Arsenal’s Finances: The Plain Truth

I’ve noticed there’s a lot of rubbish on Twitter about Arsenal’s finances. If you’re too busy to sort the wheat from the chaff yourself and you don’t know which tweet is fact and which is fiction, here’s a simple bullet point summary.

A quick edit on 22 Jan: this post was read by over 18,000 people in the first 48 hours after posting, so it’s clearly a subject that interests many fans. For more detailed Arsenal financial info and to back the idea of supporter ownership and accountability at Arsenal, join the Arsenal Supporters’ Trust.

The overall picture

  • Arsenal have some cash, but cash balances and cash to spend aren’t the same thing
  • Balances are different depending on time of year and when money comes in – season ticket monies come in at a set time, and always artificially inflate cash balances
  • We only get to see cash balances reported on two specific dates namely 31 May and 30 Nov – these are accounting reference dates
  • Money going out is more constant – players are paid each month, bills maximum quarterly, interest on debts six monthly, etc
  • Property profits are much lower than originally projected
  • There are separate companies set up under Arsenal Holdings PLC, for the football club itself, the stadium development, etc – 12 in all – but what gets reported on is the overall picture.
  • The stadium costs were said to be ring-fenced; this was never more than half a truth.
    • What was known was the overall cost of a new stadium (£440m), as long as it was on budget, which it was.
    • So the new stadium was built and paid for out of loans of £260m, ITV share money (£80m) and £100m of up front sponsorship cash from Nike and Emirates
    • There is still interest to repay on loans taken out to finance the stadium build, BUT this is covered by the additional income from much larger gate receipts, so in that sense the stadium debt IS ring-fenced.
  • Alongside the building of a new stadium there was property development, mainly at Highbury.
    • What was also expected was a fat profit on the sale of Highbury flats, which would have removed any worry about ring-fencing anything
    • What happened was that property prices and demand plummeted, so that it took much longer than expected to reach the break even point on this property (not inc. new stadium) development
    • The non-stadium property development is now making profit that drip feeds in to the football pot.
    • This was always seen as a bonus – but the bonus turned out to be a lot smaller post-banking meltdown than was originally expected.
  • The surplus gate receipts, over and above what was received at Highbury plus debt interest, goes into general available funds, so the new stadium is therefore a net contributor
  • So are we better off than had we stayed at Highbury? Clearly we are.
  • The wage bill gets bigger and bigger every year.

Transfer spending

  • People point to Arsenal’s net transfer profit in recent seasons, saying it’s bad that we make a profit while all our rivals make a transfer loss. This is both stupid and irrelevant – there’s a pot of money to spend on wages AND transfers, and our wage bill is huge, fourth largest in the Premier League. Tottenham have spent much more on transfers and much less on wages – why is their way held up as being better, when the results don’t back it up?
  • A good manager doesn’t need to spend a fortune in the transfer market. Brian Clough won two European Cups with a small provincial team and a tiny turnover compared to the likes of Liverpool and Man Utd at the time. Looking at transfer spend only is pointless. He did buy the first million-pound player though, who scored the winner in that second European final. There’s probably a lesson here on speculating to accumulate.
  • People forget we do actually buy players: Gervinho, Arteta and Oxlade-Chamberlain added together in transfer fees equals Fabregas; their wages added together equal more than Fabregas.
  • The wage bill gets bigger and bigger every year.

The accounts

  • Very simply the accounts work like this:
    • Add up all the money coming in: TV, gate receipts, prize money, sponsorship deals, merchandising, property sales
    • Add up all the money going out: bills, debt repayments and interest, running a stadium / training ground / offices / museum, admin, staff costs for everyone other than players
    • Work out the surplus: this is what you can spend on players, assuming there are no shareholder handouts (none at Arsenal for 40 years) or increased debt charges
    • If the club is well run, the surplus goes up each year.
  • The surplus may look bigger or smaller, depending whether you measure it before or after a big chunk of income arrives
  • Let’s say the surplus is £100m. That means wages plus net transfer spend can’t exceed £100m (without making a loss, which is not the Arsenal way).
  • But it’s slightly more complicated, because
    • when you sign someone you have to take their future wages into account as well,
    • and when you sell someone you don’t end up spending the wages you thought you were going to.
    • As well as that, players get extended and improved contracts. So the amount of money available is a constantly moving target.
    • Not only that, but Arsenal don’t announce either transfer fees or wages, so we have to make educated guesses based on figures in the published accounts (which are always several months out of date by the time we see them) and perceived market value of players.
  • There’s one thing we do know, though: the wage bill gets bigger and bigger every year.
  • Analysis of all this leads educated observers to believe there is approximately £40m ‘spare’ at present – not that we know if it is available to the manager or not.
  • In today’s transfer market, that is not huge, but most supporters could list a dozen or more players not playing, not performing or out on loan who could be removed from the wage bill without adversely affecting the team.
  • Whether the manager disagrees or agrees and is just having trouble shifting them is unknown, though Ivan Gazidis has admitted in conversation with AST members last month that there is some ‘fat’ to trim from the wage bill
  • Arsenal prefer not to speculate to accumulate.
    • If there’s £40m, they’ll spend a maximum of £40m.
    • If there’s a danger of missing out on Champions League income, they may save money to cover that

NB:

  • All the above takes no account of whether Arsenal’s policies are right or wrong! It’s just the facts of the current self-sustaining policy.
  • Who decides what to spend on players? Generally the manager from a wages and transfer budget that he is allocated by the Board (basically all the spare cash after expenses), but the Board undoubtedly influence decisions such as the Nasri sale who would have been a “free” this coming June

And to digress slightly from the main subject, Ticket prices:

  • Rumour has it that ticket prices may rise again this year. I’ve seen many people say, “I wouldn’t mind so much if they invested the extra into the team.”
  • Gate income is approaching £100m a year; wages are approaching £130m a year. The extra IS invested into the team – did I mention the wage bill gets bigger and bigger every year?
  • Is this justification for increasing prices further? No.
  • If supporters were prepared to go and watch whichever team gave the most value for price and entertainment, it would be a whole different ballgame. They’re not, so it’s important for fans to pressure the club into acting fairly on tickets
  • Ideally loyalty should be rewarded: those who go most often pay least
  • The club’s justification for a 4% rise last year (6.5% inc VAT) was that prices hadn’t risen for several years. Their justification assumes that prices were at the right level when they were last raised.
  • I’d argue they were too high then and they’re too high now.
  • Increasing them further when the club is struggling (relative to recent history) just adds insult to injury.
  • Commercial revenues are relatively poor compared to our peer group. Even a neutral observer of Arsenal’s business operations would say that is where the work needs to be done to increase revenues; why should supporters, the lifeblood of any club, pay more to subsidise poor performance of the commercial team?

I hope that’s all clear, but feel free to ask questions.

Oh, and follow me on Twitter: @AngryOfN5

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111 thoughts on “Arsenal’s Finances: The Plain Truth

  1. “Arteta and Oxlade-Chamberlain added together in transfer fees equals Fabregas; their wages added together equal more than Fabregas.”

    I think you are wrong there.
    Cesc was said to have got 130K /week . Arteta gets about 70. This would mean that AOC, 17-18yo when bought gets a massive 60K/week? no way. probably about 30-40K tops.

  2. Intresting piece but as much as I hate to say it I think Tottenham’s policy of spending more on transfers and less on wages than Arsenal is backed up by results seeing as they are 10 points ahead at the moment! Arsenal may be self-sustaining but what you fail to take into account is that teams can make the money back by winning European Cups and Premier Leagues (again) through prize money and better sponsorship deals.

    • But Spuds haven’t won. Modric is still unhappy (I am sure Chelsea’s wage structure would make him feel better) and Bale will turn into the next Cesc transfer saga… Players are not going to stay for 1/3 of the wages they can now get at Barca, Real, Man U/City, Chelsea, PSG etc… Football has become a business for everyone except the supporters

  3. Nicely put mate, hopefully that will clear things up and end these people saying we have 100 million or whatever the figures banded about are.

    I would say, our wage bill is enormous for the amount of actual talent we have at the club. There must be ( I’m guessing) 30m of wages each year that are going to players that we like to refer to as deadwood. If we could clear this, it would help the cashflow no end and maybe let the top players earn (slightly) more. (RVP)

    • This is the biggest flaw in our set-up in my opinion. We currently have 63 professionals on our books (not including Thierry Henry), 29 of whom are young players outside of the official first team squad ( http://www.arsenal.com/first-team/players ). Of those 29 only Ignasi Miquel and Nico Yennaris have contributed anything of note to the first team this season but all are on decent wages, our policy being to pay wages high enough to prevent youngsters being poached by competitors. That leaves 34 first team squad members. Three of those (Denilson; Vela; Bendtner) are on season-long loans because we were unable to offload them last summer due to their high wages and of the remaining 31 it could be argued that up to ten are failing to justify their places and wages due to form, fitness issues or inability to adapt to the Premier League (Almunia; Fabianski; Squillaci; Gibbs; Diaby; Rosicky; Arshavin; Ryo; Park; Chamakh).

      There is so much wrong here. Star performers not being paid commensurate with their input (and Man City hovering). Under-achievers being paid too much and getting complacent and then being impossible to shift. Young pros believing they’ve “made it” before they’ve achieved anything. A bloated, inefficient, under-performing squad. Very little room for new, better players. It’s mismanagement, plain and simple.

      • Yep also Arsene points to that he has big squad but dont use it. It beggs a question why we pay so much to players we dont use anyway, to make excuse in transfer window that we have big squad (of useless …) and dont need to buy? I thought that were going to offload deadwood and it seemed like that but then we bought Park and couldnt sell the ones that you mentioned. I hope Arsene recognise that and will sort out it in the summer if hes still there.

  4. Excellent piece. Next step is to illustrate how much more non-gate revenues can be reasonably generated and how much fat can be trimmed from wage bill. Suspect he latter is a result of poor injury record in recent years. Croc list is always among the longest in PL, the medical staff is partly to blame.

      • I will blame the manager. He created the structure of first team and squad players. That forced overuse of primary players, not to mention the alternative / replacement player is not good enough / fit enough / integrated enough to provide similar effect to lineup.

      • Is it possible that the persistent injury crisis at Arsenal could be something as mundane as the soil that the players are having to run on?

        Purely speculation, but Arsenal’s envied turf is certainly pleasing on the eye, slick for the ball, and undoubtedly nice to run on, but does this necessarily mean that it is good for the player’s legs in the same way that running in a sponge pit for 90 minutes would also undoubtedly cause injuries?

        One need only sift through the internet to find a long list of players who claim such ‘mundane’ things to affect their fitness: Giggsy being the most obvious in that he was told that by buying so many different motors his calves were being hampered by having to constantly readjust.

        Naturally my query isn’t supported by any fact and nor do I suppose anybody to know the answer.

        I just like to speculate.

      • @LG

        I see where your coming from but its a common misconception that the slick playing turf is very soft. It is actually the inverse, it is rock hard which is why it is slick. Of course, this could also be seen to contribute to injuries. It would be interesting to see how many injuries occur at home and how many away.

    • Ha ha, well in summary they all have debts that are getting bigger apart from Man City and Chelsea, who don’t give a crap until FFP comes in. Arsenal’s turnover – thanks to success since 1998 and the new stadium – dwarfs everyone else in England bar United, so debt is handled more easily. If you happen to be interested in Man Utd’s finances follow @AndersRed. He did a great presentation to the AST a few months ago comparing AFC / MUFC, with a bit of MCFC thrown in. Join the AST too, by the way.

      • Ah yes FFP. Another fart in the wind which Gazildis and the rest will be pinning their hopes on. If you think this will be applied and clubs wont be able to work round it then you certainly are living in a far away land dear boy.

  5. You make some good points. Isn’t it better to spend money to get into UCL than save money to cover if we are out of it? Also there is much talk about £53 m in the TPA account. Is there a reason why the club is reluctant to spend?

    • Best guess is that reluctance to spend is due to fear of missing up to £40m of Champions League income next season. Plus Directors’ fear of putting their hands in their pockets.

      • Surely that fear can only have a negative outcome? I’m not suggesting for one minute that the £40m should be spent in full but not spending through fear seems barmy?! Your never going to win the lotto if don’t buy a ticket!

      • Problem is that becomes a self-fulfilling prophecy – insufficient investment leads to failure to qualify. Being overly risk-averse could lead to a downward spiral and may ultimately be the riskiest strategy of all. The whole strategy relies on Wenger’s alchemy but that can’t be consistent forever.

      • Hmmm. Thats like saying we won’t eat today because we might go hungry tomorrow. Also, there is much debate on whether Wenger is actually given money to spend. Is it the the board or Wenger that is stingy?

    • It’s all well spending money to stay in the Champion’s League, but it’s better to err on the side of caution. Remember what happened to Leeds when they spent money to stay in it? Much as it pains me to say it (as I would like us to splash out on some talent), our way is better.

  6. surely its a common sense thing of getting rid of the non performers and getting some trusted players.Wenger does a great job taking risks by calling up unknown players and making them good players (cesc,henry,koscielny),but you cant actually make a whole team by taking risks.You need to spend good money at some point in time to ensure that the team lies in a good state.
    Of course it might result in short term loss,but I think Wenger is obsessed by the whole self sustaining and profit thing.You can have a great balance sheet each year,but to win at the top you need to spend real money (eg:Barca,Man Utd,etc.) they may be in debt but they are winning and at the moment that is the most important thing.Especially if you are trophyless for 6 straight years.
    Of course if the FPP is correctly applied,then the tables will turn and then I would admit what i said above would be rubbish and teams like city and barca would be in big problems.
    However i highly doubt that FPP will be correctly applied.

    My next question is if we spend so much on wages,how come samir nasri ,ashley cole,adebayor etc. leave due to low wages?
    Forget their unpopularity now,they would have been massive players for us right now if they had stayed.

    My last question is who knows whether ox,ramsey or wilshere may want to leave the club in search of higher wages.Or if rvp leaves due to no champs league.

    Even if these players leave,Arsene Wenger will come up with some plans to make arsenal profitable as always.

    But we have to ask ourselves,do we want a trophy less 10 years or loss less 10 years?

    • Adebayor, massive player? He’s a massive something, I think it begins with C.
      Any further comments from anyone giving even the faintest praise to Barndoor will not be approved.

      • the reason our neighbors tottenham are doing well compared to us has a lot to do with ades form.

        if we had played our cards right we could have kept him and right now we would probably have ade and rvp as a pair,which i think is way better than chamak,park etc.

        so are you saying you prefer chamak and park to ade?

        i agree he is the thing that starts with a c,but this is professional football and you got to make deals with that in mind

    • Our wage bill is high because we pay our young players more than they would receive at other clubs (that’s why we are able to attract them). We still don’t pay as much as Man City (Nasri/Adebayor) or Chelsea (Cole), but then few do.

    • The reason is our wage structure.

      AW, in an effort to keep players morale in check, created the footballing equivalent of Karl Marx’s manifesto.

      He made sure the gap between the highest paid players at the club and the lowest paid we’re not that big.

      The good part is that there are no ‘big heads’ in the dressing room in terms of wages. The biggest plus though is that he can offer young talents large contract offers that most clubs would consider outrageous for 17/18 year olds (Ramsey, Diaby, Theo, Ox, Denilson, Bendtner). That way he will more often than not be able to sign the youngsters he wants.

      The negative part of this principle is that your top talent are underpaid compared to your competitors. RvP, if he signs his new contract offer will break the 100k barrier (currently on 90k). He will be the third player in Arsenal history to break it after Henry and Fabregas. Our competitors have been paying their top players those sums for years to the extent that some have broken the 200k barrier.

      Rooney is on 180k. Terry and Lampard are on 225k-ish. Adebayor, Tevez, Aguero and a few others in the Man City squad make well over 200k. Yaya Toure is on 335k.

      Conclusion, the wage structure at Arsenal pays you very well when you’re a youngster with huge potential. If you don’t fulfill that potential, you become an overpaid squad player. You fulfill it, you’ve outgrown Arsenal’s wage structure.

      Double-edged sword, I say.

      • Terry and Lampard (as well as Torres) are all on 150. I can’t speak for certain on your City wages, but your Chelsea wages are 100% wrong. I’m also pretty sure you are incorrect about Toure but can’t be 100% certain on that one.

      • it is more than a double edged sword,what makes you think that these young players are going to settle for 100k when forget man city ,other top clubs are ready to offer them 150 k.
        do you think they wont take it

        its all nice to buy these players and develop them and then sell them for a nice profit.
        the whole purpose of developing youngsters is defeated if they are going to go away once they are mature.
        so thats why i am saying invest in a at least four more world class players and get rid of the 8 rubbish players we have and we should be all right.
        But action should be taken asap

    • I don’t think AW gives a stuff about making a profit.
      But he does care about making a loss and in long term team morale.
      Hi knows that if he pays €50m for Goze, he’ll have to pay him the appropriate wage, which in turn will lead to all the agents of all the other players knocking on his office door to ask for more money.
      It’s a very difficult balancing act that many managers have failed at.

      • true,but thats what separates the best from the rest.
        he has to realize that while the entire structure does not need to be overhauled ,some tweaks are a must.
        i am quite sure that this has crossed his mind and i think there is more to than that meets the eye with regard to wengers inaction in the transfer market.
        perhaps wengers not entirely to blame

  7. Great article, well laid out and explained. The constant cries about 40m etc warchests based on the nett calculation of transfer fees has long been a source of amusement and frustration. The next few months however are pivotal in terms of getting CL qualification and what it entails in the summer with regards to (certain) player retention and also acquisition. Surprised you did not see fit to mention the annually increasing wage bill all the same. Should increase even more when Theo gets his 100k per week.

  8. I think only dimwits think that Gazidis gets the AFC debit card out, presses ‘balance’ and there is £100m and that’s how much we can spend in a single transfer window.
    However, the fact remains that the club continues to generate cash consistently and the league position gets lower and lower.
    I think it reasonable to question
    a) Is the club putting to work all the available resources
    b) Is the club using what resources they do use efficiently.
    I think it’s also reasonable to conclude that the answer to both questions is ‘No’.

  9. An excellent summary of the situation and the dead wood to cut should include 3 of teh 4 keepers the are useless..skwilachi, djoure,arshavin, rocicky,chamak, park and walcott for sure..he has been aroundn 4/5 seasons should be averaging 15 goals minimum per season and is prob nearer five! and the cheeky so and so wants 85k a week..get rid of him..dosent aspire to the Arsenal standards..a lot of players need to be cleared out the tricky bit is cos they are so pooor ther ewill be no buyers ..glum! Anyway well written Angry..spot on…best regards from a very damp Devon!

  10. This is a helpful insight but it doesn’t change some basic issues with the club’s poor management of last summers transfer market.

    If we generate a surplus why don’t we spend more to replace outgoing squad members rather than less? We lost Clichy, Nasri, Fabregas, Bendtner, Eboue, Denilson and Vela from our first team squad. If we had a £40m war-chest to start with why didn’t each departure result in a replacement coming in who cost let’s say £5m more than the player going out? Part of that was made difficult by our failure to actually shift three of those players. However, imagine we’d spent £40m on a replacement for Cesc? and £30m for a replacement for Nasri? and £12m on a replacement for Clichy? and £8m on a replacement for Eboue? Imagine we’d actually sold Bendtner even at a cut down price of £3m but then spent £8m replacing him? What if we’d got tuppence for Denilson then spent £5m replacing him?

    Ambition would be taking the income from selling players, adding in our surplus and buying better players. Not taking the income and spending less.

    Imagine what our squad would look like if we took a really simplistic approach and just replaced every departing squad member with a player who cost £5m more?

  11. Well, that could just be the long term problem then.
    As you’ve stated, its not necessarily the correct policy….
    What Arsenal fans know is this:
    1. Success brings in more income and CL entry brings in more income, followed by more merchandise sales, better sponsorship deals etc.
    2. Quality players in general cost extra, but these players bring success – this has been proven time and again. We not asking for 200M to be spent, just 2 or 3 world class players at say 30 – 40M a pop.
    3. A continued drop down the table, proven once again over the past 5 years can only lead to an exponential implosion as top players leave (RVP) and a quicker drop down the table, forcing the board to re-evaluate (New manager, new players etc) which is very costly to the club and would probably put us in a worse financial position than if we had just spent some money to get some real quality players in and maintain or better our league position.

    So, although Arsenal fans may rant and get upset at the current policy, coming across as emotional and downright rude, deep down they know that the club is doomed to continued failure if it continues along this path.

      • Agreed, but these 3 players are replacing existing players who need to move on for whatever reason (under-performance, age, good offer etc)

      • I don’t see where your getting this £200mil pound from either, didnt know money grew off trees! If you read this article properly you would see we dont have £200mil spare to spend and you can’t tell me we’re gonna get anything over £10mil for Arshavin and the like!

  12. Very interesting piece. The stand-out issues for me are quite clear: 1) Move on underperforming / injury prone players for fees that would encourage other clubs to move for them and 2) Ensure our commercial activity / sponsorship / income streams from sources that are not the supporters are maximised.

  13. You quote the buys of Gervinho, Arteta & Oxlade-Chamberlain as the spend on Fabregas which is fine. But you could easily change that to Mertesacker, Park and Jenkinson which then doesn’t make it look quite so sound (the jury’s out on Jenkinson but has left the building on the other two).

      • Exactly Chris, the (rumoured) transfer fee’s for Mertersacker (£8M) – Park (£4.5M) and Jenkinson (£1M) add up to approximately £15.5M.. nowhere near the fee we recouped for the sale of Fabregas. I would say Dikster missed the point on that one.

  14. Excellent piece. I am sure it’s a matter of record somewhere but, given the fact that we will be a property developer as well as a football club for many years to come, what I wonder is the actual position on this front. I was in Highbury Square a couple of weeks ago and I can’t really work out if they are all sold now or not. The website only seems to have one apartment available. Beyond that, the swathe of properties under construction at the clock end opposite where The Favourite (god rest it) used to be must constitute a huge amount of capital which cannot be released anytime in the short term and I can’t help but worry that these properties may end up being the albatross around our neck for many years to come.

  15. The Club is at a tipping point. If we slip out of the CL it will affect the income of the club dramatically, but I doubt it will affect the wages being paid to the players.

    There are a number of players of questionable quality, who are being rewarded generously for being employed by the Club. They seem not to be interested, and are not valued by the management as they are either on loan, or sitting on the bench.

    The mess is the making of Wenger, who runs the club from top to bottom. He also gets rewarded handsomely.

  16. The management should realise the need to ‘trim the fat’ in our wage bill. Players that have passed their prime like Arshavin, chamarck, Almunia, squillachi, need not be left to be pulling the team backward and preventing investments in other players. Players like diaby and gibbs should also be assessed and decisions made to the best interest of the club. This is not a charity club. The fans feel the pain more than the players cos we pay to see them perform and win things. Arsenal is heading for a fans revolt if things continue this way. Please may I act like a scout here. Fernando Ilorente of Real Zaragoza will be a very valuable addition to our front line. Though he’ll not come cheap, he’ll justify the cost. Tell Mr Wenger.

  17. What an excellent, common sense article. There’s precious little of it around these days amongst football supporters! If we accept a) the club is well run as a business (which it is give or take a lack of foresight in maximisation of commercial revenues), and b) that we are competing on a financial playing field that is not so much ‘not level’ as positively vertical, then most disgruntled Gooners’ financial gripes fall into 2 basic categories:

    1. The failure of Kroenke to put his hand into his own pocket to finance transfers/wages.

    2. The refusal of the club to borrow money for the same reason.

    I’d say the first is a fact of life. We don’t have a sugar daddy and there’s nothing we can do about it. Not much point looking at moneybags Chelsea and City and feeling jealous – and at least we don’t appear to face the capriciousness of an owner/dictator.

    As for the second – I’d say it boils down to whether your interests are long or short term. Yes, our board is ultra-cautious, but is that better than putting the club in jeopardy by borrowing even more (remembering that we already have a chunky stadium debt to pay down)? Although the heart would love more success, surely the head must agree that the self sustaining model is the sensible one.

    So although some quarters might still consider this blasphemy, I’d say the real problem the club is facing at the moment is the mis-allocation of its existing resources. We are carrying too much expensive dead wood in the current team, and have too many players being over-rewarded in the light of their respective contributions. Whether or not this is because we can’t shift them – it boils down to the same thing – a manager who takes too many risks by rewarding promise rather than performance, and whose pride encourages him to hang onto such players for too long.

    And at the risk of going on too long, I’d say that the other problem that fans face is the lack of transparency from board and manager. I know that its the ‘Arsenal way’ not to discuss affairs in public, and I’m not advocating that we tell the market that we are skint, but there are too many mixed messages around the place, and those who are paid a great deal to manage the PR/information side of things could, in my opinion, do a considerably better job of getting a sensible and consistent message across.

  18. Of the 3 new recruits 2 play regular n Cesc was in love with sick bed, in terms of team contribution n match winning performance Cesc was supperior so overall if u include the Ox n his small contribution it was gud business by the manager, we lost a world class playa (@ cut price) n gained 3 gud playax of which Arteta has done well Gervinho will improve n the Ox will be better than Walcott

  19. The problem that we have is that we pay high wages for potential talent. This means that when the potential talent does not materialise, we find it hard to offload players. Almunia, Bendtner, Squillaci and Dennilson are examples of players that we would sell, but no buying club are willing to match their wage demands. It leaves us with no option other than to either loan them out, paying part of their wages, or just sitting on them. At the start of the 2009/2010 season we had agreed to sell Taroure to Benfica. The problem was that they offered him £ 15,000 a week whilst we were paying him £ 25,000 a week. The deal subsequently fell through. My issue is why was we paying him £ 25,000 a week. At the time he was no more than a third choice left back. It is a difficult one, because we don’t want to lose good players because they can command more elsewhere, but at the same time, we do not want to be in the position where we cannot offload players that don’t quite make the grade.

    • Bang on. Ridiculous wages spent on these guys. Does this come down to poor scouting in the first place? Poor management on Wenger’s part? Poor coaching? They come with reputations of being the next big thing… do we coach that out of them somehow?

      • The point exactly stop spending on the “next big thing” and spend on the current big thing. Am tired of these kids who we are promised to be the next big look @ Ryo for example he was a big player at Feyenoord but we have failed to get that out of him at Arsenal The Ox is better than Arshavin at leaset for the Effort but the manager says thet he needs to improve on his defensive side like Arshavin is a monster on his defensive side. I think Wenger has lost his magic. Samba was available to us in the summer for less amount than the big German and with less wages a player Quicker and more strong and knows the English game than Per. Only a handful of players can compete in the sp*&s team at the moment it is sad the quality of our squad keeps on weakening year in year out we have atleast being promised champion league footbal coz we cant win the title anyway but even that wont happen this year and now they can start promising us Europa legue if we dont act quickly and now.

      • I think part of the problem was that when Wenger began to conceive of rebuilding post-Invincibles our only real competitors were Man Utd (and then newly rich Chelsea). I’d speculate that he saw taking a risk on these highly talented youngsters would pay dividends because even if a few of that first crop didn’t fulfill their potential, several of them would turn into world-beaters and form the heart of the team for years to come. Due to a combination of a lack of foresight about contingencies Wenger might have been better prepared for (losing a player like Flamini to Milan, Cesc to Barca, having a player like Diabi, who I think Wenger supposedly rated highest of all, be permanent injured), and contingencies that have really changed football (the sugar daddy model), Wenger’s plan hasn’t really worked out as it might have.

        If Chelsea and City weren’t being run the way they are I think it’s pretty safe to say the Premier League would still have been a two-horse race over the past five years (Arsenal and United, with Liverpool, Tottenham, and Chelsea thereabouts occasionally), not only because it would remove to competitors but because it would have been easier for Arsenal to hold onto players and to compete on the transfer market.

        As is I think Wenger has done a stunning job considering what he’s had to work with. Tottenham’s transfer-fee gamble may end up paying off with CL qualification but we’ll see.

        Also think some of the criticism is a bit unfair. One can’t really lump together say Traore and Squillaci. Squillaci is a player who everyone thought was a great signing when he came in (older, CL and international experience, etc) but has been extremely disappointing. Traore on the other hand was the result of investing in building a team from the ground up.

  20. Maybe it’s time for Arsenal to review it’s business’s fiscal plan then? Self-sustainability is all well and good, but this is supposed to be a football club, not a financial institution. We should be up there with the best, not lurching from injury to injury, or defeat to defeat – and to be up there with the best and actually COMPETE one must take a punt now and again. Look what they have said about United’s / Glazier’s business model. But they haven’t gone into melt down like the pundits predicted. No, AFC is a banking front for fat, half-witted, ambitionless, old school tie directors who are happy for it to continue to fail respectfully – just as long as their pay-cheques keep rolling in.

  21. Great read Phil. The reasonable fan in me understands the way we do things but with only RvP, Vermaelen, Wilshire, Sagna (and possibly Arteta) of genuine ‘Arsenal’ calibre (in my opinion) how are we expected to keep/attract the best players? Especially if not in the CL? When I take off my red and white tinted glasses and Imagine I was advising RvP at the end of this season…I know what I’d be telling him to do and it’s not what we all want. Anyway, Up the Gunners as always!

  22. you keep highlighting that our wage bill is ever increasing, true, true for all clubs.

    however, we’re one of the few clubs with multiple deadweight players who also happen to be on substantial wages.

    diaby – 60kp/w
    denilson 40-50kp/w
    bendtner – no idea how much he is on but i doubt sunderland are paying 100% of his wages.
    rosicky – 70kp/w
    arshavin 80kp/w
    gibbs – 40kp/w
    almunia 50kp/w
    chamankh – 90kp/w

    there are plenty more deadweight players, its was wenger’s decision to give them long heavy contracts, now we can’t ship them out easily because clubs which are better then us are not interested in said players, clubs worse off then us will be reluctant to pay said players such high amounts. Not only do said players do not contribute much to the cause, they also prevent us from bringing in other reinforcements.

      • Very good read. It seems quite obvious that the model of self sustainability can work if managed correctly. The problem, as highlighted by many is that it’s not. Reward success not mediocrity, if you are a young player then dangle the carrot of a bumper contract if you perform to a high standard. At present we hand out bumper long term contracts in the hope that the player will reach his potential, but the gamble isn’t paying off. Love him as I do I think the manager has to accept his share of responsibility, he buys the players and he coaches them.

  23. two big questions not addressed here;
    1) “other operating costs” running at £55 million per year yet the club will not disclose further details…..so .are directors taking benefits in kind? eg. was danny fiszman’s jet expensed?

    2) commercial revenue is pathetic compared to our major rivals…..cannot keep blaming edeleman (although he gave away the ranch)…the new regime of gazidis and fox talk of a five year plan that will come to fruition in 2014 which is (coincidently) on completion of shirt and kit sponsorship deals and when, frankly, any chump would be able to improve the deals…..so how do the club justify the enormous salaries and bonuses given both this year?

  24. do you think clubs will cut ticket prices when VAT returns to 17.5% because I don’t remember any fall in prices (@ THFC) when VAT went from 17.% to 15%, but they increased prices on STs this season to reflect 20% VAT

  25. Why don’t players get a basic wage supplemented with generous bonuses for performance? Then ‘deadwood’ players would be easier to sell due to their lower wages.

  26. This deadwood thing is a vicious cycle – Team doesn’t perform well – no prize money to be put into extra spending – cheap, low quality, quick fix transfers – Team doesn’t perform well and round we go again , all the while acquiring more and more players that just aren’t up to scratch.

    We need to get out of this. I know the financial models are different but compare the transfer policies of Man Utd and Arsenal – Sir Alex busts a gut and spends to gets the players that he really wants. They’re risks but they usually pay off. There’s on field success and a stable core develops. He’s not going to have to buy a replacement within a few years.This success and reputation attracts yet more quality players.

    Arsene on the other hand, generally spends less on usually mediocre players, many who just aren’t winners. He gets away with it because he got them for peanuts in the first place, there’s no risk. The team doesn’t perform well and year after year, a base of ineffective players develops. The squad always needs addressing. Arsenal loses its reputation as one of the best clubs in the world and competing with the rest to attract players becomes even more difficult. I love the youth policy we have, but the investment is wasted if the players decide to leave for more attractive sides.

    I’m only 19, I don’t know much about economics.I’m certainly not suggesting a Real Madrid-esque model where the signings are the club. However, surely large investment in a few ideal players now (even if we do go into debt) is much better for long term success than the current model which fills the squad with inadequate players who aren’t capable of supporting the quality that we do have.

    • Oh and I totally agree with “stuck in reverse” – the wage bill for those players is utterly ridiculous. I’m not a fan of the “Arsene knows best” camp. It’s nothing to do with being financially limited, I can accept that. Its the fact that the man has made visibly poor decisions with the money he does have.

  27. Great read. Still doesn’t make me feel any better about not buying during an injury crisis. Or the logic behind sending frimpong on loan during an injury crisis though.

  28. Hi there,
    Just read the above article. You’ve hit the point running. Very detailed, & well thought out. Everything you say is true & begs belief that not all ‘Die-hard’ fans know this. I speak to people on the train up from Eastbourne (where I live) who are frustrated not just with Wenger but the board as well, & when I point out for example that profits from the highbury re-development were lower than expected all I get back is ‘how so? When they were selling for like £500k?!’…. I think a lot of fans aren’t really interested in the finer details whichs annoys me a hell of a lot, because as you’ve pointed out in order to realise what’s going on behind the scenes at Arsenal we all need to understand the finances!
    Thanks for a great article

  29. Great article. Found it via Arseblog and I will be reading forever more.

    Now that the fawning is over I’d like to add my views. It appears that AW’s parity of wages is a key point in why we are unable to attract the elite talent in European and World football. To keep a lot of players in a similar pay band is wonderful if you adopt Marxist ideals but the change in football that I’ve seen over the last 30 years shows that this cannot work. I find it disheartening that Denilson, Bendtner, Almunia, Diaby et al are all on wages that cripple our ability to offload them for better alternatives. There is no point in paying players that the manager doesn’t trust as he uses the same 14/15 players in every squad. Does Park actually exist or is he a hologram?

    However, we could have all the money in the world but it would not help one jot with the player recruitment debacle we witnessed this summer. Another topic for another day perhaps

  30. Theres is much talk of poor management on Arsenal’s behalf. Also I read:

    “However, the fact remains that the club continues to generate cash consistently and the league position gets lower and lower.
    I think it reasonable to question
    a) Is the club putting to work all the available resources
    b) Is the club using what resources they do use efficiently.”

    What everyone fails to realise are the following points:

    1) Chelsea, and particularly now Man City, have decimated the Premier league, distorting transfer fees (English players cost a lot because of Chelsea), denying teams players they need (Man U; Nasri); weakening potential rivals (Adebayor to Tottenham and paying his wages), etc. which means teams like Arsenal cannot compete, no matter how much they spend or whatever they do.

    2) In order to make a sustainable model and in the face of the economic crisis, the board and Wenger clearly had a strategy on youth and potential, to create the best players rather than buy, because they can’t compete with Chelsea, now Man City, even Man U, etc. Sadly, this project failed, although it came admirably close in the year Eduardo got screwed, and even more sadly the fulcrum of this project around which everything was moulded – Cesc Fabregas – was sold to Barcelona. So people talk of Arsenal not taking risks; I think the youth project was the biggest, bravest risk of all.

    3) Wenger clearly wanted to keep Nasri, and Fabregas. He said “we’re not a big club if we sell out top players” then had to sell a week later. He never makes statements like that unless he means them, he speaks in a calculated, considered way. We actually had the players to stay in the top four, and because they were removed – and this is where bad management either on Wenger or the board or both’s parts come into it – just before the start of the season, it screwed us hard, hence our awful site. The guts of this side were cut right the fuck open, and we were left with a mess.

    Now Man City have taken our spot, and Spurs seem to have finally got it right, we are being hurt badly. People need to realise we are more a victim of a lack of financial fair play than anything. Even Man U are being made to look shit by Man City. And sadly our youth and homegrown players really aren’t that great; far from a Barca academy if you will.

    The reality is we can’t get any good players over City and Chelsea, etc, EVER, unless they are regulated, and there are too many people making too much money for someone to stop it, in my opinion. Spurs have been spunking cash for years, they were bound to get it right eventually, and they’re not tied down by a stadium debt and massive player wages.

    Must I remind you that in order for us to get dibs on the young players we HAVE to pay them higher wages than other clubs do, hence our huge wage bill? That’s why we get so many of them; that is our strategy. And sadly, that strategy isn’t really working as many of these young players didn’t turn out to be any good. The buck stops with Wenger on that one.

    I love Arsenal. I hope we get back to glory days soon.

  31. every year the club had been going dwn hill we need 2 look at wenger an the board i think its time 4 both of them 2 go we dnt even play nice football anymore im a die hard arsenal fan but we wont get champs league next year every year we are out the tittle race by december its a joke wenger gets let off 2 much 4 fear of replaceing him we are gonna come under spurs this year its embarrassing apart from rvp whos world class in that team no 1

  32. Sorry but presumably we are not the only club with the problem of not being able to sell on players because of their wage demands. How do the other big six clubs fare in comparison?

    Also, while I like the self sustaining model I think we are at a real cross roads at the moment, if we dont make a marquee signing or two now I cant see us retaining or attracting many big players for a while.

    Most of our fans are so spoiled and negative that I really doubt Wenger will keep his job if we dont qualify for the CL this season. That would be such a disaster as I doubt another manager could get the same results with such a low budget compared to say Chelsea that we are directly competing with for fourth place.

    • It would be a disaster ,but we would be 6 million a year better off .How can any club who hasnt won anything in 6 years say that there is a wage cap for players but the manager can earn an absolute fortune.Wenger has been paid 28 million in the last 6 years for what??

  33. Excellent review.

    Explains our perceived inactivity in recent years.

    Clearly, as discussed above, the astonishing number of non or undercontributing ‘deadwood’ that we have accumulated and our inability to offload them appropriately due to our excessive salaries in relation to their talent are the cause of our current very concerning impasse.

    It’s difficult to see a way out of this and a continuation of our slow decline seems inevitable, sadly.

    COYRs

    • I did mention TV money in passing, but Sky money is similar for all PL clubs and more similar for the big clubs so is a sideshow for the purposes of explaining anything. Without it wages would be lower for all clubs.

  34. good read on both the article and comments made. I forget how much deadwood” we do actually have. We do need to somehow get rid of these players and get in some real quality to compliment the quality we do have. Mario Gotze would be nice!

  35. Excellent article, really good read and well broken up for an information-heavy piece. There is no doubt there is a lot of deadwood/fat to trim in the wage bill from players who aren’t performing.

    In terms of policy, Wenger has always been a proponent of buying cheaper players, turning them into stars, and paying them handsomely along the way. Obviously this was fantastic for players like Henry, Vieira, Cesc etc, but he’s also guilty of perhaps too much faith in certain investments. Players like Denilson, Fabianski, Eboue etc are/were given far too much time when we should have cut our losses and moved on long ago. Again, this worked once with Alex Song, but there are now a lot of players who have underperformed for a long while who really need to be told to step up, or get out. But the huge wages make shipping these players out easier said than done.

    Another problem with this is you have players of genuine potential, such as Aaron Ramsey, being forced to play himself into the ground as there is no cover for him. So whereas before we’d have experience to bring in, we’re now left with underperforming players who Arsene doesn’t really trust but hopes will come good. And ultimately that’s detrimental to the promising players as well as the team.

  36. Great article,,
    I would like to point out tho,why the players huge and frankly stupid wages are not a more talked about subject?
    Not only for the arsenal team, but some peole are talking about how we should get rid of ‘dead weight’ to give other players increased wages.
    If there was a wage limit impossed in football, say a still ridiculosly high 50-70k a week, there would be no problems with the greedy players moving just for money and would allow a much much mote fairer and entertaing league as even mid-table clubs could afford one star player,, that would otherwise play for a rich club just for money,,.
    I have heard rumors before, but are there any plans for this, and what are your views..

      • As those of your readers old enough to remember the maximun wage – £20 a week when it was abolished in 1961, roughly a third more than the average industrial wage at the time – will recall, top players were just paid under the table to get round the wage cap. Same thing would happen if there was a wage cap today. One reason the maximum wage was scrapped was that the whole thing had become a sham, regardless of what one thinks of the rights or wrongs of wage controls.

        One thing I do wonder, however, is why Arsenal doesn’t structure its contracts (if indeed it doesn’t; I have never read none, but everything one reads suggests base salaries are high) with a lower base salary but more in the way of performance or career benchmark incentives. For younger players in particular, if they didn’t progress as hoped, they then wouldn’t be as unaffordable to other clubs, and could move on to everyone’s benefit.

        Finally, a thank-you for your clear exposition of the finances of a club and for helping deflate some of the nonsense about transfer fees. So many factors go into a fee that the notion that fee size equals quality of player is flat wrong (see Carroll, Henderson et al). Nor does buying superstars guarantee success if they are not the right fit for the team to change it for the better (see Kaka, Torres).

    • As Phil said, it would require a change in European Law. It would also require that all the Worlds Footballing federations were able and willing to push through the same Legislation, otherwise all that would happen is that the best players would move to other continents where they could still enjoy sky-high wages and leave Europe with a far less entertaining group of players to watch.

  37. Fantastic article, thank you. My only comment really is in regard to our wage bill that rises year on year. I fully agree that players such as TV5 (one of our fighters) should be getting a decent new contract but I hate hearing players such as Bentdner, Almunia, and Denilson get rewarded for average performances and not fighting enough on the pitch. We now have obvious problems in moving them on. It puts too much pressure and expectation on the likes of Van Persie to do it all on his own. Theo is the next one, I’d sell him this summer rather than put him on £100k per week, his performances are just so inconsistent and we need more fight in the team

  38. About time someone took the financials apart realistically- nicely done! It’s always a wild ride when asking ‘where does the money come and go…’ and then answer why we might have x quid to spend or not.

    You mention 12 separate companies, yet all we are able to see is the consolidated financials (UK law, perhaps?). Has anyone really answered for the true financial nature of these individually, including expected cash flows, etc, (I’m thinking about transparency of material cash flow outlays that could impact the “accounts”). Also, was the Highbury development considered collateral for the stadium loan? I’m not sure of the loan consortium but if the cash flow impact from the Highbury property was “criticised” by the banks during the credit crisis, this would indicate that AFC possibly had to pony up more capital to satisfy the banks’ own internal concerns. Just trying to really see just how “ringfenced” the loan really is. Cheers…

  39. Great summary. The strategy is fiscally sound, but Arsenal were blindsided by the emergence of superspending owners and the financial crash. However I really agree that one big problem Arsenal have now is overpaid players, many of them currently out on loan. Bendtner is now playing for Sunderland, presumbably while Arsenal are paying or supplementing his wages. I recently read online that he said he never wants to come back to Arsenal. If he did say then he should just take a wage cut and leave cos he’s just being an absolute parasite. It’s disgraceful, especially given the fact that we could really use a player like him now.

  40. Congratulations on such an interesting article which unfortunately has left me quite depressed.It has also re-kindled thoughts that have been growing on me for some time.WHY DID WE LEAVE HIGHBURY.We were sold the fact that leaving a real football stadium to move to a glorified show business venue was the only way we could compete with the big boys.The evidence so far suggests quite the reverse and there are no signs of spending the sort of money(on Reyers,Wiltord,Henry etc)that we were able to manage at the old place.

    • If we hadn’t left Highbury we would be worse off. Plenty of players have been bought since for similar amounts to Reyes, Wiltord, etc: Arshavin, Arteta, the Ox . . .

    • Once we have paid the stadium off, we can then get new sponsors etc, then we will be in a much better position. We had to go down this route to secure our future at the top of english football. It seems all doom and gloom at the moment, but all will become good. There are clubs that would love to be in our position!

  41. A friend of mine who works on the commercial side of Inter here in Italy tells me that the Spuds have the most efficient world marketing operation in English football after the Mancs. I wondered how they managed to splash out on transfers apparentlyso far beyond their means – this side of income creation is however increasingly important, and one that perhaps we have not sufficiently capitalised on. Just a thought.

  42. Pingback: The truth about Arsenal’s transfer money | Daily Play - Your Sports Website

  43. i say we make two investments this january.podolski and samba.assuming we sell 2 keepers by the end of this season and we sell all those costly playesrs out there on loan like bendner,denilson and vela.also we remove our current deadwood like squillachi and arshavin.all in all i believe our books will eventually get balanced and we continue to generate surplus until we have enough working capital in the future(3 yrs).also we know our scope of revenues from commercial deals is much more.the only footballing factor im trying to stress is that you move the bad players out get the good players in,balance the books and improve step by step.in the past two years we have been coming down step by step despite making profits.reason:we have not made investments at the right time.the last best investment we made was on arshavin who id say definitley helped us get back in the champions league.it obviously turned out to be short term investment.look at him now.we need to make a similar investment this time and in summer remove arshavin from the books.

  44. Excellent article. But is there enough in the kitty to sign an Assistant Manager and coaches for the defence and set pieces?

  45. Pingback: Injuries mount for Sunday + Arsecast 225 | Arsenal Fans

  46. Ok so you say £40million yeah…
    Summer 2009:
    Sale Adeboyer + Toure £41million
    Buy Vermaelen £10million
    2009 = +£31million

    Summer 2010
    Sale Eduardo + Simpson £7.2million
    Buy Koscielny + Squillaci £14million
    2010 = -£6.8million

    Summer 2011
    Sale Clichy + Cesc + Nasri + Eboue + JET & Traore £70.7million
    Buy Gervinho + Per + AOC + Park + Mikel + Santos + Campbell £52.75million

    Last 3 years = +£42.5million add on the extra income from the tickets going up by 4%… Add on the fact that our budget didnt start at zero in the first place it would have been at least £30million… giving you over £75million, add on the fact that we have recorded record profits for the past like 4 years, you can say that the wages go up every year as much as you want but it aint going up enough the justify a £40million transfer pot

    • This comment is exactly the sort of selective quoting from the accounts that I was trying to demonstrate is pointless and wrong. Obviously in this case I failed.

      • Phil, sometimes all you can do is laugh… Remember, you can write an article explaining exactly why this kind of massive simplification of accounting is both incredibly stupid and naive, but most of the people guilty of looking at things in this way are the people that will either not bother to read the article, or if they do, they will completely fail to take away any of its lessons.

      • Also, I couldn’t help but feel the sentence “Add on the fact that our budget didnt start at zero in the first place it would have been at least £30million” is one of the stupidest comments I have read on this article.. Where did this £30M come from exactly? Correct me if I’m wrong, but is it not just a completely random figure plucked from the sky? Before Callum decided to add in his imaginary monopoly money, he had actually worked everything out with to only a £2.5M difference to the figure quoted in the article!
        Which was all without accounting for the fairly substantial amount of money spent on a new £440M stadium.

      • i think callum left the other costs such as stadium….
        even though we dont have 40 million,i think we should be having enough to buy a few more players especially if we can get rid of the dead weight!

  47. Chelski, Mansour City and the PL overseas deal have completely changed the nature of the league. The ‘lesser’ teams have access to much greater funding so whilst the top teams might not be as good as a few years ago, the rest of the teams throughout the league are getting stronger every year, demonstrate by who tight the leage is. Between the two moneybags clubs they have spent enough to build a 100,000 seater stadium of pure gold on the moon, or near enough. To try and compete on their terms would lead to a Leeds or Rangers scenario, it simply is not sustainable, and anyway spending money is not a guarantee of winning the league unless you outspend all your rivals massively. It is also not the way Arsenal or Arsene Wenger operate now or ever will. Since when did we buy household names or break transfer records? We don’t and I’m happy that we don’t. We buy young or unproven players and develop them, hopefully into top international players but of course not every player is going to fulfill their potential. Some become world cup winners, some become championship stalwarts, some get season or career wrecking injuries and their development falters. So many people on here that have no idea of finances or football are so quick to pass judgement and conclude “spend £40million and we will be the best in the world again”. NO . That is not the way. What happens when your £200million league winning team gets old? You have to replace them all, except this time the price has gone up, £300million, but your competitors have spent £400million. What then in another 5 years? £500million, £1billion? NO. Stick to your principles and when success comes, it will be that much sweeter!

    • if we do stick to our principles we will neither win anything and continue to lose our top players
      (cesc,nasri,robin?) its happening for six years now.I am not saying to go all out and buy 500 million worth team,but definitely we need to spend more than we are doing now.Buy at least three or four decent players with experience to support rvp and co.at least better than the current lot.

      You guys keep talking about financial instabilty if we go out and buy many players,then please tell me how man Utd have remained to stay competitive for 25 years?they did it by buying star players and also devoloping young players at the same time..

      they have shown that we need a squad of 18 very good players to stay competetive throughout the year.Even with their injury problems ,they are still getting the results.

      At best we have a proven bunch of 10 players and the remaining guys are either too young or old or crap.
      this seasons gone,lets hope something happens next year

  48. I think you could have mentioned that we’re tied to long term deals with both Nike and Emirates which were good at the time of signing the contracts but now give us pennies compared to what other, less successful clubs are getting. Thankfully these contracts are up for renewal soon, which should increase revenue and give us a big enough surplus to start investing in better players to push for the title. Really good article though :)

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