What Will Arsenal Do With Their Cash Pile?

This post is based on a comment that was left by ‘Ricky’ on another post. I thought that as it raises interesting questions, rather than provide a cursory answer in the comments I’d try and address it slightly more fully. My comments in blue.

Not related to this particular post but would appreciate your thoughts. Clearly there is at least £50m cash to spend. (May cash balances risen £118m in last 6 years.) Yes – best estimates seem to be that Arsenal currently have up to around £70m that could be spent without causing any cashflow issue.

What will Arsenal do with the cash?

  • Repay debt – which I know they don’t intend to do. There’s no point – the debt is structured so that it’s repaid slowly over the next 20 years, and it’s at very advantageous rates because the penalties for early repayment are basically that full interest to term must be paid.
  • Invest in fixed assets – which will be minimal at best. Agreed – the stadium and training ground are both pretty much state of the art, so there is little to spend on – unless the Board want to start speculating in property or vintage wine!
  • Start paying dividends/management fees – would lead to a fan revolt unless we win champions league or premier league by some miracle. Agreed again – there would certainly be protests about money being taken out rather than invested in the team. Not spending is bad enough; actively withdrawing money is clearly far worse. I can see Stan taking out some kind of fees in the future, but this depends on controlling costs – mainly player wages.
  • Reduce ticket prices – LOL. You may well ‘LOL’, but that in my opinion is the most likely option you’ve listed. However, there are dependencies here too, mainly whether the stadium remains full on a regular basis.

If I was Mr Gazidis I would Invest c. £50m on two players in addition to replacing any other players sold in future (ideally under 26 year olds that can be resold to achieve break even worst case). The board are ‘confident’ the team can already get Champions League so with addition of two high quality players Champions League would be ‘GUARANTEED’. Going further in competitions would protect/increase income streams. Reputationally would help board appease fans (stakeholders) and make us more attractive to the ‘next Henry’. What you’re saying there is what many have said for a long time, basically that there should be benefit in speculating to accumulate. Kev Whitcher, editor of The Gooner, has been banging this drum for a very long time (I proofread his column in every issue, and I see it over and over again!). But the fact is that there are no guarantees. You could buy two players and end up worse off than before in terms of league position. You don’t know if the new players will gel. This doesn’t mean that you shouldn’t try, though. You could argue that the Board should do everything possible and spend every available penny in the quest for success.

The reality is it appears the board are going to continue their frugal spending policy (spending just enough to get fourth place) in the hope that FFP comes in and lowers transfer fees and wages. And then when Arsenal finally do win a trophy, Stan will pay a huge dividend and the spare cash we have been hoarding will disappear. (And of course FFP gives an excuse to increase ticket prices.) Problem is City and Chelsea will legally protest and FFP could be dragged out for years.

Okay, some of this I agree with, some is making too many assumptions for me. FFP does give clubs a reason to increase ticket prices, that’s true – Man City have already done it as far as they dare, to make the balance sheet more balanced. I also agree that the Board seem happy with how things are, but in my opinion that’s due to the situation they have got into with the manager. I don’t know if all the Board are genuinely happy, but there’s nothing they can do apart from sack Arsène. They handed power to him when Dein was kicked out and that’s the way it is. All they can do is make money available to him. You can decide whether they are making all of it available or just saying they are, and Arsène is happy to go along with the deceit because in every other respect he can do what he likes. Personally I think it’s Arsène who decides what to spend, within the limit of available cash – and it’s possible for those with accounting and Arsenal knowledge to work out a good estimate of the available cash.

I think we will have to win quite a few trophies before Stan gets away with taking a load of money out – and he’d have to reduce ticket prices substantially first, or there would definitely be a lot of unrest. I wouldn’t be surprised if quite a lot of tickets went unsold otherwise. Whether a boycott of games would stick I’m not sure, but there would certainly be calls for it.

I can’t see City or Chelsea objecting too hard to FFP. I think they are more likely to work within it but push it as far as possible – eg allowed losses up to the maximum, inflated sponsorships, etc. No English club is going to break away from the Premier League, so the success of FFP in England partly depends on whether the PL introduces its own form of it that corresponds closely enough with UEFA’s version. There is a battle coming up between owners, players, and to some extent fans, as to who gets the increased revenue that TV deals are bringing. FFP affects that, but there are too many competing forces to see yet how the battle will develop.  

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12 thoughts on “What Will Arsenal Do With Their Cash Pile?

  1. “You could buy two players and end up worse off than before in terms of league position. You don’t know if the new players will gel. This doesn’t mean that you shouldn’t try, though.”
    I completely agree with this. I don’t mind Arsene Wenger’s transfer policy uptill the time in the season where all we have to blame is the sub-standard quality of a handfull of players and the lack of depth because we don’t bolster enough.

  2. How about spending the money on putting 15,000 more seats in the stadium and then cut the ticket prices? Maybe it’d cost more than that though – I have no idea.
    Anyway it’s the only way to increase match day revenue.

    • I’m hugely in favour of cutting ticket prices, but there are issues with increasing capacity. The stadium wasn’t built to be made bigger, and there would be objections from local residents and councils if an extra 15,000 people were encouraged to be congregating and then leaving the area simultaneously. But if objections can be overcome, then standing areas are probably the only realistic way of getting more people in – you can get twice as many in the same area and charge them two thirds of the seat price. Better atmosphere and more money. Plus you stay warmer on cold winter evenings.

      • Is that true? Arsenal built a 60,000 seater stadium and did not consider the potential to develop it further?

        That is outragous.

      • No, they considered the potential and weighed the difficulties of a bigger stadium against the advantages of staying within 300 yards of their old stadium. That is not outrageous.

  3. As long as we don’t blow it on another one off payment to Henry and increase the quality of the squad most fans will be happy

  4. This £110m that I keep seeing banded around, is it actually there? I have looked at the books, tried to get my head round all the figures etc. And realise as part of the loans and long term debts we have to have a set amount in reserve (about £30m I think), after all that and the fact we actually made a £31m LOSS BEFORE player trading this summer, are you 100% correct in saying we have all this loot sloshing around?

    And you also say the club would not want to pay off the debt quicker than planned. I thought that IS exactly what has been happening and I have seen plenty arguments where Gooners have been upset by this, suggesting we should be spending THAT money on players, contracts etc.

  5. What does 70 million get you nowadays… A £30m player and his wages for 4 – 5 years… Plus an overall increase in wages as a result, will take you well over £70m.

  6. Watched my first game in 1958 on my Dad’s lap. Arsenal 4 v 5 Man Utd. Greatest introduction to football ever. Devoted myself to Arsenal and eventually got a West Stand season ticket with my Dad. Lived around Highbury and Canonbury all my life. Greatest memory is standing behind the goal at White Hart Lane, next to Ray Davies of the Kinks, and exploding with joy when Ray Kennedy scored that beautiful winner. I have seen all the great Arsenal teams since 1958.
    I never though I would see such an inadequate Board and sadly, now, manager. I thank Arsene Wenger for the best team I have ever seen, the invincibles. But he is no longer the same man. I have purred with joy at watching some of the greatest players of all time, playing for Wenger’s Arsenal. Now I am disgusted by a Board and Manager who have forgotten that the fans pay their wages. Not Chairman Stan. We pay their wages and they are letting us down. We are always a couple of players short of being a top class team again. It is not to do with financial fair play. We have the free and valid money to invest in players. The excuse that Arsene will only buy the ‘right’ players is ancient propaganda. Other managers are buying the ‘right’ players and for good prices. I as a fan want to see beautiful football and the premiere team in this country… at least. It is down to the wrong board and ‘now’ the wrong manager plying us with their erroneous and stubborn propaganda. We will always be two or three players short of what the fans want and it has nothing to do with finance. It is down to the refusal of an archaic board and manager unwilling to wake up to change and a mad desire to prove everybody else wrong and them right.

  7. Part of regime policy is to persuade us that the Club is loaded with the Emirates debt, hence the need for frugality: the fact is most big clubs annual debt repayments are greater. What has cost us as much or more is poor commercial deals: eight years ago they almost measured up to those of Man U. Now they are less that 50% – a difference in annual revenue of circa £50m. Why? They were sold off cheap so that the former owners could sell out for a higher price. But let’s not forget that Stanley and Ivan have been around for 4 years – plenty of time to re-negotiate or to add fresh ones. Their performance is dismal. The wage structure is another area of huge wastage – unable to sell-off high earners, forced to keep paying them. Lack of investment in quality players (whatever the risks) is the only route to success on the pitch – which, of itself, would increase revenue. Instead we sell off our best players to our rivals, making them stronger and ourselves weaker. The Club has been badly run – and is STILL being badly run.

    • Can’t agree with your first point – in fact Ivan has said the opposite, that the debt has little or no effect, in order to justify not having a rights issue.

      • Ivan has a habit of being ‘partial’ with the truth whenever it suits him. Hasn’t he told us often enough that high ticket prices are necessary to clear the Emirates debts? A Rights Issue (or taking help from AU) is, of course, anathema so he will do anything (even contradict himself) to avoid that.

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