Untold Arsenal » There are 3 ways of running a top EPL club. (Two don’t always work)

Articles on Untold Arsenal are so good that they also appear on Team Talk. The same is true with much of our correspondence. The name of the “author” is changed on Team Talk.

Team Talk have been told repeatedly, but won’t stop the activity, so, I think we should celebrate this situation. Read it here, and then read it again. (If you have nothing better to do, that is).

3 Ways of Running a Top EPL club

1: The Rich Friend to the club

This is the traditional way of developing a club which dates back over 100 years. The local carpet wholesaler or whatever puts some money into the club, and becomes chairman. Woolwich Arsenal was run like this (although the rich friend wasn’t that rich and ran a gents outfitter in the town.) When he couldn’t raise any more money a rich “friend” appeared in the shape of Henry Norris and he ran it until he was thrown out of football.

But this method of running lesser clubs turned out to be small-fry when it was revolutionised by the then singularly second rate Chelsea. The new “super rich friend” approach and has since been explored by Man City, and up to a point by Fulham.

Portsmouth are trying to go that way too but “rich and proper persons” keeps getting in the way. QPR have done it in the second division and Newcastle have tried it with a man who drinks too much in football grounds. That last case shows what can go wrong.

But in terms of winning the league twice Chelsea has shown that it can work – but also that it is not guaranteed as a route to eternal silver. There was a real thought that they would win the league year after year under Abramovich. But they didn’t.

This lack of guaranteed success reveals a danger. The owner can lose interest, or all his money. And the sort of people who play these games and have this money are not that good at waiting. Tensions can arise. Last season we called the owner at KGB in Fulham, Absent Abromovich. His interest is back, but it can go away.

2: Buy now sell later

The idea is to do a buyout in which all the cost of buying the club are put back into the club itself. Loaded with debt the club will have no chance of escaping from its situation. The club can go on buying new players and attempting to win the league – indeed it can win the league – but that makes no difference to the debt because the ground is already full, and despite the wild talk at Real Mad, shirt sales do not grow exponentially.

The idea is for the owners to find an even richer owner to take over the club and the debt. So the current owners buy the club with the clubs own money, and sell the club and keep all the sale receipts. The club changes ownership, and the people who used the club’s own money to buy the club now walk away with a huge profit.

These people love the club to win trophies, because the more they win, the more the sell-on value of the club increases (as long as the debts are ignored). So they carry on spending more and more money, even if it means they can’t pay interest on the debt, to keep the supposed value of the club rising.

This all goes wrong if the rich kids lose interest in football (ok you get the boardroom fun, but you also get supporters of every other club hurling abuse at you). And it can go even more wrong in a recession when no one will buy because they expect the club to go bust first, and then they can pick up the pieces.

This is the problem facing Manchester U and Liverpool. They have been running up the debts – Liverpool have now been ordered by their bankers to make hefty repayments, and Manchester U have long since stopped paying interest out, rolling the interest into ever greater loans. (A brief pause here to say this article first appeared on Untold Arsenal, even if you are reading it somewhere else – these cut and pasters don’t actually bother to read the articles they pass on).

So the momentum of winning has to be kept up, to keep up the supposed quality of the club in the eyes of a potential buyer, and for that the debts have to rise, until one day either the lenders lose patience and liquidation follows (Leeds is the example here), or the clubs find a buyer.

3: Sustainable development

Arsenal went looking for another route. They needed money to build the new stadium, and knew that if they borrowed money for players at the same time as taking on the stadium mortgage they would end up in one of the two positions above.

So they developed two ideas that were already in the club: World-wide scouting and Youth Development.

Everyone has scouting, and everyone has youth development, but the plan was that the club was already so far ahead of the opposition in terms of both, that it could trade on its reputation. Youngsters and unknowns would come to Arsenal first, because of the reputation the club had in both areas. So when Arsenal bid against Manchester U for Ramsey Arsenal walked in, because of the reputation of not putting big names ahead of the youngsters.

Put the scouting and the youth policy together and you have scouts who, even if they bring in just one brilliant player every five years, save the club £millions against the cost of transfers.

Some of these great finds will be sold on for a profit, and because of this jealous supporters elsewhere renamed Arsenal a “selling club” as if “selling club” was a bad phrase. But in fact Arsenal generally gets the best out of its stars before moving them on. From Vieira to Hleb this has been proven to be true.

So powerful is this model (it saves money, brings in brilliant players, heightens the reputation world-wide, and then brings in money when players are sold on later in their careers), and indeed so spectacular has it become with the current double-winning youth team (most of whom joined the club six years ago) that it is now commonplace for clubs that seek to rise up the league to say that they will “do an Arsenal”.

The fact that no one has done this yet, reveals the danger of this model. It fails when the people at the top are not clever enough to do it. If you bring in second rate players, or can’t spot a Clichy when he is playing for a minor club that has just gone bust, you don’t make it work.

But when you make it work, it can lead to a self-sustaining production line that lasts and lasts – because all the kids want to join. At first it is frustrating – the great youngsters are all too young to play. But if you keep it running for four years, then in the fifth year you get the benefit of the first year – the first crop of brilliant kids are available for the first team.

That is where we are now. After four years of thinking “my God those 13 year olds are ****ing brilliant”, they are now emerging. As Liam Brady said, a lot of them are ready for the first team now.

The model is also unassailable from without. Both Manchesters , Liverpool and Chelsea are all at the mercy of the money men. Arsenal is only at the mercy of its own ability to bring through the talent. With Arsenal every issue is under their control. At Manchester U it is the Glazers and the markets. At the KGB in Fulham it is Mr Abramovich (and his ex-wife who now seems to have half his empire). At Portsmouth it is the rich and proper persons act (sorry “fit” not “rich” – slip of the keyboard).

One reason why people don’t like the new Arsenal approach is that it takes time, and we live in a culture in which success is demanded now. But in fact we’ve been through the hard times. We’ll see one or two youngsters enter the fray this year – and then next year we won’t know where to move for players.

If you want proof of the impact that Arsenal’s approach has had across the world however, take a look at the comment from the gentleman from Russia near the very end of yesterday’s comments section. That tells you the result of what Arsenal are up to.

Conclusion

In the end it is the question of control. Do you want control within the club or do you want control exercised by RBS and Gillet (at Liverpool), by the Glazers and the one company that might just pull the plug and ask for its interest to be paid, or by Mr Abramovich becoming absent once again.

(c) Tony Attwood 2009. Reprinting without acknowledgment is a crime against my pride.