I have learned some amazing things on twitter recently. For a start there is the subject of my previous post: there are people who still believe that Arsenal had to sell all those star players year after year because they desperately needed the money. Absolute tosh. Even more amazing, there are people who genuinely believe that a good reason for Arsenal to increase ticket prices is because the money might be spent on things that would benefit the fans. I won’t reproduce the tweets here to save the writers’ embarrassment, but I was rendered speechless by that. The first and most obvious illogicality is that if the Arsenal Board wanted to benefit fans they wouldn’t be increasing ticket prices in the first place. One person claimed the transfer kitty is separate from all other funds, and trying to make any link between that and revenue is ‘silly’. The Board must love having fans like that, it gives them licence to be as obtuse or unprofessional as they like and still people don’t question them. Amazing.
Then there is the load of nonsense talked about how Arsenal’s funds have been ‘restricted’ ever since the move from Highbury until now. This is not helped by comments from Arsène, who doesn’t ever go into any detail about these supposed restrictions. Such as: What are they? Who is doing the restricting? When did it start and when will it finish? Restricted compared to who or what?
We have had Ivan Gazidis banging on about 2014 for several years as the date when everything comes together and Arsenal will rival Bayern Munich. They’ve just come up against a really good team and been stuffed, so perhaps we are getting to be more similar to them. But I think Ivan meant we’d rival them in income, though he doesn’t seem to have fully anticipated that as our income rose theirs would too. But because we have more money now does that mean Arsenal were ‘restricted’ up to this year? The problem is that the likes of Gary bloody Neville have stirred the pot with ill-advised comments about all Arsenal’s debt being paid off, which has just served to make some people think along the lines of:
Arsenal had debt, but now they don’t have debt; and Arsène used to say he was restricted, but now he doesn’t say that; and he once said that thing about having to earn £20m a year to make the debt repayments, but he hasn’t said that lately; so Arsenal couldn’t spend money before, but now they can (they’ve bought Özil so that proves everything) . . . so this must mean that for several years since deciding to build a new stadium, Arsenal had NO MONEY AT ALL. But now they’ve bought Özil so suddenly they have LOTS OF MONEY.
Unfortunately if you add up a lot of half truths and complete rubbish, it doesn’t make anything worth knowing.
I’ll recap the debt situation: when the new stadium was being built it was financed by project loans that were separate from the rest of the club’s income and outgoings. Once it was built all the debt left was packaged up into long-term agreements, so since 2006 repayments have been steady at around £20m a year in total, split between capital and interest in gradually varying amounts (interest going down slowly because the sum owed is a bit less, capital repayments going up slowly). The debt is not paid off, and won’t be until 2031. Gary Neville was talking through his backside. The amount that repayments cost has changed only marginally (ie it’s the same figure to within a million or so, which is pretty small for Arsenal these days) since 2006-07, so Arsenal are not suddenly free of obligations they’ve had up to now. The only thing that changes is that as total income goes up, the amount of the debt repayments gradually becomes a smaller proportion of the turnover.
So what does ‘restricted’ actually mean? Restricted compared to what or who? Compared to when we were at Highbury? Certainly not, as I’ve explained before (and mentioned again last time). Because of the huge extra ticket revenue from a 60,000 seater stadium, plus some property profit, not to mention the ever-increasing TV deals, there has always been a lot more cash coming in to cover the extra expense of debt repayments and sundry other costs.
Restricted compared to other clubs? Well Arsenal have always been restricted compared to Man Utd, whose commercial operations make ours look like a car boot sale. Nothing has changed there. Since the Abramovich era started Arsenal have been restricted compared to Chelsea – we simply can’t spend as much as them. More recently we’ve been restricted compared to Man City (but so has everyone else). Realistically, unless their backers walk away, this is unlikely to change.
So when Arsène commented that he needed to earn the club £20m a year before he started, unlike those awful rich oil-funded clubs who could afford to lose £100m or more a year, was that the truth? Well only in the sense that Man City and Chelsea don’t have to make debt repayments and Arsenal do. But (at the risk of repeating myself) Arsenal have always had more money than they had at Highbury (all right, bar one year by my calculations, when they were a mere couple of million down) – the flipside of the £20m of debt repayments (including interest) is the £50m of extra income from ticket sales, and all the extra money I’ve already mentioned – property profit, TV deals, CL pot. That doesn’t look like much of a restriction to me.
It’s worth also noting that since the Glazers took over Man Utd that club has been forced to make debt repayments far in excess of Arsenal’s, in fact far in excess of the total cost of Arsenal’s stadium. The money taken out of Man Utd by the Glazers would have almost bought two Arsenal stadiums. I must have missed when Arsène said how unfair to Fergie that was.
The only logical ‘restriction’ on Arsenal’s finances has been the self-imposed straitjacket of the longstanding commercial deals with Nike and Emirates that have now come to an end (or been renegotiated in the case of Emirates). Arsenal were restricted by not being able to renew these at ‘current’ rates in about 2008 or 2009, so have forfeited some income since. But hang on – if you look closely at the accounts you can see that the aforementioned extra £50m ticket income per year plus the profits on property dealings and development have more than made up for the shortfall there.
I’m going to repeat this point: The ‘restriction’ on finances was caused by building a new stadium – but the income generated because of the new stadium is more than the amount of the restriction. SO THERE’S NO RESTRICTION! It’s like me complaining that my spending is restricted because I’ve moved to a more expensive house, while at the same time renting rooms out that give me more disposable income than I had before – but look at my rich neighbour, he’s not even got a mortgage! Oh I’m so hard done by!
Arsenal have got richer in 2014 and will continue to get richer, but they will still be behind the three very rich clubs (two in Manchester plus Chelsea), roughly on a par with Liverpool and well ahead of everyone else. In that respect nothing much has changed. In 2002 Arsenal were second richest. Chelsea demoted them to third, then Man City demoted them to fourth. That would have happened with or without a new stadium and any debt repayments.
Assuming the correlation between overall spending and league position continues to hold, these five clubs mentioned are all most unlikely to finish outside the top six or seven – they should be the top five really, but occasionally one will slip up, as Chelsea did two years ago, Liverpool last year and Man Utd so far this season. But slipping up is relative – they’ve all stayed in the top seven, a seemingly stable group made up by Spurs and Everton as the also-rans.
Arsenal will probably struggle to finish in the top two, definitely in first, for the foreseeable future. I would suggest that is the most worrying thing for Arsenal fans right now.
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