A look at Arsenal Finances

[Macmoish]

BBC Sport's Editor, David Bond

Why Arsenal need Kroenke to do more than just talk

David Bond | 16:33 UK time, Friday, 30 September 2011

Silent Stan Kroenke finally broke his silence on Arsenal's troubled start to the season telling the Daily Telegraph in an interview this morning that he has full confidence in manager Arsene Wenger and that he has a long term vision to try and emulate Manchester United's commercial success.

But a look at their latest financial results for the year ended May 31 2011 tells you just how far they have to go.

On the face of it Arsenal Holdings Group's performance is very impressive. Turnover of £255m and a group operating profit of £50.5m.

But this includes the proceeds from the property side of the business associated with the move from Highbury to Emirates back in 2006. These reached their peak in 2010. Strip that out and there is a very different story.


Stan Kroenke agreed a deal to purchase Arsenal in April. Photo: Getty
Yes, unlike Manchester United, Arsenal are paying down their debts and it is a credit to the board's self sustaining model that the club now has net debts of £97m. When you consider they have moved to a new ground and taken a risk on selling off their old home as luxury flats, that is no small achievement.

But the problem is the football operation is now at near to full capacity. Turnover on the football side of the business is up slightly, by £2.5m to £225m.

However wages are increasing year on year and now account for 55% of the club's turnover - high for a club as traditionally prudent as Arsenal. There was a £14m increase in 2010/2011 although these figures don't account for subsequent changes to the wage bill following summer player trading (Major transfers out: Cesc Fabregas, Samir Nasri, Emmanuel Eboue and Gael Clichy. Major transfers in: Mikael Arteta, Yossi Benayoun, Gervinho, Per Mertesacker, Alex Oxlade-Chamberlain, Ju Young Park and Andre Santos).

On top of that there is another £55m in other operating costs which barely changed over the last 12 months.

On the commercial side Arsenal pulled in £33m. This has been much the same ever since the club signed long term deals to 2014 with Nike and Emirates. This provided cash up front to help secure the stadium move but now look under valued compared to deals being done by United and Manchester City.

In commercial terms alone Arsenal are £70m behind United whose global strategy of packaging up their rights and selling them off territory by territory allowed them to break through the £100m barrier for the first time in 2011.

In overall turnover terms they are more than £100m behind.

And yet Arsenal and Wenger do have cash in the bank - according to these accounts, £115m. (That will have changed following the £60m sales of Nasri and Fabregas and the money subsequently invested on new players.)

Arsenal's reluctance to spend big is not only philosophical, designed to remain within the spirits and laws of Uefa's financial fair play. It is also pragmatic. While they could easily afford the transfer fee of a major player, servicing their wages over five years would not be sustained by a business which will soon run out of flats to sell.

This is why many fans are now asking billionaire Kroenke to dig deep and invest some extra money on top of the £500m or so he is committed to spending on buying his 66% stake and controlling position in the club. They fear that soon the financial gap with the rest of the top teams in the Premier League will soon be too big to close.

www.bbc.co.uk/blogs/davidbond/2011/09/why_arsenal_need_kroenke_to_do.html

[Hogan]

There are flaws in the above theory, e.g,. Arsenal had to do the deal they did initially with Emirates and Nike to get the whole stadium financing going, so ofcourse over time the deal will be dwarfed by other clubs doing new deals with sponsors.

They are financially secure compared to the likes of Man Utd, Liverpool, Chelscum and many other clubs who have accumulated huge debts without financing a new stadium. Had Arsenal won more silverware ala Man Ure and the scum their figures would have been vastly improved, so all in all they are much better placed than the competition. If they had invested in a strong spine to their side and some more British players they would surely have been closer to the black.

[RoryTheRanger]

I hate Arsenal. I hate Arsene Whiner. I hate disillusioned Arsenal fans.

[canadaranger]

They are in a much better position than Fulham.

[Lonegunmen]

And they are wanting Tarbs for 12 million. #5 million and sell him, he's a better player than Andy Carroll any day.

[gramps]

As a point of interest, we are always hearing about the pay packets of players. Does anybody know - in the most approximate of figures - what managers are paid? Don't recall ever seeing any stats about this.

[ingham]

Building a smaller stadium than United and Barca suggests they are not as big, as punchy, or as peachily placed as some of the PR coming out of the Club - and the supporters - suggests.

And they are on a losing run at the moment. They spend less on players, but there is growing pressure for them to spend more.

If their own logic concerning the advantage of a bigger stadium is correct, the gap in size will hurt them. They play that one both ways. Size is everything when it favours Arsenal but not the be-all and end-all where a rival - like United - has a bigger one.

So many Clubs fall into the trap of only looking on the bright side. Whatever they do, it will turn out for the best. And if things are good now, they can only get better.

They haven't for Arsenal. It may be temporary. But it is a little ominous that United's much bigger debt hasn't curbed Ferguson's mastery of the Premiership - 4 titles in the 5 years since Arsenal moved to the new Ground. All the more striking because United's losses aren't due to spending on players.

Traditionally, Arsenal were cautious, able to cope with long periods without much to show for them. Now, they seem to be getting infected by the must-win virus. Particularly the virulent 'must-win-by-spending more' strain.

Their support was gung-ho for Wenger last season - impressed with his relatively restrained (though still enormous) expenditure on players for just as long as they remained in all the competitions - yet they were soon disparaging him, the team, and the Club's perceived unwillingless to splash out.

Being unable to take defeat is a dangerous thing when hundreds of millions of quid are hanging on it. Especially when the sums in question are speculative. Earning lots of money is fine, provided you can live with what you're earning. And in football, the temptation is often to say 'not enough'.

Going back to stadium building, Arsenal are only the latest Club to acquire a new home. Just because Emirates Airlines now have their advertising hoarding in Drayton Park, it doesn't mean that stadium building is at an end, with Arsenal the declared winners.

Maybe other clubs will build bigger grounds one day. Even if they are only bigger than the ones they have now, it will make them more competitive against Arsenal if Arsenal's own capacity equals competitiveness logic holds good.

None of this means Arsenal can't or won't bounce back. But that can be said about any Club. And there are so many of them.