Ticket Prices: Arsenal’s Justification For The 3% Increase

You may or may not be aware that Arsenal have a Fans’ Forum, where they invite representatives from different groups of supporters to discuss matters of concern a few times a season. Fair play to Arsenal for doing this, as many clubs don’t do anything similar. Whether they’re really listening is another matter, though.
Ahead of the April meeting the AST, who send a rep to the Fans’ Forum, tabled some questions on financial matters at Arsenal, which can best be summarised as:

Ticket price increase? Why?

Before I go on, if you don’t care how much tickets cost to watch Arsenal, good for you. If you think the Arsenal Board will spend any more money raised by increasing prices on things to benefit fans, also good for you – though you’re wrong. In fact you’re deluded. Don’t bother leaving me an abusive comment about that.

Here’s the full AST statement on the logic – and I use the word entirely incorrectly – of a ticket price increase this season. I have interspersed it with the answers Ivan Gazidis and other Arsenal officials gave at the Fans’ Forum meeting, the minutes of which are posted on the Arsenal website here, and some of my own comments on what was said.

 

Arsenal are heading towards annual revenues of £300m and cash reserves of £140m in 2014.

The Champions League and a successful FA Cup run has seen the team play a total of nine home cup games this season, with season ticket holders having been surcharged for two extra games, with one of these (Munich) being surcharged at Category A prices.

Ticketing income will increase by more than 10 per cent and Commercial and Broadcasting income will increase by 35 per cent and 27 per cent respectively, with more to come.

Yet still the club chose to announce an increase in the price of all tickets by 3 per cent in December 2013. We find this increase extraordinary and would highlight:

a. It is the second rise in three years fans have endured, totalling 9 per cent in all (incl VAT).

b. Inflation (itself only 1.9 per cent) only pertains to £60m of Arsenal’s cost base (operating costs), which is 20 per cent of its revenues. The vast bulk of costs relate to wages and transfer fees, which are influenced European-wide according to supply and demand, the relative strength of TV and sponsorship revenues and not, repeat not, influenced by the general RPI in the UK.

c. £25m of Arsenal’s £29m of extra PL TV revenue has to be retained by the club and put toward non-wage costs or profit under the new Premier League financial rules agreed last spring – providing plenty of capacity to mop up higher running costs.

d. Overall income is up 21 per cent this year. Sponsorship revenues will rise by over £20m next season, Champions League TV revenues by some £7m the year after and then Premier League revenues again the year after that by anything up to another 50 per cent.

e. Arsenal will be sitting on an available cash pile of some £140m come 1 June 2014

Question 1: In the context of £140m cash reserves, do the club’s Board believe that the extra £2.7m generated from the ticket price increase will even be spent? Did Arsène Wenger request the additional money as being vital to making the team more competitive?

Ivan Gazidis: The money will be spent on developments that are being worked on across the Club, be it for Youth development or towards purchasing a new squad player or to put into our facilities. The club is self-funded and we are always trying to spend in a balanced way.
My comment: Missing the point completely Ivan. You’re not spending all the money now. There is £140m in the bank. There’s been over £100m since 2011. Why do you need more? What is the point? Just take £3m from the cash pile and spend it on “youth development” or “facilities” or paying off Bendtner or whatever the hell you like. The point of the question is that we all know that Arsène decides the bulk of the spending – wages and transfer fees – so has he asked you to raise more money so he can spend on those things? If not, then a price increase is purely and simply to milk fans for as much as you can get away with. Is that what you and Arsenal’s owner think fans are for?

Question 2: In December 2013 Arsenal broke with tradition and announced far earlier than usual that ticket prices for all Platinum, Gold, Silver and Red members were to increase by 3 per cent for Season 2014-15.
Why was this approach taken?
Will it become the usual time for increases to be announced?
Can Arsenal ask for Supporter Group input ahead of ticketing announcements?

Communications Director Mark Gonnella (MG) explained that the announcement went out when it did to let fans know as soon as the decision had been made and to give as much notice as possible. This will be the approach in future as appropriate.

Question 3: Are Ivan Gazidis and the Board still committed to their statements in 2011 and 2012 that the ordinary fan is in danger of being priced out of football and subsequently that they intend to reduce the top-line costs of tickets as commercial revenue increases?

No answer given. How strange.

Investing the additional revenue raised in Supporters

Even if the 3 per cent increase is now set in stone, the additional increases in broadcast and commercial income are welcome and offer the club the opportunity to take a custodianship approach and give something back to supporters. There are many ways of doing this and we highlight the following that we would like Arsenal to consider:

• removing the additional surcharge costs for games played beyond the 26 covered by the Gold general admission season ticket in the same way that Club Level already encompasses all games

Ticketing & Services Director Ivan Worsell (IW) explained that club and box are very different products to general admission. [Why are they different? You pay money, you get a ticket. What’s the big difference?] Some years you will have more games and some years you will have fewer games. IG added that there is a system in place for categorising the games and this needs to be consistent. [Note: not fair in any way, just consistent.]

• a ‘Premier League only’ season ticket consisting of 19 games

Head of Marketing Charles Allen explained this was not being considered.

• extending the excellent Young Guns scheme to also cover Category A games
• freezing all ticket prices for season 2015-16
• investing in an improved Ticket Exchange Scheme so that more tickets are made available for Fans to buy

Charles Allen stressed that we provide fans with opportunities to sell on tickets and we are constantly working on raising the awareness of this amongst our fans. MG asked the Forum if this is something that they would be able to help with to drive awareness of our ticket transfer service so that more fans can get money back on their tickets if they are unable to attend games.

• investing in improved Ticketing Technology so that Home credits can be awarded, leading to an even fairer system of allocation for cup semi-finals and finals

Question 4: Will Arsenal comment on the proposals put forward by the AST to reduce the overall burden on match-going supporters when other revenues are increasing so strongly?

No answer given.

Question 5: Why doesn’t the Young Guns scheme include Category A games?

CA explained the Young Guns initiative is another way to make the stadium accessible and affordable for our younger fans as these are our supporters and season ticket holders of the future. The primary objective when discussing the Young Guns Enclosure was to hit the £10 price bracket for tickets. It is easier to discount B and C games rather than A games. [Easier how exactly? It’s not easier, it’s just cheaper.] We need to raise awareness in the local area so we can reach our capacity.

This year there will be more than 120,000 empty seats over the season (bought but not used). Ivan Gazidis once described this as ‘a tragedy’.

Question 6: Will Arsenal make capital investment in improving the Ticket Exchange including creating an App, selling until 4 hours before kick-off, and allowing fans to donate or sell tickets at less than the face value?

No answer given.

Question 7: Will Arsenal invest in improved ticket technology so that home points can be introduced when fans attend games? This will encourage more use of tickets and make the distribution of Cup Final tickets even fairer.

No answer given.

Question 8: What do Arsenal plan to do about the Season Ticket holders who only use their seats at a few games a season?

No answer given.

Question 9: Will Arsenal be upholding their own Customer Charter when Puma take over the shirt sponsorship and only changing the home and away kit every other season?

CA explained that no announcement can be made until the PUMA contract starts in July. He pointed out that we are the only Premier League Club who does not change its kit every season and we had actually received complaints this season from fans who wanted a new shirt.
Who are these complainers? Do they work in the Arsenal commercial department?

Mick Padfield Arsenal Supporters Club also asked: What percentage of the wage bill is funded by ticket prices?
Ivan Gazidis: There are three basic sources of revenue – commercial, broadcast and ticket sales. We held ticket revenue flat for six out of the nine years. It is not possible to say what percentage is used since money raised is fungible.
Any politician would be proud to be as obtuse as Ivan. Yes, we know that money comes in from different sources and gets spent on different things, but the point of the question is how much is the wage bill compared to the amount raised from long-suffering supporters through the turnstiles. You can see that’s what it means, Ivan, surely? Let me help you out. In the last published full-year accounts, to the end of May 2013, the total wage bill was £154m and the revenue from ticket sales was £93m. So the Ticket sales covered 60 per cent of the wages. You could have said that, Ivan, however fungible everything is.

But wait a minute. Among Ivan’s deliberate point-missing is there a contradiction in his answers? When asked to compare wages and ticket income he couldn’t do it, because all the money raised is fungible. But when asked to say why an extra £2.7m is needed from increased ticket prices, he managed to say that it would be spent on ‘developments across the club’, be they youth development or the wages of a squad player or ‘facilities’ (so basically absolutely anything then). Hmm, perhaps there’s not a contradiction: he has no idea what any money will be spent on, it could be anything – though given that wages takes up more than half of income it’s likely to be that really, on the law of averages.

Still, as Ivan has no idea what any money is spent on, he’s certainly not going to be earmarking the extra £2.7m from the ticket price increase to anything in particular, so I can only go back to my earlier point: why exactly is a ticket price increase necessary when the club has been sitting on a bank balance of over £100m for the last three years?

The only possible answer to that is that Stan Kroenke likes money. He likes it so much that he wants more of everyone else’s.

 

Twitter: @AngryOfN5

 

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11 thoughts on “Ticket Prices: Arsenal’s Justification For The 3% Increase

  1. I was priced out of a season ticket years ago.
    Complaining about it is a pointless exercise; it’s supply and demand at work.

  2. Kroenke has mentioned that he can’t understand why people object to the Glazer’s approach to owning and running a football club.
    I recall he hadn’t paid for all his shares originally, is that still the case?
    Kroenke is a business man. He is not a “soccer” fan. This is not the equivalent of a rich man’ s train set (Chelsea), or part of a nation’s marketing budget (Citeh), so he intends to get a return on his investment at some stage, otherwise he would not have bothered.
    If he still has to pay for some of his shares, or even if he did raise funding to pay for them (his wealth was/is unlikely to be liquid to the degree required to pay cash for his total shareholding), so I suspect we will see him recouping some of his investment by using revenue to fund repayment of cash used to buy shares. I can also see him finding other ways of extracting money from the club, although I doubt it will be via dividends, as that would mean Usmanov also benefits.
    I think you re correct in your basic premise though, Kroenke wants the money, and he will find a way to extract it for himself to his best advantage.
    What we can possibly hope for is that the FA Cup success might have encouraged him from the perspective of success enhancing the revenue and value of his investment and that we do see some ambition going forward.
    Unfortunately, the days where the Hill-Woods of this world saw themselves as “custodians” is now gone. Maybe some should have been a little more appreciative of their approach at the time?

  3. One point about Kroenke and his wealth, his wife is the Wallmart heiress and she is worth substantially more than he is. At least as far as I know. I only make the reference from the point of view of his liquidity and share purchase mechanism. Of course, they may have separate bank accounts 😉

  4. “…..you’re wrong. In fact you’re deluded. Don’t bother leaving me an abusive comment about that.” I would expect that if you really wanted to discourage abuse then it probably isn’t a good idea to abuse those you are aiming your comments at. Deciding that any respondent to your view is wrong and deluded before you’ve seen the response is wrong – and deluded!

    The annual (and interim for that matter) report and accounts shows what the money is being spent on and where it is being spent. Most of the questions raised in this forum regarding ticket prices can be answered simply by taking a look at them.

    Nobody increasing the price of any commodity is going to be able to provide a satisfactory explanation to those paying it whether it be travel, food, energy or whatever. The only answer is contained in the law of supply of demand. Anything else is just twitter.

    Just one question for you Phil. In between your posts pointing out how we might expect to blow it against Hull and the evil act of those forcibly taking our money out of our pockets were you ever happyofislington for any time? There must have been some joy in all of this for you surely? Or do you find it hard to talk about that? 🙂

    • Every comment you write makes it clear you only bother reading about half of each post, then you take as much out of context as you can to try and prove whatever your point is. For example I said this:
      We’ve learnt our lesson. This is a new Arsenal now. An Arsenal who aren’t going to blow it. I have every confidence in a superb performance against Hull, who really have no chance.
      So you said this:
      your posts pointing out how we might expect to blow it against Hull
      Did you read what I wrote?

      • Yeah I read it. Your closing paragraph was a ‘cover-your-arse’ addition. Most of the article was written to explain how we’ve blown it more often than those comparisons you chose. For example “We have blown it two thirds of the time, twice as often as we’ve strolled it! Everyone else: 20%. Arsenal 67%!” with plenty of exclamation marks for emphasis!!!! Had we have lost you could have used the same article to claim your foresight in pointing out the chances were that we would.

        The irony here is that you’re bleating about one small part of the comment I posted (do you ever read the whole comment?) but if you prefer let’s change the question to “In between your posts pointing out how we’ve blown such encounters two thirds of the time but won’t this time against Hull and the evil act of those forcibly taking our money out of our pockets were you ever happyofislington for any time?”

        Maybe you did but just don’t like to show that side.

  5. “It is easier to discount B and C games rather than A games. [Easier how exactly? It’s not easier, it’s just cheaper.] ”

    It’s always easier to discount the price where demand is lower because it has a lesser effect on demand and more likely to match demand with supply. If you discount the price of the product for which demand is greatest you just increase the demand where demand already exceeds the supply which makes tickets even harder to come by. You also reduce the revenues from Cat A games which makes it harder to discount the prices for other categories.

  6. The comment (by Chris) that ‘ticket prices are a matter of supply and demand’ is axiomatic. Fans can argue, plead, beg, threaten, none of which will work if demand exceeds supply. The only method of making the regime kow-tow (or sell-up), is to reduce demand. And, ironically, the power to do that lies with those who complain most about ticket prices: the season tickets holders. Simple. Stop renewing your season tickets. Painful? Not necessarily, not if you put your heads together and form an Association of Season Ticket Holders. That done, you can make your own ticket pricing rules. Otherwise, shut up and pay up. Meanwhile, ex-season ticket holders like me (and, I guess, Chris) are more concerned that cronky Kroenke okays the expenditure of that £140m pile in the AFC account on as many exceptional players as it will stretch to. If Arsenal resumes its place at the top of the elite, if the Club regularly wins major trophies, I don’t give a damn how much he charges season ticket holders. Neither, I imagine, do 99% of Arsenal’s twenty million fans.

  7. Pingback: Arsenal paid Stan Kroenke's company £3m last year – the same amount as season tickets went up | London news

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