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Arsène’s transfer war chest; does it exist?

By Phil Gregory

Right, in order to head off some of the usual confusion around what we have to spend I thought I’d put together this article.

The big question surrounds this mythical, unspent war chest that stubborn old Arsène likes to sit on and shout “NON!” when anyone asks about it. Do we actually have a fund like that? Not really, in my view. Arsène’s war chest is whatever cash the club produces each year plus proceeds from player sales. There’s no unscrupulous outgoing that accounts for money that isn’t spent (the board don’t take dividends), so any surplus will technically pass on to the next transfer period. More realistically, the surplus is generally less than we presume due to the cost of wages, signing on fees etc.

The  intention with the “spend what you earn” model is sustainability:  money that can be spent on players is the “extra” money produced by the club so we can afford to spend it while player sales are a windfall and can too be spent on players sustainably. That’s the model we work under, so let’s see what numbers that gives us to spend.

Cash the club makes is – in accounting terms – “operating profit” which is basically the cash the club makes from it’s operations (TV, commercial and matchday activities).  Our 2010 operating profit for the football business was £56.8m, which is a sizeable sum.  I’m specifically using the football side of the business as property profits are a one-off. If we go and blow property profits on  Messi, we spend a large sum of money based on a temporary income stream and are left paying his wages for a good number of years.

Hence, given our preference for a sustainable business model, I don’t believe the amount of “property cash” we have to be of any use in regards to our transfer funds. It’ll probably be spent on hard infrastructure – facilities and the like – that will benefit the club but not result in us incurring substantial costs.  The best indicator of our summer spending power is how much extra cash the club’s business produces: our £56.8m operating profit.

Unfortunately, that doesn’t mean we can go out and spend £56.8m.  Even with no new additions, the general level of wages rises. Players who come from nowhere such as Wilshere will likely have been (or will be) handed a new contract and substantial pay rise. Big name players such as Nasri have yet to sign extensions whilst there were several youth and reserve team players who have signed on the dotted line. What that means is that general wage growth is quite high: between 2009 and 2010, our wage bill was up over 6% (an increase of over £6m if you like) whilst since 2005 the wage bill is up nearly 70%.

Those figures do, however include the wage growth as a result of new signings. While a new signing’s wages will probably be mostly offset by the wage saving from a player sale,  it seems reasonable to expect that buying players will boost wage growth. Since we’ve been at the Emirates,average year on year wage growth has been 7.5%. That includes the wages of new signings, so for our “current squad” wage growth figure I’m going to use a  slightly lower figure of 5%. That shaves £6m off the fund, leaving us with roughly £50m, from which any potential transfer fees and wages need to be deducted.

Now let’s imagine the impact of two signings on that £50m. Player one is a “big name” signing, costing £25m and on £100,000 a week. Player two is an Arsène special, costing £10m and on £40,000. Signing player one will cost the club in his first season £30.2m (his transfer fee and a year”s worth of wages). Signing player two will cost the club £12.8m in transfer fees and wages during that first year. Buying both would mean the club have £7m left in the coffers for any January acquisitions. The following summer, assuming everything remains equal (bar the trend 5% wage growth) the available cash for transfers would be down roughly £13m due to the additional wage costs of these two signings plus the trend wage growth (rough budget of £37m)

I think that illustrates the problem well. Unless we can offload players and put the cash recouped on transfers and wage savings towards transfers, these apparently huge sums of money we have don’t actually go very far. Even if we forget about player one and instead expect three signings in the  “player two” bracket, we’re still looking at £30m on transfer fees and over £6m extra per season on wages.

What this also demonstrates is how wasteful transfer fees are. Read back: buying player one and two leaves us with a mere £7m at the end of it, but the following summer (when the budget is down only due to their wages) the budget would be  £37m – even taking into account wage inflation – yet we’d already have a big name player and a Koscielny/Vermaelen type. The wages of individual signings don’t est up the budget too much, it’s the general wage growth that proves costly (the trend increase of 5% is the equivalent of an extra £100,000/week player on the wage bill). Tranfser fees on the other hand do eat up the budget rapidly. Much better then, to avoid spending on transfers (say, by having a great youth academy) and only dip into the market occasionally when needed.

So with some of the transfer targets being banded around, how does this all shape up? All of this assumes Cesc stays: selling a player for £50m does tend to change the budget somewhat…

For my money, I’d like to see us bring in an offensive wide player. Hazard seems the most likely target, but having signed a long term contract, his fee and wages would likely account for about half of our budget. There’s also been a few concerns around the defence,with Squillaci’s signing not having lived up to expectations. Kyle Bartley certainly seems to have potential so could be in the centre back mix, but if we did look for an external candidate, someone such as the much-linked Vertonghen would cost around £12m-£15m.

These two alone would pretty much account for our budget and would represent a fair increase in the wage bill, so some departures seem probable. With my suggested wide player coming in and Ramsey’s return to fitness, I can’t see Tomas Rosicky getting much game time and with him being a senior player he’s probably earning quite well too. While he wouldn’t yield too much of a fee, I expect his wages could cover the best part of a Hazard-type signing. Nasri and Clichy’s contracts are yet to be signed but we tend to leave those until the summer anyway so it’s not like they’re at an impasse in negotiations. If however either of those two didn’t sign, they’d be sold to cash in while we can.

As an aside, each year the  same old controversy always happens after the transfer window shuts and the year accounts come out, showing substantial cash in the bank, prompting howls of protest. There’s a few misconceptions amongst those screaming bloody  murder at Wenger: One, he in no way profits from not spending, neither do the board. In a normal business, post-tax profits can either be reinvested into the business or given to shareholders as dividends. Our board don’t take dividends and haven’t for a while, so anyone who believes Wenger’s frugality is given the okay from above as the board line their pockets is simply wrong.

The nature of the club means that after season ticket renewals, our expenses generally exceed our income on a week by week basis. Because of this, club cash is always going to be high at the start of the season and then be drawn down over the course of the season, with the biggest requirement during the summer when there are no games played but wages still due. Cash in the bank at this point is in no way our leftover transfer war chest.

For those accounting types reading, it’s worth noting that while I’ve deducted transfer fees off operating profits, transfer fees don’t actually appear on club accounts. Instead they are amortised over the length of the contract (fee paid/length of contract) and charged to the accounts bit by bit. As this doesn’t reflect when the cash actually goes out of the club it’s a pretty pointless system and isn’t much use at all in my opinion.

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54 comments to Arsène’s transfer war chest; does it exist?

  • Muppet

    Excellent article.

    I was trying to make a similar point last week on ACLF, that a reserve of £50 million, does not amount to much. It will only get you a couple of signings, and what happens the following year, when you need 2 more players, and you’ve used up your reserves ?

    People need to wake up that we cannot spend with impunity and we do not have hundreds of millions of pounds to compete with the likes of Chelsea, Manchester City and Real Madrid.

  • Mandy dodd

    Interesting article I have long wondered about this supposed war chest. I remember we gees rebuke at the board a couple years ago saying he was not stupid and if he had a hundred million of course he would spend some of it.
    I guess critics would ask what happened to the money we recently received from citeh, why we were promised the stadium would not hinder strengthening the team, and then the false economy argument say spending six million on a defender could have won us the league, or stopped us having to qualify for the cl. And then the keeper situation in recent years.
    I have always had the feeling that if we knew the whole truth, wenger would be less criticised by some, maybe the board should come out with a statement on how little he has had to play with?

  • Phil

    Mandy: As I point out in the article, it’s wages that are the killer. Revenue may rise but wages are being driven up extraordinarily quickly, and something is going to give if there is a shock to revenues (via TV court cases or the like)

  • simon james

    whilst you have made a point of figures, you are completely missing the point yourself as usual. with out us spending, we shall fall further back and probably outside the top 4. so your 58 mill operating profit will be greatly reduced probably cut in half, the ground will not be full, merchandise sales will slow up considerably and we will loose significant players. i like everybody thinks, we are close but we are 3-4 players away from being seriously close and competing until the end without the usual valetines day collapse, that we suffer with this team from that point onwards. so if we are close, as you say as well, then fi we spent and won, what would happen to the 58mill then, it would go north and grow, because we would be champions and the 20 million we would loose on your calculations would be non existent in fact we would probably gain 15million to our 58mill, minimum. you also forget the revenue generated by new signings in merchandise sales etc etc, your view is as very limited and with wenger glasses

  • Phil23

    Great article Phil. Those two signings would be great for Arsenal although Hazard does seem to have done the dirty on us a little bit by signing a new contract with Lille. If he had restrained from doing that he would have been an Arsenal player the summer for sure! Vertonghen will also provide great cover for Wilshere. In the first month it would be nice to have a double defensive shield of Song and Vertonghen while Wilshere is rested. I expect 4 or 5 players to leave but none of them being big players. Nasri, Fabregas, Arshavin, Clichy will all stay. Almunia, Denilson and Bendtner seem to be 100% going. Any one or two of Rosicky, Squillaci and Vela could go too.

  • Phil

    Simon – It’s a fair point, but you can also spend on 3/4 players that you can’t afford and still miss out on the top four. Then you’re doubly screwed. See Real Madrid etc

  • nicolas

    Hi Phil, an excellent article. I’m actually in the same wave lenght, but in a way I feel that this summer Arsenal should do more in the transfer front and shake up the first team with a harder hand. I feel that Arsenal would be better of if it would part ways with 10-15 players this summer, 3-6 from the first team and the rest from the reserves. For example from the 1st team, players like Vela, Bendtner, Almunia, Squillaci, Rosicky and Denilson do not seem to offer a lot of competition of places and thus should be sold. What is the point having a big squad if its not used? In addition Arsenal has an vast amount of young reserve players, who have been on loan gaining experience, but by now the coaching staff should have an idea who will potentially feature with the 1st team and who will not. Sales could be the “core of the war chest”.
    I would hope that Arsenal will recruit externally to the 1st team at least one pure striker, a offensive wide midfielder, one centre back and one defence-minded midfielder. Rest of the players could come from our reserves.

  • MickTheGunner

    Here’s a question, what has happened to the adebayor/toure money??? We sold ade for 25m and toure for 14m in the summer of 2009 and only brought in vermaelen for 10m, the only other major signing after that was koscielny for 8m in the summer of 2010 so after doing the math the question is where is the 21m that is still left????

  • Adam

    Wenger needs to spend. Where he get the money from is the business of the board. He needs to spend, not for the sake of it, but to make the team more competitive. As it stands this team/squad is not strong enough and recent reults qnd seasons offer ample proof of that for this who disagree. I see absolutely no option other than finding the money from somewhere and buying the players we need. Subtle trimming, wonder kids and bargain basement buys are really not going to cut it this season. The stadium is a statement of intent and the club really needs a trophy-winning team to play in it. I believe it is as straightforward as that and debates as to how much money is available are moot and somewhat pointless except to the owners and the board. This is professional football in the toughest league in the world and if you can’t afford to compete then you won’t. Hard and possibly distasteful to some but still evident to many of us.

  • Goonerbeall

    Hm, what an article? It expalins nothing really coz other than minutia of accounting it say naffall. Who said we buy witout selling? There are 6-7 individuals who are surplus to requirement and they would bring in some money on top of savings of their wages.

    Almunia, Clichy, Diaby, Eboue, Denilson, Charmack,Bendtner. These will bring in 60m-70m at least which could be added to that 40m we heard about to make it a nice round £100m which can bring the required individuals: Phil Jones ot Samba will cost £15m tops, another LB can be bought for a £10m then M-Villa can be bought for £20m tops, I guess you could bring Falcao for another £20m and that Belgian kid could come for another £20m. Lastly, Given would come for a £10m and you have change after that.

    Then we can actually compete and be able to even think about future unlike your theory.

  • Henry Durell

    I think both points are valid, while Having the 58mil on 2 quality players (hopefully experienced!) unless we have more players going out we will struggle to get the 3-4 players most of us believe we need. Spending beyond our means has a greater risk if we do drop out top 4, so I belive we will see a few players on the way out to, Bentner and Denislon have already nailed there colours to the mast (Bentner more with his comments). If Wenger can get the blend right I think sucess is not far away. Sounds cruel but I hope blackburn go down so Samba does not cost the earth!

  • kgs

    Wheres the Money from Henry,Pires,Abadayor,Torre gone?

  • Chowdhury

    @Goonerbeall –> Thank dear lord that you DO NOT manage the budget for the club I love since childhood. For if a SIMPLE person like you did manage to be at helm, i’d be deprived of having a club to call my own a long ago.
    They should ban playing FIFA on playstations for adults.

  • Sharpshooter

    @Goonerbeall-who the f*** will pay 60-70 million POUNDS “at least” for those players that even you say that are rubbish. If you get 30-40 you’re lucky. Falcao is at least 30m, the “Belgian kid” (Lukaku I suppose), did you see him play at least, since you’re willing to pay 20m for him? Wtf, it’s not your money, right?
    Quite a simple mind you have, son. Go and check out Le Grove, please.

  • Mandy Dodd

    As you say, wages are a big issue. Maybe not helped by the UK tax compared to say Spain, although my sympathy for these players having to pay 50% tax is tempered!
    I think one of the problems is the secrecy surrounding the club on all things financial – many put 2 and 2 together, get 14 then blame Wenger. I know supporters who are convinced Samba was a done deal at £6m last Jan, only for Wenger to pull the plug at the last minute for some reason. Seems the same player will now cost £15m. No idea if this is true but these sort of things, leaking out, whether true or not annoy many of the fans. Conversly, someone like Parker would have been £15m a year ago, I am pretty convinced we could get him for much less.

  • Phil

    Good point on the tax, though I think top band in Spain is 43%, and the Beckham Law exemption is lapsing/has lapsed.

    Problem is if the club are open, prices generally go up. Our reputation for being stingey means clubs don’t play hardball eg when we walked away from the Spahic deal rather than overpaying. Means we get nice bargains, but miss out on other occasions.

  • Jonathan

    What are you talking about mate, Wenger has already said that the transfer sum he has includes first year wages… And even if u were correct, we’re not asking for a new 11, just buy!

  • Norm

    Top piece, Phil. Nicholas: Totally agree. Most of us agree with the Gang of 6 who should head for the exit door, but I bet AW doesn’t. Also the obvious improved purchases mentioned by contributors here, won’t be the ones AW has in mind. Free up the overblown salaries on some of the loanees too. I know I’ve said before, but buy Baines, PJones/Samba, Parker and a scoring striker. Or could we take an Hernandez type punt on Shane Long? For sure without substantial outs and quality ins (with attitude), the current squad is not the best. Maybe the club do NOT have a huge war chest, but I believe we should spend.

  • Shard

    Hmmm.. Food for thought here. Basically none of us know how much Wenger has at his disposal. I do believe we will spend some money, but as you and others point above, it’ll be the players we sell that helps us do that. That is no bad thing in my view as some players do need to move on I feel.

    Phil, what is this TV deal court case and what impact will it have, potentially? I read something about it on Untold before, but I guess I didn’t pay too much attention. Also, I read on some other site, that our wage bill (4th highest) actually includes all the staff employed on the footballing side, rather than just the players. Is this true? And do other clubs follow the same practice?

    Lastly, for those wanting signings, well an Arsentine winger is rumoured to have signed a pre contract. Don’t know if it’s true, but we could do with a winger in my view.

    http://www.goal.com/en-gb/news/2896/premier-league/2011/05/20/2496038/arsenal-set-to-sign-velez-sarsfields-ricky-alvarez-report

  • Shard

    haha.. Argentine, but would be an Arsen(e)tine signing 🙂

  • Phil

    All these calling for a striker bemuse me. You either drop Van Persie (best striker in the league, not going to happen) or shift to two up front, thus dropping one of Fabregas, Song or Wilshere…

    It’s easier to list names than it is to build a team.

    Shard: I plan on doing an analysis of Arsenal’s wage bill. When I wrote my submission for the commons inquiry I cast doubts on what this “wage” figure includes, as they never actually tell you. I haven’t crunched the numbers yet, but I suspect the widely accepted figures for what Arsenal players earn does not match up to the final wage bill figure.

    Here’s the article about the TV deal http://blog.emiratesstadium.info/archives/10791 Basically sky are screwed and their current style is illegal under EU law. It’ll likely lead to a fall in the value of TV rights, which is great for consumers (more competition = lower costs) but very bad for clubs. Could it be the thing that ends wage inflation in the PL? Potentially

  • Wrenny

    @Phil
    Do you mean to say all these armchair managers DON’T have all the solutions to building a title-winning team? I’m shocked!

  • Phil

    Groundbreaking, I know!

  • lewis

    @Phil,top article. there is no doubt we need to spend on big money players, purely because many of our players are not performing to the standards that there wages demand. How can our wage bill have nearly doubled since we last won anything? And therein lies the problem. This is the year for the shake up, kick out dead weight, and dont pay over the odds for contracts. I genuinely would rather sell cesc and Nasri than be held to ransome. as good as Nasri was at the beginning, he and every other player (except van persie) acted like origami and folded under pressure! I bet Cesc is more than what Henry and Viera where, and as amazing as he is, hes not as good as either of them, so we go back to paying players what they are worth, and not a penny more

  • truegooner

    Sepculate to accumulate!!!!!!!!!
    We would earn far money if we won something.

  • John L

    a word of warning to those calling for the departure of ‘sub-par’ players…

    not so long ago song was considered rubbish, and there were many cries for a DM signing. the following season song improved immensely and we solved our problem internally.

    not saying i dont want to see some transfer action this summer, but its important to remember that players CAN improve!!!

  • Dark Prince

    There are lots of assumptions made in the article which can be wrong. There are many other loopholes also in this article. But on signing part, i agree that Hazard and Vertonghen would be excellant signings. But am i the only one here who thinks that we need an excellant striker as well?? Can we really expect Chamakh and Bendtner to do the job if Van Persie gets injured again??

  • John L

    One of the reasons I love Arsenal is that we don’t rely on big name signings. That we are sustainable and extremely competitive. That we look to good coaching and youth development. If we have money and do not spend it, but instead promote from within, it gives me pride in our club. If we make frugal ‘no-name’ signings and turn them into global superstars this makes me proud to be a Gooner! Proud in the philosophy, unity, talent and dedication that takes. Sometimes we dont win, but I am proud of my team because of a pre-existing philosophy that I believe the club and myself hold…sustainability.

    We cannot sell out on that for short term satisfaction, that is not even certain. As Phil points out, signings cost more than just the stated transfer fee. If we can do that and remain within our means than I would love to see some new faces. However, we have to stay true to our philosophy. Our current structure has brought us very close, maybe next time we will be closer. If not, like some of you suggest. It will be our sustainable philosophy and ‘penny-pinching’ will be what save us and allow us to survive a potential disaster aka no CL.

    My question to those complaining, asking for signings, sales or sackings….why do you support Arsenal?

  • nicolas

    An armchair manager yes, but are you any different? Aren’t we all just merely giving our opinion here? The striker issue for me seems quite important. Even though I appreciate Van Persie, I feel that he truly is one of best players in the league and in Arsenal squad. But his history proves that he can’t play for the hole season. In my mind he just isn’t ideal number 9. He comes way too deep leaving his position and thus many times missing the opportunity to score and he doesn’t know how to head the ball in which makes a lot of crosses just useless. Maybe van Persie could be deploid as a second striker when playing 4-4-2(especially when one of our midfielders would be injured), or as a winger in 4-5-1 or what ever the situation could be. With the amount of possession and service, it is almost a crying shame that our best striker hasn’t scored 40 goals or even 20 goals in the 23 games he has played in the league this year or over 20 league goals even once in his career at Arsenal.

  • Dipesh

    People only talk about how expensive singings are but why don’t they think that if two or three expensive singings can help us win the league then that money will come right back into the clubs hand(prise money, tv rights, commercials, merchandise sell) .. and what if we don’t buy and end up 5th or 6th what good will that be for the finances ?????

  • Sam

    Phil. I am a season ticket holder and a regular reader of yours and I am also Wenger’s strong supporter. My support for Wenger is running out. I am prepared to give him one more year.
    I don’t have figures in front of me but, what I know is that;

    1. Our stadium produce same match day revenue as Manu.
    2. Our annual mortgage payments on the stadium are £20 million
    3. 0ur debt now is under control and is nowhere near Manu
    4. We are the 4th or 5th richest club in the world.
    Despite all this, if we still are not able to strengthen our squad then our club is managed very badly financially. Could we not affort few extra millions last year to buy Fulahm keeper Swar and CB Hagleland. Of course there are no gurranties in life but in my opinion, we would have been at least 5/6 points better of with these players with us.
    You also conveniently ignored the fact that when a club buy a player like Hazard, it creats extra revenue through shirt sales. So please balance your artical rather then blindly support Wenger. Tell me , can’t we afford to buy a better defender than having to put up with players like, Sylvester, Sol, Lehman, Squillaci, Almunia, Sandros. Man u have just won the title and announced they will buy 3 players.

  • Richard B

    Arsenals so called warchest (money specifically set aside for transfers) will only get spent in full if there are no likely first teamers coming through the ranks and/or if there is a danger that attendances fall off to such an extent that the mortgage payments are in danger. If that happens the banks that loaned us the money to build Emirates will demand reassurance – in the same way that they demand insurance against non-payment of any mortgage.
    It is also likely that, if FFP regulations are strictly applied from this summer onwards, the transfer market as we know it, will cpollapse. A well run business would wait for that to happen and not buy at what will soon appear to be inflated prices. AFC will only spend big if we sell big – and the only big sale we are likely to make is Fabregas for whom ready made replacements already exist at the Club.

  • Wrenny

    @Sam
    “Could we not affort few extra millions last year to buy Fulahm keeper Swar and CB Hagleland.”

    Neither of those transfers failed for financial reasons. Schwarzer explained a while back that he would have come to Arsenal on the condition that Fulham found a replacement. Shay Given at one point looked set to go on loan to Fulham but then decided to stay and fight for his place at Man City, and so Schwarzer wasn’t allowed to talk to us. It’s quite possible that Man City themselves blocked Given’s move, if they knew or had an inkling that it would otherwise pave the way for Arsenal, one of their rivals, to strengthen in a key position.

    And last season, I think it was straight after Fulham had booked their place in the UEFA Cup final, Hangeland told a reporter something along the lines of “my decision to stay with Fulham has been vindicated”. Which would obviously suggest that it was not down to money and any offer Arsenal made could well have been accepted, but the player himself didn’t want to come.

  • Adam

    @Phil, nice article, Would Arsenals end of year accounts show profits carried forward, AFC have been in profit for a while so would they not have accumulated a so called war chest. I remember Wenger stating(some time ago) that there was only 3 players in the world we could not afford. Im not saying we should spend at all, just trying to understand.

  • jbh

    You cannot underestimate the importance of the current Arsenal strategy:
    a. attractive attacking football
    b. emphasis on youth not only for high energy but also playing young players early
    c. build rather than buy the team as much as possible
    d. when you have to buy, buy wisely for the right price

    Translating these points into what they mean:
    a. Keep the stadium full or close to full and build a worldwide following. Most of the best teams in the world play attractive football. And you attract better talent who want to play good football.
    b. Young players can play with greater pace and intensity. If you play young players you will act as a magnet for the best young talent. As is Wenger – they want to play for a manager with his prestige and reputation (any American will tell you how dominant you can become if you can get many of the top “draft” picks year after year without the problem of going to the “draft” where the worst performing teams pick the best talent first)
    c. All players take time to get used to a new team, and teams with high turnover in players year after year usually underperform. Not to mention the high costs of writing off high transfer fees. The more you build the greater the continuity – the reserves and youth all play the same systems. Also the youth talent that doesn’t make it often garner the club transfer fees.
    d. You can get top talent by being careful in your shopping. Arshavin was keen to come and did so at a reasonable price. With a good scouting network there is good talent at reasonable prices, and the scouting team know the types of players Wenger wants who will fit into the team patterns.

    Lastly objective no 1 is to win the league, no 2 is CL, no 3 is top 4 in the league, no 4 is FA cup and lastly Carling cup. To acheive at least one of these every season is a phenomenal acheivement. In fact Wenger has hit 22 of them in 15 seasons. He’s taken Arsenal from no 38 ranked team in Europe to 5th ranked. With his budget, style of football and age of teams is incredible.

  • Phil

    Adam – bottom line profits would just be kept as cash in the bank. I’d have to go back through the quarterly accounts to get a feel for the seasonality of the cash flow, then strip out property money to get a feel for whether we’re sitting on funds. Might be worth a follow-up article

  • Anne

    @John L:

    I like you.

    You too, jbh 🙂

  • Andrew Chua

    The only resource we have pertaining to the financial status are the annual reports for these years and they indicated Arsenal has the $.

    How to utilise the $ to the optimal hinges on a good management (including the manager) being able to meet the fan’s expectations, exploring other means of revenue (football-wise and not into property) and balancing the books. The management are paid handsomely to do these.

    To date, they have achieved only to balance the books nicely but have failed, IMO, to achieve fans’ expectations and other means of revenue (raising the already world record ticket price is not creative).

  • well-endowed gooner

    There actually IS a war chest out there. One of the conditions of the bank loans was that 70% of transfer proceeds must be invested back into the squad, either by extending existing contracts or buying new players. The big question most gooners ask is where the Adebayor and Toure transfer monies went to. 28m of that combined 40m transfer fee HAS to be pumped back into the squad.

    If we consider the players in and out since then:

    Out: Adebayor, Toure, Gallas
    In: Squillaci, Koscielney, Chamakh, Wilshere (like a new…)

    I’d say the wages saved from Ade, Toure and Gallas would comfortably cover the wages of the incoming players, and then some.

    Which leaves the question of where that 28m (which Arsenal must spend) went to? Presumbly, it went to pumping up the wages of existing players. And the question one must ask if whether giving Denilon a 50k a week contract and Eboue a 60k a week contract was the best way of spending 28m.

  • well-endowed gooner

    Sorry, forgot the purchase of Vermaelen… the expenditure for whom should still fit into the savings from the outgoings.

  • Countryboy

    Most people seem to comfortably ignore this fact that Arsena have too many average or young players earning too much money. Many of whom will never make it as arsenal players. the focus on project youth has been quantity not quality.
    @Walter, can you do an analysis of the number of arsenal youth players who have made it through the first team and those who have been perennial future prospects. I know this is a pro-wenger site but l know you know you wont refrain from dong an article because the answer may not be too flattering.
    Personally i believe in project youth. Only it must be about players who have a realistic chance of making it than those we just hope will make it.
    If u spend 12M on players like Nasri & Walcott, I consider it a surer investment than paying 1M each on fifteen teenagers, 14 of whom may never play first team football for arsenal.
    My argument may be simplistic but i think it is worth looking into

  • Countryboy

    sorry i said Walter, anybody could do the article – Phil, Walter or Tony

  • Shard

    @well endowed gooner

    I don’t know where you get the 70% figure from. As far as I know, the percentage has not been revealed. And yes, the money has been used for extending contracts. Which brings us to what Countryboy said about average players earning more than they deserve. Yes, it is true. Arsenal paid out for long term contracts on the basis of potential, and in order to build a team. After Flamini left on a free, an Hleb threatened to buy out the remaining year of his contract, that was the only way the club could ensure that we kept our players. So it has resulted in people like Denilson earning more than he should, but it also means we get to keep Cesc. At a stage when we couldn’t afford to buy readymade players to fill gaps in the team if any of our players left for free (even the squad players) I think it was the ONLY thing to do, not just the right thing.

  • Sam

    The calculations are completely flawed!!! if you buy a 25 mil player the payments are generally don in staggered amounts and not at one go!!! So first year additional cost for the “BIG” player would be 8-10 mil + wages. The rest 15-17 mil will be paid over the next 3 years.This is the reason Barca still has to pay some amount for Hleb!!!
    I can understand the idea the writer kept out the probable sell offs as that can be a separate topic altogether albeit the hottest one on the net!!!!

  • Rhys Jaggar

    Your argument assumes that the transfer fee is a lump sum up-front.

    Not to put too fine a point on it, that’s not an entirely accurate assumption…..

    You ever heard of transfer fees being spread over 4 years?

    Because if you haven’t, it’s about time you did……….

  • Well-endowed gooner

    Well, if Man City are spreading the transfer fees over four years, then any in-coming transfer would also be over four years, hmm? So it evens out.

    70% has been the figure there for some time. Do a google search of it if you don’t believe me.

  • dan

    usmanov,please save us

  • chris66

    Astoundingly the author manages to construct an argument that supports the opinion he had in the first place. Confirmation bias again on this site.

    If you are looking at either paying the fee in one lump sum payment or depreciating the asset over 1 year (which would mean the player only signs a 1 year deal – never going to happen) then this article stands up. But however, if you are prepared to embrace reality then you can see that a $25 million transfer over a 5 year contract with a salary of $100K per week, actually costs the budget $10.2 million per year ($5 million of depreciation plus $5.2 million of wages).

    By cutting out some highly paid but under performing players (we all know who they are) and replacing them with squad players from the youth ranks (Coquelin, Lansbury, et.al) to fill out the squad, we can both generate incoming transfer fees to offset the full impact of new player acquisitions plus reduce the overall wage bill. In fact it is very easy to conclude that Arsenal CAN buy exactly the players we need to push this team beyond the plateau that it is stuck on AND be sustainable. It is not the false choice that is constantly presented (Spend & Die vs. Not spend and pickle)

    This is increasingly so if we are able to increase revenues over time (which is the point of management) by being more successful, both in terms of results and in commercial deals from being a better and more attractive team to be associated with. Sponsors like winners.

    While being successful on the pitch is always a risk, it is the nature of the business that the club is in. Being successful off off the pitch however is surely the reason we bought in all these highly paid execs to work alongside Gazidis, and so is much less risky. As we rid ourselves (either by the terms coming to an end or buying ourselves out) of the deals we had to do to fund the equity for Ashburton Grove redevelopment, our cashflow and operating profits will increase substantially. In fact there is an argument that the club should borrow the money (either from a third party or from Kroenke) to fund buying out those deals, as the net return should definitely outstrip interest costs to do so.

    The truth is we can afford to do what is necessary. The question is, will we, or have we as a club, as so many on this site, become so stuck in our view of the world that we cannot see the alternate paths in front of us?

  • Dan Green

    how anyone can say wenger knows what his doing is silly. fabregas clearly wants out. nasri isnt in a hurry to sign a new deal. clichy likewise (although if he signed for another top club they wouldnt put up with his poor defending and poor crossing). but forget clichy and focus on nasri and cesc. why do our two best players want to leave? to say wenger has lost some of the players trust is an understatement. the rot has gone on too long. if nasri and cesc go then that should be the final nail in wengers coffin. get in a new manager and build the team around ramsey and wilshere. wenger cannot be trusted with wilshere and ramsey. we cannot afford wenger to be the man to rebuild. his rubbish at it. he cant do it (fact). 6 years and i dont know if we are the finished article. are we? or are we still a work in progress, progressing at a snails pace?

  • Stevie E

    @Dan Green, can I ask how you know cesc wants out or nasri doesn’t want to sign a contract? Have you spoken to Cesc? Or Nasri? Oh, I know, you’ve read it in the papers… I just read that nasri is going to Man IOU so that must be true! I also see you’ve been in the dressing room cos you seem to know AW has lost the trust of the players?!? What the hell are you talking about? To come onto a blog and spout nonsense is one thing, but to reiterate what you’re read in the press and act as if it’s the complete truth just shows you have no mind of your own. So you think AW should be sacked and a team built around Aaron & Jack? So how long do you think that will take? 6 years? 7 years? How long will you give the next manager to undo all the work AW has done just to redo it? How long do you think it takes to build a championship winning team? In your vast wisdom of running a football team at the highest level, with no money, no debt and against a league which doesn’t want you to win, how long does it take? Should we be like Chelski from now on and only give a manager a season to win stuff, and if he doesn’t he’s out? I await your insightful reply, I’m sure if you google all the questions I’ve asked you, some smart arse hack has answered these questions for you so you can just copy & paste.

  • Dan Green

    @STEVE – man utd have not even finished the season yet and they are buying for next season.oh arsenal why are you so slow on the uptake.one more thing does anybody here think that the daily mail is fast becoming a man utd fanzine.dont get me wrong it is the best paper for sport but every day througout the season the coloumn inches they get get compared to the other teams is rediculous.they really do not like the arsenal .they even printed a snied piece about us giving barca our training ground as if to suggest we want to help them beat englands team.if they want to talk about northern teams then do so and let them print as the used to southern team news for us down here.fergie showed yesterday in his conferance that all the press are dead scared of upsetting him. who does he think he is.does he only want pepole around him you write nice things.does that remind you of anything in the distant past.

  • Stevie E

    @Dan Green, who have they bought, Nasri? If you get all your info about football from the daily mail, it’s no wonder you hold man iou’s transfer dealings in such high esteem. As you haven’t answered any of the questions I asked you, I will just assume you don’t have an opinion of your own and couldn’t find any relevent answers in the “best paper for sport”, and as such I can’t be arsed to get into tête à tête with you or the hacks from a red top rag who sells sensationalism thinly veiled as news. Oh, and just for the record, I couldn’t two shits what man iou are doing.

  • hariwool

    another day passes and

    … and here is an article on the issue of economics, and here is a commentary on something quite different. Odd isn’t it. The text has been removed. Tony

  • Rowan

    But if Arsenal were the only team in the top 4 to actually make money(i.e. a profit) and still are not able to buy players, how do Man Utd and Chelsea and Man City buy 30 million pound players without blinking?? Do they just keep slipping more and more into debt? Or is it purely from the owners pocket from which the funds come? Not affecting the individual clubs profit at all?