Dear Santa

The Christmas Sales have started earlier than normal this year. Whilst fighting your way through the crowds for the latest Wii or iPod – how does anyone use the new iPod shuffle? My thumb covers the whole of it – you can scoop up a bargain in the Premiership’s equivalent of a bring and buy sale.

The news that Liverpool have finally made positive steps towards new owners of the club brings to a close the most protracted drama since Dirty Den went missing for the first time in Eastenders. Following on so soon from the West Ham takeover, the timing is coincidental but highlights a wider issue facing Arsenal, something that will be addressed in the near future, namely when will they be taken over?

You will notice the word “when” not “if”. A glance at the Premiership table will tell you why; of the teams that can be remotely considered to be “cash generators”, there is only Arsenal and Newcastle United left who are ripe for new ownership. The latter is reportedly already available for those with sufficient funding behind them with Freddie Shepherd reportedly wanting to front a bid to buyout the Hall’s or sell the club completely. Irrespective of league success (or lack of it in any competition), The Toon are viewed as a big club mainly for their ability to achieve a high average attendance as a percentage of stadium capacity and the attendant commercial revenues are there to be exploited even further should they ever be able to escape the stigma of Shepherd’s comments some years ago, which they probably could if people such as myself would let them.

With Manchester City admitting at their AGM that exploratory talks were underway that could lead to new investment, the rush to invest in Premiership clubs is now reaching the point where it could be called a stampede. UEFA are now actively pursuing ways to implement a salary cap to prevent a gulf between “the haves and have nots” according to their spokesman, William Gaillard. Bearing in mind that this is a man who appears to shoot from the lip with a speed that would shame Simon Jordan or Ken Bates, not too much can be read into the wording he uses but the principle is one that is long cherished of the Footballing Authorities hierarchies. However, the fundmental problem with UEFA’s stance is that it would probably contravene European Anti-Competition laws and misses the point as to why English football is so appealing. Certainly the cash involved (along with the Real Estate values of most stadia) but more importantly, the ease with which an investor can back a club. With Italian club football’s star waning, the footballing hotspots are England and Spain. It is extremely difficult for an investor to break into the Spanish market due to the Socio ownership structure there so everyone wants their kopeks or dollars into England. Equally spurious are UEFA’s concerns about English clubs falling into foreign ownership. For an organisation that openly promotes the movement of assets across borders without impugnity as long as the correct paperwork is in place (how very European), it is hypocritical to then complain about the owners of said businesses not being nationals of the countries in which they operate. So much for Globalisation.

There were of course rumours earlier this year of an impending takeover at Arsenal that came to nought; the question is not as to how long it can be fended off but more importantly, is it in the best interests of the club for the Board to do so? Do not misunderstand me; I have no overall issue with the current ownership / stewardship of the club. In trying circumstances, they have managed to build a new stadium as well as allowing the manager sufficient leeway to maintain a relatively successful team. For sure there have been some dubious PR displays but money does not guarantee success on that front at all. If that were the case, Chelsea would be the most popular club in the world instead of one of the most reviled.

It is not even a case of the richer clubs pulling away from Arsenal in the short-term. On the playing side, Arsene Wenger has accumulated a squad that if it reaches its full potential has sufficient youthfulness to actively compete on the pitch for five years. There are plus and minus points in this; positives are that it allows the next crop of youngsters to come through at perhaps a more leisurely pace rather than being thrown in at the deep end. The minus is that positive – the next generations have to come through otherwise substantial sums may require spending in the transfer market, money that may not necessarily be there.

But it is not the richer clubs which should be causing concern. It is that the pack of mediocrity below them could get closer. Looking at the Premiership this season, there are a number of clubs under new ownership or with wealthy backers. Whilst they may not be able to compete in monetary terms at the moment, a new investor who perhaps cannot afford a club such as Arsenal, may be able to boost their ego by getting involved at, for example, Manchester City which may make them more competitive on the pitch. Money does not automatically guarantee success; Leeds are the most obvious example of that but investment can lead to sustainable mediocrity. This makes them as opponents more likely to throw the proverbial spanner in the works in terms of results. They may not be able to compete at present with Arsenal but it would only take another phase of rebuilding to be required for them to be a dangerous opponent; both Liverpool and Arsenal can over the past two seasons identify with a struggle to attain a Champions League place, something that in previous campaigns has been achieved without even a passing thought for what the teams in fifth and sixth place have achieved on any given Premiership weekend.

The major factor in any sale would rely on the individual(s) involved, perhaps more than at any other clubs. Please bear in mind that any cheap shots over the next few sentences can make a serious point. Of the big four English teams, only Arsenal and Liverpool can claim with any justification to have remained true to their roots to any degree. Manchester United have long been a commercially driven organisation and must be respected for their success in pursuing that course of action. The downside of that was that they became vunerable to takeover as soon as they listed on the Stock Exchange and prior to the Glazer’s successful bid, had long been the focus of takeover bids – real or otherwise – from such luminaries as Rupert Murdoch and Robert Maxwell amongst others. Chelsea as the “Johnny Come Lately’s” to the Big Four had no history in terms of Corporate Culture to speak of so the Abramovich-era has seen them create one for themselves, which they are obviously happy with. Liverpool meanwhile, like Arsenal, have been for many years owned by one group of investors. A realisation that they cannot move the club to the next level, primarily a new stadium without impacting on the playing side, has necessitated the search for new investors.

Which leaves Arsenal. And they are a hefty proposition for anyone to take on. Financially, the new stadium is a costly venture but that it is mortgaged so a new owner would need to be able to satisfy not just the Board but also the Lenders that there were no plans to make that investment “insecure”. Presumably, it would rule out a bid from someone in the same boat as the Glazers, ie borrowing considerable funds to buy the club unless clearing that indebtedness was one of the criterian for lending the money in the first place which would surely be the case. The question is whether that makes the club any more secure, the answer has to be “no”. However, if someone or a Group of similiar financial stature as Abramovich or the DIC were to bid, with the ability to remove the mortgage, Arsenal are a very attractive proposition. A stadium that sells out every week with substantial property revenues still to come, allied to a solid commercial base with room to grow and a wages policy that has most clubs looking in envy at its sensibility? Good returns are not guaranteed but have a strong realisable potential.

The second and equally high hurdle to clear is the Board’s (publicly stated at least) requirement that any new owner appreciate “The Arsenal Way” of conducting themselves. The club are by no means squeaky clean but have a reputation of being the equivalent of an English Gentleman. Whether that is a true aim of the Board remains to be seen; after all, if someone comes up with an offer that cannot be refused, do they value the club’s reputation ahead of their own investment or the ability to unencumber the playing side of the equation?

I have no doubt that before the end of 2007, most likely a group of investors will be coming to The Emirates with their cash. How that will be received remains to be seen.

15 thoughts on “Dear Santa

  1. Drew10 says:

    Good article, you have put some interesting points forward there. However, I for one would not want to see our club slip into the hands of a foriegn investor. Whilst I truely agree that the amount of lesser teams suddenly getting sugar-daddy style investors, I would rather see our club run by the same people that have created this dynasty of footballing culture. The Hill-Woods have been on the board at Arsenal for the best part of 100 years and look at what they have achieved. Our club is run succesfully and in a way that truely befits the Arsenal way. Imagine if as was suggested at the time Roman had got his smug little face in at Arsenal (Chelski wasnt his first choice.) We would now be sitting on a huge amount of classless cash. Arsenal conduct themselves with an air of dignity something which the chavs surely lack. Whilst I accept that we will need some investment to keep ahead of the also rans I am sure that we would want our club run by true Arsenal men.

  2. Yogi's Warrior says:

    Apparently the only reason he rejected Arsenal was the new stadium. Whether he would have been accepted by the Board is another matter. In any case, I doubt that he would have changed much of the culture of the place. Remember Chelsea were going horribly bust so it was obvious that the Directors at the time were not the most capable in the world, running a business at a substantial loss, and not for the first time in their history.

    With the Arsenal Board’s record of prudence, I wonder if he would have left the senior management largely intact, giving some continuity over time (can you imagine David Dein giving up his seat at the top table? I can’t) whilst also putting his own advisors on the Board as well.

    Money does not change the Corporate Culture. It is how people react to it that does.

  3. Frank says:

    In a way Arsenal is already where Chelsea claim they want to be. It is self supporting…huge debt matched by huge assets, and dependent upon fans/customers/clients for income. The latter is very important because it forces the management team , business and technical, to be very focused upon the quality and value of the end-product – football. It is no accident that we have a new stadium, new training facilities and a squad fed by young players for years to come..that was all part of the vision and grand plan for the new era.

    The current setup works very well and is adaptable, we may be losing against Chelsea at the moment and may do for a couple more seasons, but we will gradually work our way to the top. Ironically they have helped by providing much needed competition on and off the pitch. They have forced us to find a more affordable and more sustainable model, and AFC are rising to it.

    The risk is that some of the shareholders will want to cash their chips in. I doubt though whether any new investor would wish to behave in the way Abramovich has by ploughing money in. This would be a retrograde step and would weaken the club.

    As I said we are currently behind Chelsea in terms of results..but not for long. In business terms we are well ahead of them.

  4. Yogi's Warrior says:

    I think Chelsea have a different business model to us in certain respects, most notably is that they have to be in a hurry.

    Even with Abramovich’s largesse, they cannot keep haemorraging cash as they will fall foul of footballing regulations regarding liquidity (whether those are enforced is an entirely different matter) but also in anticipation of new regulations, they need their turnover to be boosted significantly year on year.

    They are trying to globalise their brand, rushing into markets commercially where they perceive the cash to be, i.e. Asia. Arsenal on the other hand have worked with the footballing community, quietly in a large number of cases, to build their support base.

    Chelsea are the new Real Madrid in the Far East. Popular for a while until the next thing comes along.

  5. Flint McCullough says:

    We are up to the fat edge of the wedge now. Chelsea, Man U, Villa, Pompey and now Liverpool (soon to be) foreign owned. Those clubs with the possible exception of Man U may have been attractive because there was plenty of scope for development.

    Arsenal are an exception because by and large they have been excellently managed for a number of years. They have done it on their own so is there much more for an investor to develop?

    The problem, that I see, is that David Dein must be in his mid 60s. He is the prime mover & shaker – how much longer will he be able to carry on?

    We need the competion to be stronger or the bubble will burst. It has been great for us to be in the top 4 for 10 years but it is not a good thing for the honours to be shared by so few.

    But by the same token we have already lost most of the heart of the game. There is no chance of an Ipswich winning the league.

    Money dominates for the worse.

  6. Yogi's Warrior says:

    An investor would probably look for the Returns more than anything – as I said in the piece, I would have thought that if the club were unencumbered by loans, these could be quite reasonable.

    On the playing side, not too much investment – certainly not on the Chelsea scale – thanks to the excellent youth and scouting network that is in place now so I think they look attractive as a business opportunity.

    There is scope for growth in the foreign markets and it won’t be too long before the Premiership goes down the individual club TV rights route which is where Arsenal will really benefit.

    Lets not kid ourselves about the Premiership being more uncompetitive than the old First Division. The period 1976/7 to 1991/2 saw only 6 teams win the title. Of those, two are no longer in the top flight (Forest & Leeds) whilst the period of Premiership – roughly the same time span – has seen four teams win it. Of the six and the four teams, Arsenal are the only ones to appear in both lists. The League Champions I think were Liverpool, Forest, Aston Villa, Everton, Arsenal and Leeds. As with the Premiership, the majority went to one team.

  7. Ian says:

    Re-football liquidity regulations. Are there any?
    I know its been talked about but I don’t think any exist yet.

  8. Yogi's Warrior says:

    UEFA have them for their club competitions but never enforce them otherwise Real Madrid could not have entered the tournament a couple of years ago.

    I think the Premiership are introducing them but they are so toothless as an organisation that any regulations are a pointless exercise

  9. Flint McCullough says:


    MU, Wolves,Burnley,
    Tottenham,Ipswich,Everton,Liverpool,Man City,Leeds,Arsenal & Derby. 15 years 11 teams.

    That was of course before Liverpool distorted it by being so bloody good. Their domination was more because of excellent football management, rather than financial clout.

    You see everyone had hope. We were mainly crap but you could dream of the FA Cup because it meant so much more then.

    Today our start to the season would still have kept us v much in the hunt but M U have won all but 3 of their games & Chelsea 4. It is hard to compete with that.

    It is not really true anymore that anyone can beat anyone in the top division.

  10. Yogi's Warrior says:

    Looking at your stats, I would have said that football was becoming more uncompetitive. The Sky deal which has brought of all of the money to the game would have done so anyway with money gravitating towards the rich.

    This seasons Carling Cup proves that the smaller teams still have hope: Southend beat a virtually full strength Manchester United, Chesterfield beat Man City and West Ham so it can still happen.

    Granted another Wimbledon is unlikely but how of them were there before that? Probably only Ipswich had anywhere near that success out of the blue when Ramsey was in charge.

  11. Flint McCullough says:

    The last team to come out of the blue were Howard Wilkinson’s Leeds. Had Sky started then?

    Clough’s Forest came up & won the League at the 1st time of asking. Just cannot see that happening again unless an Abromovic buys Scunthorpe – “for a bit of fun”.

    Sunderland & Southampton were 2nd Division teams when they won the Cup.

    I suppose in the old days there could be a surprise factor in that you would rarely see your opponents on TV, so you would be less able to nullify their strengths. Also pitches would also be a great leveller.

  12. Yogi's Warrior says:

    I have a feeling that the Leeds title win was either the first or in the first two seasons of the Sky deal.

    Do you not think that some of the “surprise” winners of the title were never to be repeated anyway? Look at Forest; whilst they had been in the top flight before, was it more a case of the manager being able to put together a cheap team who gelled at one point in their history? Once they had retained the EC, it went into decline pretty rapidly afterwards, only briefly threatening to revive during 88 – 91.

    The pitches were a great leveller – can you imagine the state of some of them being acceptable these days? Colchester beat Leeds on a mudbath, same for Sutton beating Coventry.

    The biggest difference is the youth academies. Bef0re, youngsters were happy to learn in the lower divisions and then get the move. Now either the pick of the youth are snapped up by the Premiership at an alarmingly early age or priced out of the market by clubs desperate to get revenue. That leads to it being cheaper overseas.

  13. Flint McCullough says:

    That’s just it Yogi- they were 1 offs but it was possible.

    I just saw a trailer for the England under 16 match. The lads were training on virtually a ploughed field, Sunday League park pitch.Perhaps that is 1 of many reasons that foreign players have a better chance of success.

    I appreciate football has moved on. It is really more theatre than the raw dynamic occasions that I was brought up on. Perhaps more circus in that there could be some doubt about the outcome of a particular performance in the ring.

    It always was quite cynical but now it is totally money driven way beyond what it was. Probably a natural progression but still hard to take.

    There is still some passion about the game- you get a good atmosphere in a lot of games but that electric feeling was lost with the terraces, or is it just me getting older.

    Long gone are the days you could wake up on a Saturday morning and just decide to go to the away game, standing with the locals,without fear of having a punch up, and without destroying your bank balance.

    Against that you can now see virtually all your teams games on tv, which has brought in a different type of fan.

    Not all good – not all bad but sometimes I wonder if major football is going to implode up its own arse to leave the little local teams suddenly a lot more popular than of late.

    Sorry about the rant but I really feel that football has been “developed” way beyond what is good for the game, locally & worldwide. These foreign investors, particularly Abramovic are radically distorting the game.

  14. Yogi's Warrior says:

    I am surprised that the U-16’s were training in poor conditions. Most are attached to clubs and surely the FA could have arranged a session at say, Arsenal? Not sure of the logistics though, plus they have Bisham Abbey as well. Highlights the need for the centre at Burton to be built.

    All seater stadia definitely changed the atmosphere at grounds, away terracing was always the best place to be watching a game be it after a long haul or at a derby.

    Football has become like everything else; it is now a business. It was before but more appreciative of its unique “socialness” and its roots in a community. With less reliance of Gate Receipts, supporters become less integral to the clubs commercial wellbeing.

    I would not disagree with the implosion on major football. I just wonder if there will be any local teams left by then?

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