Today’s football supporter has more information at their fingertips than any ancestor on the terraces. The AST’s commentary offers an insight into the financial statements, as well as observations from the authors of possible implications. It is not the definitive view; simply a viewpoint. Idealism demands supporters have a say in the running of the club. Supporter representation on the board of directors is a good idea albeit the obvious danger of Animal Farm needs to be heeded. But to suggest that representation is a right is wrong. Owners of clubs do not have to listen to supporters, it is up to us to make them listen with sensible solutions or comment on key matters and that is a point I will return to later.
Is the business of Arsenal Football Club, football?
What is the business of football. My view is anything to do with football and player trading comes into that equation. Accounting Standards demand player sales be separated from the operating costs but not excluded from the final calculations. Clubs buy and sell players; it is part of the day-to-day activities of a football club; always has been, always will. That accountants treat them as assets is a by-product.
It deflects from the real issue, namely whether or not selling players is a necessary activity for financial survival. Are Arsenal a selling club, do they have to turn a profit in player dealings to survive? Not in the long term but it masks debate over which players are being sold and utilisation of funds to replace them. The players sold in recent seasons have for the most part been bought relatively cheaply and being sold on at vast profits. That has not always been the case and probably will not be in the future.
The watershed of 2014 is fast approaching and the realisation is dawning that the trumpeting of vast commercial revenues in this era is not going to be from exploitation of secondary markets, simply more money coming from renewal of existing deals. The club’s prime asset, the stadium, is tied to a certain airline beyond the turn of this decade. The question to be addressed before then is whether Ashburton Grove is too synonymous with The Emirates? Has the value been impaired by the length of the naming rights deal? It is an issue that Arsenal need to be considering now, learning the lessons from Dortmund and other Bundesliga clubs that have crossed this particular Rubicon.
The problem is that whenever the club take a step forward, those wealthier than Arsenal take greater strides. You have to look at the increases in commercial activities of bigger clubs to see that. An 8% increase in Real Madrid’s revenues dwarfs a similar level at Arsenal.
Ticket prices cannot absorb the increased cost base on their own and as is noted at the end of the AST analysis,
Reduce the ticket prices (for example more League Cup pricing, £10 Junior Gunner games to rebuild the younger fan base and no more Cat A games)
Ultimately, this is what the club must aim for. A financial base which offers more equitable pricing for tickets without impinging on the ability of the squad to compete for silverware on the pitch. It is that by which we should be judging the club’s commercial performance by.
The Wages Of Sin
The club is moving toward a less equitable pay structure as the AST acknowledged. Previously the wage bill was measured against league positions. Arsenal performed as expected; better than expected on occasion, including last season. On that basis, it can’t have Chelsea’s lucky rabbit foot which secured Champions League football.
A new measure was needed, one that tapped into the populist desire to pay high wages. It has been devised: “wage equality ratio” (WER), measuring the salary spread throughout the squad. This calculation is based on information gleaned from the club and estimates from other sources; not entirely guesswork but not far off although credible data in this area is difficult to come by. The AST believe Arsenal’s WER is 5:1. I personally feel this is a touch too low – more likely 7:1 – but we will assume here that 5:1 is right.
Actually it doesn’t matter since WER is a nonsensical measure, too abstract to be meaningful. A high WER will tell you that the spread of low and high earners is great. So what? One player earns £5k per week, another £250k. That WER is 50:1. When the rest of the squad earns £100k, the real WER is 2.5. Where is the merit in such a measurement? What is the point in this? There is none; the point is perhaps that there is no point in comparing wage bills of the different clubs. The money spent on wages does not guarantee anything.
The quality of the squad is the absolute measure and sometimes I just feel we have lost sight of that, become too obsessed with money forgetting that points mean prizes. The key is quality not (in)equality. A lack of trophies is more about potential not being realised than anything else. 2007-08s squad should have won the title or a trophy in the next two seasons; it did not. That was not about the wage bill, that was about the quality of the players.
FFP or FFS?
Does this mean that the club are right? Undoubtedly there are commercially astute and clever people working at the club but are they too reliant on the implementation of Financial Fair Play (FFP). Compliance is necessary but rich clubs will employ an army of advisers to avoid falling foul of the rules. Premier League clubs are looking at introducing a domestic version and being a party to that discussion, Arsenal passionately believe in the application. With Manchester United in favour of the regulations, the likelihood is that introduction will be expedited. The turkeys it seems, are voting for Christmas albeit wearing bulletproof vests.
This is where my cynicism comes to the fore. The clubs were presented with the notion of financial regulation and made the rules complex and riven with enough escape clauses to render them impotent. Those caught by Uefa at the moment are several rungs below Arsenal in the football food chain. The problems which Uefa has sought to eradicate do not actually affect the bigger clubs on a continuing basis. That is not to say that they won’t, they just don’t at the moment. Have Arsenal sunk their hopes into a tomorrow which won’t arrive?
Which begs the question: where does the club go if FFP fails to lead them to the Promised Land? What is Plan B? There are too many smooth operators at the club for an honest answer to be given immediately. In all likelihood, they don’t know. Are the club are backing themselves into a corner with their reliance on FFP’s implementation? The club that stood for tradition modernised and found its business model wanting; there is just a sense of everything fumbling around in the dark off the pitch. Thank God the manager has the players performing.
The club is trying to stride two worlds: football past and football future. Arsenal want to uphold their traditions but need to modernise them. It is a tricky balance to strike and at times they seem to struggle. Working within financial constraints which are lower than those of your competitors is difficult but commercially, the club are not helping themselves. Too much financial caution is as paralysing as reckless spending.
Won’t Somebody Think About The Children?
Into this arena, the supporters’ organisations come into play. The captive nature of the audience demands that an organised voice be heard by the club otherwise roughshod does not begin to describe the liberties which would be taken. But we have to pull together. Cheap shots undermine good work. Poor benchmarks lose credibility, re-entrenching views on both sides of the fence with common ground lost. But we need to support, to pull together. The review has proven that the AST don’t get everything right. They won’t do as you demand every time, they will drive you mad at times. It’s a democracy, sometimes you have to suck it and see. Sometimes you have to put the personalities to one side and take the chance that the overall aims are better achieved through a louder voice. If it takes a comment on a vile radio station to be heard, live with it. That publicity gives an outlet to broader issues, more depth that gives credibility to the points raised.
If you want to change things, if you want your voice heard, sitting on the touchline will achieve nothing; join the Arsenal Supporters Trust here and/or Arsenal Independent Supporters Association here.
‘til Tomorrow.
George I would say regarding Payton that he’s been less visible certainly in the last 12 months. I think they may have had a look at their “communication strategy” and he’s either had his wings clipped or more likely they’ve adopted the pretense of a more circumspect approach.
Thanks, Yogi.
A player to keep an eye on in the future – http://www.romfordrecorder.co.uk/football/arsenal/young_striker_reveals_arsenal_dream_1_1527084
Yogi, we are ALL born as originals, but why is it that so many leave this world, pale shadows of what they should have been? For someone to write an original blog for perhaps 300 times a year, is an unusual person. He or she is not one of the common herd, but an original, an exceptional individual. I am sure you grasp my drift.
As for the AST, the great majority will I am sure, elect a more representative member to be chairman, or to use modern jargon, chairperson. I would suggest, that on known information, we can all suggest a more suitable candidate, without mentioning names!
I tell you, the level of sycophancy on here is getting worse and worse by the day. Not to mention the fact (I will anyway) that I am still waiting on the now almost mythical ‘refresh’ icon to appear at the bottom of the page. Mmmmm……maybe the two are connected. ——->
if people are really worried about the seven years in the desert or what spuds or chelski fans say to them i would suggest they check their history books and be clever enough to outwit their misguided foes. unfortunatly alot of people have only known one or two ARSENAL managers and know only the recent sucess wenger has brought.personally i would now feel tainted if we managed to spend 50/60 mil on a player ,jack and frim etc bring me alot more satisfaction and the fantastic football we play to go with it.As far as tiny tim and the like are concerned he strikes me the sort of person who goes through life complaining about everything and never finding happiness in anything other than moaning,a victor meldrew type if you will,forever spending life in a hypothetical plastic bin bag!
last
there has to be a cut off point and irish your not aloud to be first and last
the finances of arsenal
one of my favorite subjects and one of the reasons im staying off the blogs for a bit because it pisses me off..and i just want to try to enjoy the football again..
arsenal are a business that takes advantage of the fanbase and the money to turn huge profits. football, heart and soul went out the window ages ago..
1..what kind of club that has a huge fanbase, highest ticket prices anywhere and a 60 thou stadia, turnsover near 300mil a year yet cant self sustain without selling players, property AND making CL..well run? my arse..its shockingly run, even from a business perspective it has to have a firesale every year to keep it running..
2..what kind of club says they cant pay the best players big money and they operate within a wage structure, yet everytime the best players get sold in 2′s and 3′s the wage bill goes up 20-30 mil per year.? make sense of that one..its funny how the only man who rivals IG’s wages is that bloke at manchester blue sox though..which begs the question, who gets the wages? the commercial team need fucking sacking as well..what is it they get paid to do again because im lost..
3..all the profits showed was that we could have taken a hit on rvp for one more year. 10 mill is still a nice profit is it not, but we dont do it that way, football comes secondary and ppl say players are greedy!!
it stinks to high heaven…
i know ppl think stans ok because he hasnt ploughed us into debt like the glaziers and everyone thinks uzmanovs a toe rag because hes rich as fuck, but stan cant do what the glaziers did because usmanovs stopping him whilever he has a major stake in the club, not only that, but on one hand youve got a man who cant afford to buy the club outright once unless he asks his wife and on the other youve got a man who can afford to buy the club outright about 25 times over..i know which one id trust more with the clubs money..
2014 could be the watershed, but i just think thats the start of a period of when gazidis can announce 50mil profits regular and double his bonus and then try and convince fans trophies are actually the priority and everyone wants to be run like us even though we dont give a shit about trophies and we couldnt run a bath…
ah the ills of capiltalism
Blimey JJ, that has to be one of the most bizarre posts in a while. Talk about picking up the wrong end of the stick!
A couple of inaccuracies.
Firesales, hmmm, no. Let’s look at this objectively, back to Toure’s sale. Of the players who left, I would suggest that 1 was bad business in the sense that market rate was not achieved, i.e. Cesc. What the club was guilty of was not planning for the eventualities in advance. Last summer was appalling transfer business in the sense that replacements for Cesc were not on hand already and even Nasri to be honest. This time, the lessons were learned and put into action.
Arsenal have been lucky in the sense that they have had a large number of players come through for peanuts or picked up cheaply whose sale has been able to enhance profits. At the back of the reports, there is a summary of financial results since 2008. Read it and you will see that profits before player sales always cover the interest. Thus to say the club survive on player sales is utterly wrong. It begs the question though, whether or not you think buying and selling players is part of the football business.
Property is a different matter. It’s a phase in the club’s history to help fund the stadium build. It’s not a long-term ambition or business angle, it’s transitory. If Arsenal were announcing a string of high street estate agents, yes, you might have a point.
IGs wages are rivalled by all of the top four from last season, Liverpool’s as well. If you look abroad, there are comparisons to be found as well. Who gets the wages? Don’t forget we’ve brought in more players than we’ve sold in recent summers but no-one outside of the club knows who’s paid what and that’s the problem. It leads to outlandish claims. For example yesterday it emerged that the WER of 5:1 might be utterly wrong. It appears that my conservative estimate of 7:1 is wrong. The spread of first team squad wages seems to be £5k to £90k which means a WER of 18:1. It highlights the risk in creating benchmarks without a proper basis in fact.
Commercial team? Not arguing as such, my point is very similar.
RvP is exactly the point I made but that money may yet be invested wisely over the next 2 transfer windows. Let’s wait and see.
It’s factually incorrect to say KSE can’t buy the club without wifey, they can. I don’t think he wants to, it’s not his style overall. Might be wrong now but a while back, of the major sports clubs he owned, only one was *entirely* owned by KSE. People object to Usmanov for a myriad of reasons, not least of which is him personally being odious.
Interesting that you think he’s more trustworthy. You know that open letter he sent to the board, ridiculing the commercial team for cold calling one of the companies he owned? Well, he certainly acted in the club’s best interests by making that sponsorship deal work didn’t he? He did, didn’t he? I mean, they are one of the partners of the club aren’t they? They aren’t? Oh…
Today’s post will arrive at 7am:
http://www.aclfarsenal.co.uk/arsenal/one-of-us-speaks-making-camp/
Warm up for it at Arsenal On This Day, where this morning’s post reflects on the record attendance at Stamford Bridge, 82,905 people turned out to watch Arsenal On This Day, 12th October 1935
http://afchistory.wordpress.com
Good post, but I disagree with one part of it: “the point is perhaps that there is no point in comparing wage bills of the different clubs. The money spent on wages does not guarantee anything.”
Actually, there is a proven correlation between expenditure on wages and league position – the more you spend, the more likely you are to finish higher in the league. Obviously, you can spend still spend a lot and under-perform, or spend a little and over-perform. check out a book called soccernomics for more information.