just brings status. That was the view that held sway for years and years. Until that awfully nice Mr Bates made a fortune selling what used to be known as Chelsea, and David Dein sold his shares in Arsenal for quadrillions. Suddenly thought patterns changed.

Manchester IOU and Liverpool I can be sold at any time There will always be a buyer and there will never be any problem in raising more loans. That one is just starting to crack.

With unlimited money one can guarantee victory in any competition one wishes to name. (KGB in Fulham, Manchester Arab). The KGB have proven that wrong.

That when a top club comes up for sale people will want to buy it Now look at Newcastle Zebras – as it has become clear than none of the Zebra players has a clause reducing his salary upon relegation, so no one wants to play. Interestingly this is the self-same problem that scuppered Leeds.

Big clubs don’t go into a tailspin. I refer m’learned mates to Leeds and Nottm Forest. And although Southampton are not big in the same sense, they were in the top division for a long old time before heading further and further down.

Selling to some big time operators will bring your club up the leagues. Well not at QPR. Notts County owners who GAVE AWAY their club to an unknown company certainly hope so. I’m not sure.

Usmanov’s men assumed that Arsenal’s earnings will drop by around a third next year because they will have to give all their players a 14% pay rise to counter the tax rise. They also say that because the sale of the properties is going so slowly, they will run into trouble trying to get a loan to cover that problem.

The Arsenal analysis is interesting because it says that even if the assumptions of the Usmanov side are true (which it doesn’t accept) the £150m Usmanov’s share issue would raise would hardly help – saving just £5m a year.

They admit the Highbury flats are a problem, because property is just not selling at the moment, but again they say that they have other ways to deal with this. And anyway if in a terrible scenario Arsenal defaulted on the Highbury loan, the developers would not be able to seize Arsenal money, or the Emirates, or a couple of players. Arsenal FC is owned by a different company from Highbury.

But then comes the killer. The Arsenal report asked the Lord Wenger if he was actually having a problem because he doesn’t have enough money to buy and pay the team he wanted. He said no.

So will Arsenal be hampered by a lack of funds because their player salaries are about to escalate? Yes, if everything else stays the same. But for years clubs have got round this issue by using off-shore trusts to pay players. The government recently closed one loop-hole – what do you bet me that another one is not as I write, opening up?

In fact to make the Usmanov claim work, you have to assume that for the first time ever, the government has got the better of the accountants who work for the corporations. That’s one hell of an assumption. You also have to assume that the Lord Wenger was telling porkies to Usmanov’s men. And you have to assume that the people who drew up the Highbury contract forgot to isolate Arsenal FC from the debts incurred during development. Three big assumptions.

And of course there could be something else not included here. Many writers say that the Black Death caused the end of Feudalism, so maybe Swine Flu will cause the end of capitalism – in which case it is all irrelevant. Maybe Liverpool or Manchester will implode. Maybe Mr Abramovich will be arrested. Maybe dark energy which affects the universe and reverses gravity (don’t laugh – that is real – read New Scientist each week if you don’t believe me) will be tamed, we’ll have anti-gravity cars and oil will become worthless and Manchester Arab will go bust.

So it is all assumption, and how you see the world. Lots of Arsenal players thought losing Flamini was the end. WC Milan didn’t really share that view, only played him when others were injured, and are apparently willing to sell him. It all depends on your perspective.

The only thing I can predict with certainty is that most of my predictions will prove to be wrong.

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(c) Tony Attwood 2009