FTK's financial analysis of the consequences of the Fulham draw…

FTK's financial analysis of the consequences of the Fulham draw...

It has taken me twelve hours to come to terms with the enormity of the nil-nil draw yesterday. If Aston Villa win today against Stoke City, then they will have taken a great leap towards securing Champions League football next year at the expense of Arsenal. An eight point margin is not unsurmountable but given the fact that that we can only perhaps rely upon two possible stumbling blocks on March 22nd against Liverpool and April 5th against Man United and knowing our luck, even those games could throw up an unexpected bonus for them, they are clearly architects of their own Champions League status destiny. This is also assuming that we regain our winning ways.
So what will be the consequences of failing to renew our Champions League status in 2009/10? Dropping down to the Europa league will be less beneficial than the prestige of the Champions league. It has a lesser draw for top players. However the revised format means that the financial rewards will be a little better than currently on offer. In looking at the income derived from participation in European Club competition it is important to underline that all the figures quoted below can be inflated by the calibre of the Club concerned, in terms of attracting sponsorship and TV advertising revenues. But Arsenal Footabll club will not become extinct as an entity overnight.
The revenues from Champions League and UEFA Football consists of several streams.
1.UEFA participation funding,
2. The prize money derived from a percentage of broadcasting and sponsorship revenues
3. A proportion of the merchandising commercial income through UEFA
4. Ticket sales.
75% of the total fund is paid to the participating clubs with the rest retained by UEFA.
The Champions League is very lucrative and more so than the UEFA Cup by virtue of the caliber of teams playing , their stars and the wider broadcast audiences expected.
In 2007/8 the payments were 3 million Euros to a club that qualifies for the UEFA Champions League.  With an extra 2.4 million Euros for the Group stage.  Each group stage win paid 600,000 Euros. A draw paid  300,000 Euros. The first knockout phase granted a 2.2 million Euro bonus, with a side qualifying for the knockout phase securing around 9.4 million Euros in total.
Then for the quarter finals each team receives 2.5 million Euros. Whilst this is increased by 0.5million Euros for the Semis. A bonus of 4 million Euros is paid to the runners-up, whilst the winners stand to gain an additional  7 million Euros.
There will also be slices of the Commercial and merchandising income which will be shared among the clubs this could equate to as much as 12 million Euros per team. The clubs generates also ticket revenues from the group stage in an average of 8.55 million Euros, and commercial and marketing revenues accounting for a further 6 million Euros. Solidarity payments are also made for clubs that do not progress to later rounds between 100,00 to 160,000 Euros depending on stage of exit.
So a club will make approximately a quarter of its payments from the combined market pool payments, with another quarter from the UEFA prize fund. Thus a club winning the Champions League will make
3 Million qualifying plus a minimum of 2.1million Euros for 3 wins and one draw to progress from the Group stages (assuming 10pts) add to this 9.4 million for the knockout stages, plus 5.5million to reach the final, and a 7 million bonus for winning. A grand total of at least 27 million Euros.
The UEFA Cup is much less lucrative and the figures are fixed with approximately 1 million Euros qualifying, 70,000 Euros for group stages and 40,000 Euros for each win and 20,000 Euros for a draw. 140,000 Euros for the draw and two rounds with 300,000 Euros for the quarters and 600,000 for the semis with runners up receiving 1.5 million Euros bonus and the winners get 2.5 million Euros. A winning club will therefore receive around 8.75 million Euros plus commercial and ticketing revenues. This final element could be as much as another 5 million Euros making the total around half that of what could be achieved from The Champions League.
Arsenal will stand to lose at least 15 million Euros for non participation in the Champions League assuming that they would have progressed to the Knock Out stages. This analysis is assuming that they win The Europa league. The losses could be increased by as much as 5 million Euros for unsuccessful Europa participation making a staggering 20 million Euro shortfall in expected revenues.
Add to this the potential loss of key players such as Robin van Persie, Cesc Fabregas and Adebayor, the transfer fees for those players could make up the shortfall, but at what cost to the ticketing revenues from failed renewals of Club and Corporate Diamond level season tickets?
All this in order to maintain financial independence and the club being able to pay it’s way. It was fine and dandy until the team failed to perform on the pitch. For me it rather makes a mockery of not investing in a decent striker (recall I asked for David Villa?) and defensive midfielder in the long run and shows how Arsene Wenger’s faith in his current squad even allowing for injuries was totally unrealistic. But hindsight and saying I told you so are scant comfort in these current troubled times.
Having said all of that however, I maintain that Arsene Wenger is the only manager capable of masterminding the Arsenal renaissance next season. We still have the possibility of silverware this season by way of compensation, and a host of maturing young players who will grace our first team. Finding the right blend of  experienced and young players better than this season will be Arsene Wenger’s next challenge in his penultimum year of his current contract. So please, whilst many of you consider this season already to be a failure, think of the bigger picture. Are you supporting a Club or a fantasy? I may be frustrated and disappointed today, but I console myself safe in the knowledge that with Arsene Wenger and the current crop of youngsters at Arsenal Football Club, then the return of great success and victories for this noble club will not be long in returning. Glory hunters can now depart stage left and leave the true loyal Gooners to continue supporting their club.
Fabregas the King.

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