We do like tradition at Arsenal, so it’s good to see that after a couple of years of the cash balance dropping we’re back up to a new record of £231m! Top of the league on that measure (though the situation looks unlikely to last, for various reasons). The figures come from the club’s accounts to the end of May 2018, released in the last week of January to no fanfare whatsoever. For about 20 years we had glossy colour brochures containing the results, which were always released in October ahead of the AGM. Now that Stan Kroenke is the sole owner there’s no longer an AGM, no other shareholders to keep happy, and no need to spend money on frivolities like printing colour pictures of Laurent Koscielny making a tackle. So it’s back to black and white, with the document posted on a quiet Thursday evening. And without an AGM, also no need to get the accounts out very quickly, which is why we had to wait till almost the end of January to see the figures up to the end of May 2018.
Regarding the cash situation, as you can see from the graph, the amount of cash Arsenal hold has been on a generally upward trajectory since 2006 when the stadium move completed and the debt from that move was restructured into a 25-year deal. Having spent £400m on the stadium the Board, usually fairly conservative by nature anyway, probably thought a bit of a cushion was advisable. Then the property crash happened and they thought an even bigger cushion was needed. And what if Arsenal dropped out of the Champions League? Better save enough to cover that for a season or two as well.
Then Stan Kroenke became majority owner, with a clear modus operandi of continuing the self-sustaining policy Arsenal had followed for generations. With one small alteration: he’d take a bit of money out as fees for unnamed services. Only £3m a year to begin with, but that’s still the wages for one first team player. The payments to KSE lasted only two seasons, such was the level of protest and the complete inability of the incompetent Board to justify them.
So the combination of the traditionally ‘safe’ behaviour and Stan Kroenke’s aversion to spending meant the cash balance increased year by year until it reached levels where not spending big money on players was starting to look completely ridiculous. I mean, they could easily have reduced ticket prices to a quarter of what they are and made all refreshments in the stadium free, but those things must not have occurred to them. So the likes of Ӧzil and Sanchez were bought. “At last”, said lots of people, “Arsenal can afford big players” – ignoring the fact that Ӧzil-sized fees could have been paid three years earlier – check the cash balances.
Eventually Arsenal did drop out of the Champions League, meaning a reduction for the last couple of years in Uefa prize money, and ticket income stalling. Meanwhile wages and transfer fees keep going up, not to mention all the expense of running the club. On the credit side of the sheet, the TV money also goes up, but because everyone gets that it just leads to even more inflation in wages and transfer fees, and agents becoming even richer. The net effect was that Arsenal’s cash pile started to diminish at last, until record sales of players in 2017-18 gave a profit of £120m on transfers. Up goes the cash pile again. But as I said, this position is temporary. Another season without the Champions League means missing out on another £35m or so of income, and there’s no way of making £120m a year profit on transfers every year– there’s hardly anyone left to sell for decent money, they’re all too old, too injured, too highly paid or too near the end of their contracts.
In any case £64m was spent on transfers in summer 2018, in the period after the cash pile of £231m was counted, so although there is some to be spent now it’s definitely in the tens of millions rather than hundreds of millions.
So the cash balance is at a record high this year and will be down again next year, but how much difference do either of these things actually make? Although clearly the richest clubs win the most trophies, there’s more to it than that. Spurs have had much lower turnover and been spending a lot less than Arsenal on wages for decades, yet have managed to finish higher in the league for the last two seasons, and are ahead again. They still haven’t won a major trophy since the middle ages, but they have improved. So clearly you can get to the level Arsenal are at by spending less than they are. Leicester, of course, won the league on a spend of peanuts, but even if you discount that as a freak occurrence, look at what’s happening at Man U: they were spending massive sums and getting nowhere under Mourinho, and now under Solskjaer won their first eight in a row and look a completely transformed team. Early days yet, but it’s still a big transformation. So yes, it obviously helps to be able to afford the best players, but the right coaching and management is also important.
Have Arsenal got the right coaching and management? That’s the big question. Ultimately it probably makes little difference if Arsenal have a turnover of £380m or £420m, or if they have to spend £20m on debt repayment out of whichever of those figures it is this year, because a difference of five per cent is minimal and can be wiped out by a single transfer fee negotiation. Stan Kroenke taking £10m dividend or fee on top of that would make things a little bit harder, but ultimately you adapt your business model to what’s available. Spurs don’t spend £200m a year on wages, because their turnover has not allowed that; Arsenal do, because their turnover allows it. But Spurs have coached their players to perform better over 38 games than Arsenal in recent seasons.
Either way, Arsenal and Spurs are both stuck below the Manchester Clubs and Chelsea in terms of income, and Liverpool will start generating more if they actually win trophies. This doesn’t make it impossible for Arsenal (or Spurs), but it certainly makes sustained success more difficult.
So a cash pile of £230m or £100m isn’t hugely relevant. What’s more important is the underlying financial strength of the club, and where that places it in the list of clubs it’s competing against. On top of that you need a manager/coach who gets the best out of players if you want to win trophies. The team has to become more than the sum of the individual parts. Results and performances for Arsenal this season have been distinctly mixed, but personally I would rather have the potential for improvement than to have continued the slow decline that was clearly underway in the final Wenger years. Arsene repeatedly bemoaned the fact that Arsenal had a debt to repay and claimed he was forced to sell all his best players, but it was obvious that he could have been given a billion every year to spend and still no longer been capable of producing a title-winning team. Football has moved on.
As for this season, Arsenal once again seem to be unlucky with injuries, but even so have lost games you would expect them to win. Then Arsenal played Chelsea and dominated completely, which apart from anything else makes profitable betting difficult. If you are betting, make sure you seek the best odds – the majority of the UK’s Premier League-related betting sites will always offer the best predictions and odds, injury crisis or not. Unai Emery may not be the man who can get the very best from this particular Arsenal squad, but for the moment we can hope.