Arsenal Finances: How Much Cash To Spend?

I could eulogise all day about a very good away victory at West Ham, but others will be doing that. I will say that we scored three very good goals, and our attacking play for all three showed a welcome return to some of the values of the early Wenger era. Theo’s finish was Henryesque, though he doesn’t (yet?) have Henry’s consistency. A world class finish is all very well, but to be a world class player you need to be able to do a world class finish nine times out of ten, not one in three or four.

Cazorla’s shot for his goal was welcome in at least two ways: it showed what he can do from distance and it also demonstrated that we have other options than passing the ball into the net. Cazorla’s shooting has been probably the one disappointing aspect of his game so far this season. His shots are often blocked or rather wayward, but when he hits it right he’s unstoppable. I’d hope he’ll attempt two or three of those per game, because we get enough possession 25-30 yards out for him to do so. If that means teams will push up their defenders more to prevent long range shooting, then there’ll be more room behind for Theo to run into. You can’t beat having variety and options in attack.

Giroud’s goal was similarly welcome as a boost to his confidence and to remove any pressure that not having a league goal was putting on his back. It wasn’t a spectacular effort like Cazorla’s, and nor did it have the precision of Theo’s. But credit to Giroud for picking out Podolski on the left and haring into the box to be on the end of the cross when it came. He got there and he put it in. We’ve all seen those missed.

Away from the pitch, Arsenal’s financial results came out during the week, swiftly followed by Swiss Ramble’s excellent piece analysing them. The Arsenal Supporters’ Trust will be issuing their own statement on the club’s finances this week, which will include information received directly in discussions with Arsenal.

The key themes of the finances have not changed much, though the influence of property money is now reducing. Arsenal continues to be self-sufficient, though there would be losses without property profits and player sales. Meanwhile the club continue to look to FFP as the key to keeping Arsenal in the financial elite of football.

I often see people claiming Arsenal should do better, as they are ‘the fifth richest club in the world’ or ‘the fourth most valuable club in the world’, and there is a certain truth to this, though ‘richest’ and ‘most valuable’ are certainly open to debate.

Deloitte and Forbes are always busy churning out lists that get seized on, for individuals as well as football clubs and other institutions. Recently I saw an article saying that six of the Walmart heirs were worth a combined $115bn, from which someone extrapolated that Stan Kroenke’s wife was suddenly a lot richer, and tried to explain Stan’s behaviour by it. In fact Mrs Kroenke is reckoned to be worth about $4bn, which is huge to the rest of us but hasn’t changed much and isn’t going to mean Stan blowing Usmanov out of the water anytime soon.

On the ‘fifth richest club’ matter, what this list is really is turnover, not riches. Turnover is potential riches, but riches also depends on outgoings. It’s true that Arsenal is fifth on turnover, though the four ahead of us aren’t going to be caught anytime soon. FFP could cement that position.

Obviously clubs take different approaches: some aim for stability, others swap managers every five minutes. Chelsea are totally inefficient, but so far it hasn’t mattered to them. They waste millions on players they don’t need or use, and millions more in compensation to a string of managers. But they’re still successful. Man City haven’t swapped managers so often, but have wasted more on players. Man Utd are less wasteful and have kept the same manager for over 20 years. What they all have in common apart from the success is that they spend loads of money. Arsenal’s turnover at least allows them to stay in touch with these clubs in England, and FFP could mean that us and United leave City and Chelsea behind. Only United and the three European giants of Barca, Real and Bayern Munich will have an advantage over us. Then we’ll see if being ‘fifth richest’ is paying off.

As for most valuable, that list contains so many assumptions that it’s barely worth commenting on. So I won’t.

Back to the Arsenal results, and a couple of nuggets ahead of the full AST analysis. As Swiss Ramble mentions, Ivan Gazidis himself has said “The reason we talk about the financial results at all is that it provides the platform for us to be successful on the field.” Couldn’t agree more.

Firstly the club is hopeful that the new commercial deals they’ll get when the current Nike and Emirates deals expire will be bigger than generally expected – they expect it to be far more than the additional income from moving to a new stadium, which was about a net £30m per year improvement. This gives cause for optimism.

Arsenal also sit on a fat pile of cash, but fans should be aware that all of that can’t be spent. You have to remember that we only see the cash position at two points in the year, and they may not be at all representative of the average amount of cash held.

Arsenal have borrowing in the form of bonds, and the terms of the bonds mean that they can’t borrow more elsewhere. So they can’t afford to get into a position where they need money quickly and have nothing in reserve. They need to hold enough cash to cover spending for the year, plus an extra amount of £33m ringfenced for the bond debt, then rainy day money on top of that.

Why not repay the bonds, then? Repaying the bonds early has large penalties associated with it, so the club have said they won’t consider it.

In summary, the cash pile that looks like £150m or more leaves far less to be spent on players. So don’t build your hopes up! There is money available, though.

Much more detail on all this in the full AST statement, where we also look at the effect of Arsène’s wage policy with the help of a new acronym – the WER, or ‘wages equality ratio’. (Because what we really need as Arsenal fans is another TLA!) How much does the top earner at Arsenal get compared to the low-end squad player, and how does this compare to the rest of the Premier League’s elite? All will be revealed.

Twitter: @AngryOfN5

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7 thoughts on “Arsenal Finances: How Much Cash To Spend?

  1. I notice that Gazidis gave himself a 24% pay increase as a reward for his poorly negotiated sponsorship deals.

    And I think way too much faith is placed in FFP. The idea that UEFA will reduce the value of their own CL tv rights by banning big clubs with the world’s top players is simply laughable.

    • The poorly negotiated sponsorship deals were foisted on us, not by Gazidis but dictated by the stadium financing requirements at the time so do your research mate. I agree that the FFP may have to submit to pressure from CL superpowers like Real,Barca , Bayern, Manure etc., who apparently have started making noises about a seperate superleague…the same noises that made EUFA and FIFA shit their drawers about 7 years agio if my memory serves me.

  2. So far we’re ahead on what we pay Gazidis. 2014 will tell.

    I look forward to AST analysis of the financial results.

  3. Thanks for this,you underline the important point that we are only self-sufficient currently because of property and player sales. The two problem areas are wages,where we pay too much to mediocre players and some who will never represent Arsenal in this country and commercial deals primarily the shirt sponsorship and kit deals. Lets hope we drive a harder bargain than last time. The increase in the TV revenue from next year should also be very useful. One would hope we might be able to make an increased bottom line profit of at least £40 million a year,about what we got for Song and Van Persie in transfer fees. The implication of this is obvious. Hopefully we can stop being a selling club but can’t go ballistic in the transfer market. But if there are many bargains like Santi Cazorla in the market we don’t need to.

  4. I sincerely hope that all will be revealed but I suspect that it won’t; the regime which runs AFC are past masters of secrecy. And I also suspect that the wage policy – the drain down which our money esapes – is not Arsene’s doing. It’s intro coincides with Stanley’s appointment as director, and as preferred owner he would have had a big say on the BoD about future financial policy (and the appointment of Ivan as CEO.) The other factor in your assessment of what the hierarchy may or may not choose to spend is that we now have a profit-seeking ownership instead of the traditional custodianship. It may well not be your intention but your piece seems to sing the current regime’s tune (the old regime’s tune, too, for that matter). My belief is that Arsenal ought to be up there with Man U and Bayern M in terms of revenue. (Okay, Barca and Madrid – for the time being – have a big edge in TV revenue). And we ought to be able to compete with them in the transfer market. And we ought to win trophies like them. We have the matchday revenue, we have a universally popular style of play, we have a huge fan base, we are a global brand, we have an outstanding manager. Why have we fallen so far behind them? Because the owners (past and present) were (and are) motivated by personal gain not the glory of Arsenal. A rights issue (which I believe Dein wanted when the Emirates project began) would have provided the money to bring in quality players which would have won us trophies and increased revenue. Now Ivan tries to convince us that our best players must be sold off each summer. Don’t let’s believe it for a second.

    • I fully agree that a rights issue to bridge the gap until the increased revenue from sponsorships comes in is a good idea, as I’ve written several times before.

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