Google+
Twitter
Facebook
Delicious
Digg
Stumble
Reddit
Today I am going to distract you all from the current World cup woes of the England and France squads by detailing an Arsenal item. We all too painfully aware of the financial strait jacket that has restricted any real investment in players at Arsenal. It has been the obvious reasons for our failure to progress in major competitions during the closing weeks of the season. Much has been debated as to whether Arsene has cash to spend or not. Regular readers of this blog will know that I have maintained my view that the Danny Fiszman and the rest of the Board have been mischievous with the statements that Arsene has the cash there if he needs it. The real situation was probably, “only touch that money in an emergency Arsene, as we need it to pay off the outstanding £178 million pound loan.” I think that Arsene has been denied real spending power by his own Board ever since the departure of Thierry Henry. There were even ambiguous statements from our manager that some interpreted as indicating that Arsenal was acting as a feeder club by farming young players for future selling potential.
This target has now been achieved and Arsenal’s debt is very manageable as long as the Stadium remains at least 40% full, but more on that later. Arsenal is a very wealthy club based upon the revenues generated through broadcasting and the regular advances to the latter stages in the Champions League. It had made some fans question “Where has all the money gone?” Well into players wages and this rather vague Stadium running costs. I would reject absolutely that someone is siphoning funds out the Emirates. Yes there are no dividends paid to the Directors, but neither do they contribute to the pot of funds available for player transfers. This has been my criticism of leading Board members who have Nero like, played their violins as Rome burned. I have also criticised Arsene Wenger for publicly letting the Board off the hook by having a very frugal transfer policy and paying large amounts to ordinary squad players. Also his rigid pre-season schedules means that overseas tours for advancing international commercial revenues will never open the pot of gold currently available to our rivals.
The Arsenal Supporters Trust have today released an exclusive report which confirms the healthy state of Arsenal’s finances. An extract reads thus
“33,000 of the 35,000 season ticket holders so far renewing. These sales mean that at least £65m of matchday revenue has already been secured for the coming season. The remaining £25m to £35m comes from the tickets that are sold on a match by match basis, cup ties played in excess of the season ticket’s 26 match allowance and the 3,000 seats allocated to away fans.
This money received in advance of the new season forms a major part of the cash balances reported on the club’s balance sheet at the end of each financial year being 31st May. Cash at end of May 2009 was £100m and of this it is clear that much is generated from advance ticket sales and is earmarked for football costs throughout the season such as wages payments. It should not be confused as being exclusively a transfer kitty.
These strong tickets sales, together with the news that Highbury Square project is now debt free, means that club’s financial position continues to strengthen. Let’s hope the rest of the summer sees that translate into new player acquisition and squad investment.”
The fact that season ticket sales inflate the cash balances at the end of year accounts is not a problem providing the system does not change, but even though I am not an accountant, I conclude that if the wages bill is at the same level as the season ticket renewals, then the new player transfer funds can only come from other income streams, those being the broadcasting and marketing revenues. Arsene’s excess current fighting fund came courtesy of the Adebayor and Toure transfers. When one looks at the income streams in detail on very glaring item is visible and despite repeated questioning the Club is never able to give a transparent answer. Again courtesy of the AST’s financial analysis by Nigel Phillips I can list the 2008/9 figures
Arsenal’s football income (excluding player trading) comprised four separately identified revenue streams:
Match day £100.1m (£94.6m) 45% (46%) of football revenue
Broadcasting £73.2m (£68.4m) 33% (33%) of football revenue
Commercial £34.3m (£31.3m) 16% (15%) of football revenue
Retail £13.9m (£13.1m) 6% (6%) of football revenue
Without a boost in the marketing arm of the club’s activities then our transfer will still have a low ceiling compared to the likes of Tottenham, Chelsea and Manchester United. To say that we will be able to compete with them upon the basis of the above stated revenues is optimistic at best. I would therefore urge caution to all fans.
Where does the money go? Well £104 million on wages, £20 million on loan repayment for the New Stadium, and as the AST 2008/9 annual accounts analysis points out
“Other operating costs jumped by 19% to £55.4m (£46.6m) and the lack of a breakdown in these costs which account for 25% (22%) of football income continues to disappoint. Stadium operating costs may be up to £25m, but this still leaves £30m in retail costs, team travel and training and other unidentified costs. The commercial confidentiality argument against better disclosure is not clear to me.”
So like the AST and other loyal fans, we have the right to ask Ivan Gazidis
“WHERE IS THE MONEY GOING?”
Why have OTHER OPERATING COSTS jumped by 19%?
What are these costs? and why is the Club being so secretive about them?
Until the Club is forthcoming upon these questions and satisfies its supporters than nothing is being hidden, then the confusion as to why Arsenal cannot fund any major transfers will remain a mystery. Yes Arsene will have cash to spend but only that which has been accumulated since last year’s relatively inactive year. We will never be in the market for a £25 million player, We will continue to pick up free agents such as Chamakh and Joe Cole whilst spending less than £15 million on any player. Given the excellent calibre of the new likely recruits Is this a sign of a well run club in this current economic turmoil, or again the Board getting lucky and being bailed out by Arsene Wenger’s transfer strategy? I would argue the latter, for which in expressing these views I am sure that I will again be very unpopular…
FTK {jcomments on}
loading...
FTK Blog: Pride and despair today
Arsenal Fans Build Case Against Arsene
Loading ...