By Tony Attwood
I have just read an article in which it is suggested that Arsenal may well be heading the way of Liverpool, and that unless the manager is changed that is where the club is likely to end up.
It is an interesting proposition, and one that requires some analysis.
Liverpool FC were once the top club in the country, but eventually they fell from grace. Arsenal were involved in giving them that push away from the top, as George Graham’s two championships dealt them quite a blow.
But the biggest cause of Liverpool’s demise was surely the takeover by Gillet and Hicks. Just in case you have forgotten here’s how it went.
In January 2007, Dubai International Capital pulled out of a deal to buy the club, and with David Moores seemingly anxious to sell, a couple of days later Gillett and Hicks reached a deal to buy Liverpool FC for £435 million.
That money was £220 million to buy out the shareholders and included £44.8 million to clear the debt. The rest was said to be set aside to build a new stadium. The Board unanimously recommended that the club’s shareholders accept this offer.
Thereafter Liverpool bought Fernando Torres, Yossi Benayoun, and Ryan Babel, but Rafa Benítez constantly argued he needed more money, which was not forthcoming.
Meanwhile it became clear that the purchase of Liverpool was in effect a leveraged buy-out similar to that used at Manchester United which used money borrowed from the banks. This debt was then put onto the club and so the club had to pay interest on the money used to buy the club! (Man U survived because they were constantly making more money than Liverpool mostly through their worldwide marketing programme).
It also became clear that the old owners, who were expected to be part of the club’s future, were quickly eased out. Nothing, it seems, was written into the terms of sale, for them to be kept on board, or to have any control over the club. As a result, the new ground was not forthcoming, and as the club became unable to pay for its borrowings, eventually Royal Bank of Scotland took Gillet and Hicks to court to ensure the sale of the club. The High Court ruled in favour of the creditors and so the club was sold again.
Since then Liverpool has been involved in some strange transfer deals – most notably buying Carroll on 31 January 2011 for £35 million, and have gone in for managerial change. The Carroll affair was excused at the time by the fact that they had just got £50m from Chelsea, but in hindsight it looks as if a much better move would have been to buy several players at more normal prices. Carroll’s subsequent performances have not given him the look of a £35m player.
Now we have to ask if Arsenal have any chance of following Liverpool’s decline which has left them with the old stadium, and out of the champions league.
Obviously the majority owner of Arsenal could do a leveraged buyout, but normally this is done instantly, not some years later so I think we can say it is extremely unlikely.
The majority owner could sell his shareholding elsewhere to someone else who could then fund his purchase through a leveraged buyout. Certainly the previous owner of Liverpool seems to have been remiss in his sale of shares – it looks (again with hindsight) as if not enough checking as to what Gillet and Hicks would do. Again one can’t ever be certain, but it seems as if Mr Kronke is not at all intending to do this sort of thing. If he were he would presumably have sold to Mr Usmanov by now.
On the pitch not all Arsenal purchases have been brilliant – but then the same can be said of any club, and Arsenal are just about the only top club making a profit on player buying and selling.
I can’t really think of anything as odd as the purchasing of Carroll for £35m happening at Arsenal. Indeed most of the AAA complain that Mr Wenger doesn’t spend enough money and is too niggardly in his offering of money.
Next there is the stadium issue. Liverpool has a problem because its income on match days is a lot lower than Manchester United’s and Arsenal’s. Arsenal already has its new stadium – something the writers of the “nightmare scenario” article seem not to have noticed. Liverpool are now talking of re-developing the ground, but that is problematic, and it is not clear where the money for this will come from.
As for being taken over by the bank, Arsenal’s building of the Emirates and selling of Highbury has been a financial success.
So on virtually all fronts (no leveraged buy out, no selling on irresponsibly, no stadium problems, nothing quite as odd as buying Carroll for £35m) Arsenal and Liverpool are not the same. Indeed just to throw in one little extra, Liverpool lost £50m in their last financial year, and may well not qualify for Europe under FFP, if they get into the top places. Arsenal invariably make a profit.
Thus one might ask, where is the nightmare?
And the answer is that it is in fact a real nightmare – in effect a dream that has evolved in the writers’ minds.
It is unfortunate that so many people like to fantasise with dreams, but that is the way of the world, and obviously it does make some people happy. We can be compared with Liverpool of course, but the comparison is not based on reality. Just on a bad dream.
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- The Arsenal History Blog from the AISA Arsenal History Society