By Tony Attwood
If you cast your mind back you may recall that before the “Wenger Out” and “Thanks for the memories but…” spell we had the “spend some fucking money” period. And it is clear that many people who comment on Arsenal’s finances, and do so with far more financial knowledge than I have, still have not grasped the fact that spending lots of money on players, rather like changing managers, is no guarantee of success. Although it is a guaranteed way of losing money.
Arsenal do normally make a profit, and in fact the last time Arsenal made a loss was right back in the financial year 2001/2 when Mr Wenger was still developing his team, but the income was limited by the size of the stadium, and much lower broadcasting and European revenues.
Arsenal’s income however has been changing and gradually different bits of its sources of income have been sorted out. The stadium has been built, self-evidently, and mostly paid for. And really the only area where Arsenal is lagging is in terms of commercial income. But there too, progress is being made.
Of course Arsenal is not going to compete with the income that can be provided from unusual financing arrangements that for a very short while were outlawed by FFP – like the money from Qatar to PSG and similar deals with Barcelona etc. Plus one cannot catch up with the historic arrangements of Bayern and Man U.
But progress can certainly be made and is being made, although the endless attacks on the club by the media and a vocal minority of “fans” doesn’t help. Companies don’t invest in organisations riven with internal strife, which is how the media portray Arsenal on a daily basis.
Man U’s kit deal is still worth double that of Arsenal, for example, but that is to be expected after their very successful run under Sir F, and they managed to secure a ten year deal (and thanks to the BBC, the sponsor can be secure in the knowledge that every single Man U FA Cup game from the third round on, is televised, as it has been for the past seven years. But they will still have to start doing some serious Champions League and Premier League performances soon, to ensure they are not overtaken.
However one of the things that many “financial analysts” in football don’t do is a review across a number of seasons, despite the fact that it is this sort of review that can give some interesting insights.
The last four years for which figures are available give us the results below. Here we can see some streams of money fairly static, such as matchday income (which will remain static since the ticket prices go up only every three years or so, and the number of people who can come to a game is fixed).
TV money however is rising rapidly – but then everyone is benefiting – although the constant participation in the Champions League helps Arsenal. Wages, of course, go up – that is where the money goes… and as a result of these fluctuations, profit jumps around a bit without showing any particular trend.
| 2014/2015 | 2013/2014 | 2012/2013 | 2011/2012 | |
| Turnover | £345m | £304m | £283m | £245m |
| Matchday | £100m | £100m | £93m | £95m |
| TV | £125m | £121m | £86m | £85m |
| Retail | £25m | £18m | £18m | £18m |
| Commercial | £79m | £59 | £44m | £34m |
| Player trading | £0.8m | £0.5m | £2m | £3m |
| Property | £15m | £3m | £38m | £8m |
| Wages | £192m | £166m | £154m | £143m |
| Profit | £25m | £5m | £7m | £37m |
| Interest | £14m | £14m | £14m | £15m |
| Debt | £6m | £33m | £93m | £98m |
But there are some factors here that should be noted. There are still more property deals to generate income (these are all part of the rebuilding of the area around the stadium, which was part of the agreement with the local authority), and they have been staged step by step so that Arsenal has not been paying out huge amounts on rebuilding while still paying for the stadium. So the profits here will continue for a year or two as the next stages are complete.
However we should particularly consider the last two lines in the table above. Arsenal’s interest payments remain static. This is not because debts are not being paid off, but rather because of the way the loan and interest are repaid. This is the same as when you buy a house – the interest on your mortgage is balanced across the years with the repayment of capital – so in the first years you are paying almost all interest and no capital repayments, while at the end the situation is reversed. Then it is all paid off, and that’s that.
As a result at the end of the last financial year declared, Arsenal still paid the regular £14m in interest, but only had £6m loan left. As you can see from the way the debt has declined in recent years, that is about to go and should be paid off in full by the end of 2015/16 financial year. So more money for Arsenal to play with.
Of course other things can affect club profits – such as Tottenham had with the sale of Bale. But Arsenal’s figures have been in fact very consistent making Arsenal one of only three clubs to make a profit over these four years.
And although it is commonplace to suggest that Arsenal don’t spend money on transfers, over 13/14 and 14/15 Arsenal had the third highest spend on players in the League. When Arsenal “only” bought Cech last summer Mr Wenger said, “It is not a shortage of money, just a shortage of players.” There was of course derisive laughter from the media, but the policy still took the club to second in the league. And it looks as if this season there will be considerably more spending. Indeed it has already started.
Spend on players however is always a misleading concept in that such a figure shows Bellerin, Coquelin and Iwobi as having no cost – but there has been a considerable amount spent on their development and training.
Arsenal do have some continuing expenses to incur with the work on the Hale End Academy and London Colney facilities – and these will continue for another year or two, and of course Arsenal does not have the luxury of being given a new stadium as West Ham has, or a stadium and an extension and a complete new youth complex paid for by a sponsor, as Man City have.
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Tony – the outstanding loan is still over £200m. It’s the net debt that is down to £6m i.e. we’ve got almost as much cash in the bank as we owe but, chances are, it won’t be finally paid off until 2028 as per the original schedule.
Tony just a few points
You said that spending money and buying lots of players has no guarantee on sucess but there is more chance of sucess that buying no outfield players and keeping the same manager who has failed to win major honors in over a decade.
Also you mention about not being able to compete wit the oil money of chelsea and city but the way i see it is our 2 major shareholders have as much wealth as the two clubs mentioned but dont want to share it with the fans.Well one anyway.
We were told when we went to the new stadium that it was a necessity to compete with the very best but as has been shown from the vardy dealings that because of our willingness to make profits over ambition we are even struggling to lure players from leicester.
@insideright, until the year 2028 before Arsenal will payoff the Stadium debts? That’s 12 years to go before Arsenal can be free to fly like the free flying bird in the airspace as I was previously told by @Robert on this site.
And how are Arsenal going to have space to increase the Ems’ sitting capacity if they have used up all the spaces around it for property developments? Can they re-negotiate the property developments agreement with the local authority if it’s not late? Or the property developments will not hinder the Ems expansion whenever they want to do it?
We owe more tham £6m on the stadium. Still a substantial portion to pay off. Approximately 40 to 50% left I think.
Tommy, tiresome, Tommy, boring Tommy, give it a rest Tommy….
Tommy
Our wealthy shareholders are not in it to give money away. They’re holding millions of pounds worth of shares which they’ll sell eventually, when we’ll have different wealthy shareholders who won’t give the fans any money. These people are not altruists Tommy
yes indeed’ Arsenal are going in the right direction. but bcos of the media + pundit constantly and almost nonstop ridicule n spread negativity about Arsenal every chance they got, it change the way people think about Arsenal even some of the so call fans of the Arsenal(mostly the concrete thinker).when the bad way of club doing business(wasted millions on purchase mostly ready made players and offer ridiculous wage) hail as good and the new way of club football is run’ you get some of Arsenal fans questioning, if other clubs spend big on buying players’ why cant our club behave like them? while the good and sensible ways(give a chance and promote academy players with potential into the 1st team and buy players who will strengthen the squad but also continued with their development plus reach their peak and full potential with the club) look like the wrong and backward ways. maybe the media and their allies dislike it so much bcos A.Wenger is the master of that sort of thing
Tommy
You are on the wrong site.
Most of the other fans who can’t think for themselves go on the Le Grove site.
Arsenal borrowed money from the likes of the Royal Bank of Scotland, at the beginning.
Arsenal then refinances.
Fixed rate bonds of £210 millions in July 2006, repayment commenced in September 2006 and will continue until 2029.
Floating rate bonds of £50 millions issued in July 2006, and are rescheduled for payment between 2029 and 2031.
The company’s fixed rate bonds and floating rate bonds are secured by a mixture of mortgages and fixed charges on freehold and leasehold property, trade debtors, by any related bank guarantees and over £54 millions of the bank deposits held by companies within the portfolio of Arsenal Holdings plc.
The bondholders have had a quiet word with Mr Wenger, now and again, over the past few years. Metaphorically speaking!
Advance payments for seasons tickets, commercial deals and sponsorship, hide the true debt.
Source, Arsenal Securities Plc, Notes to the Accounts 31 May 2015.
Enough people have told Tommy to go take along walk on a short Piers (Mrgan).
Today, the Arsenal website had a blurb saying they had just finished up writing a new arrangement with Santa Rita winery of Chile. My Mom likes wine. She now has a bottle of wine from that winery.
Since I was the first person to take advantage of this thing with Santa Rita Winery, does that mean Alexis Sanchez is going to pay a visit to Dawson Creek, BC, Canada sometime soon? 🙂
Agree re net v gross debt comments. Still a long way to go re paying down the stadium debt.
Tommy must be the token shallow thinker allowed through the screening to be the ritual target of abuse this time…
Kronke recently spent $500 000 000 on a land deal in Texas so perhaps he doesn’t have any spare cash to give to Arsenal.
May be the club could help him out with with some pocket money say another $3 000 000.
Mick
Thank you very much but i can think for myself,and if i dont agree with some of the blog that tony has written i will say so.Sorry tony but surely it would be boring and a little strange to keep writing blogs and everyone agreeing with every word you put.Football is about opinions ,everyone has them and usually they differ.There are many different opinions about Arsenal and the way they are run. I dont believe all that is written on here are correct the same way that i dont agree that everything written on Le-grove,goonersweb,goonersworld Arseblog etc are right either.
Your player trading figures are incorrect. Profit on player sales in 2014/15 was 28.9m – not 0.8m. Likewise, the figures for the other years you quoted are also all wrong – by significant amounts.
Could I suggest in future that you check your facts first and source them either directly from Arsenal’s published accounts or a respectable source such as Swiss Ramble.
“However one of the things that many “financial analysts” in football don’t do is a review across a number of seasons, despite the fact that it is this sort of review that can give some interesting insights.”
Speaking as someone with a financial background, I can assure you that any true financial analyst – not some random blogger or hack – will at least compare the current year’s financial results to the previous year’s, and all published accounts provide that information. Taking a specific example, Swiss Ramble – the highly respected football financial analyst – does compare results for 5 years, sometimes more.
Yes, you can garner interesting insights when reviewing results for 4 years. But only when you get the facts right – which you have not on player sales and loans.
One thing i can say for sure besides the constant abuse of Arsenal, is that the banks rip everybody off. But this is no wonder as that is what they were set up to do.
Saw this informative North London is Red Article linked in the PA Twitter feed
http://northlondonisred.co.uk/arsenals-stadium-debt-the-inside-track/
A viewpoint on just what the club were up against with the stadium debt
This club and manager would appear to have come through some very scary times
Tommy
You are of course entitled to an opinion and you are obviously free to express it.
However, if your opinion goes against the ethos of this site expect to get criticized for it.
Tommy – you have said “football is about opinions”. Indeed that is what has happened to football debate in this country.
But it doesn’t have to be like that – it could be about opinions backed up by clear evidence and data, and that is what this site has set out to produce. We’ve been doing it for 8 years, and have brought in a very large audience, so I hope you will accept our ethos. If you wish to disagree with a writer on Untold, by all means do, but please respect the site’s overall position, which is that opinion which argues against the original article, should be backed up by evidence.
“As a result at the end of the last financial year declared, Arsenal still paid the regular £14m in interest, but only had £6m loan left. As you can see from the way the debt has declined in recent years, that is about to go and should be paid off in full by the end of 2015/16 financial year.”
That’s incorrect. You’re quoting the net debt figure of 6m and claiming it’s the “loan left”. It’s not. It’s the difference between Arsenal’s long term debt and the short term cash balances.
To quote Swiss Ramble: “Although the net debt stands at only £6 million, thanks to those large cash balances, the gross debt of £234 million remains the second highest in the Premier League, only behind Manchester United, who still have £411 million of debt even after all the Glazers’ various re-financings. Arsenal’s debt comprises long-term bonds that represent the “mortgage” on the stadium (£206 million) and the debentures held by supporters (£28 million).”
“Of course other things can affect club profits – such as Tottenham had with the sale of Bale. But Arsenal’s figures have been in fact very consistent making Arsenal one of only three clubs to make a profit over these four years.”
Had you got your facts right, you’d have noticed that Arsenal made a loss in each of the last *five* years from their core business. Player sales and property turned that into a net profit.
As for things like Tottenham’s Bale sale affecting club profits, exactly the same can be said about Arsenal. The Club made more than 100m profit on player sales in 2012 (65.5m) and 2013 (47m) combined.
Tony
Ok so where are your facts and clear evidence and data to back up that “But progress can certainly be made and is being made,”????
Where is the progress being made from last year???
2014-2015 season – League points 75 ,Fa cup winner,champions league last 16
2015-2016 season – League points 71 ,FA cup quarter final, champions league last 16
So if you look at the facts and evidence you are wrong and we haven’t and aren’t making progress.
Tony can i ask why my previous post is in moderation??Is there anything against the rules that i have put??I didnt use any derogatory terms or posted anything that isnt allowed to be posted on a forum for debate. I hope that my previous posts havent caused offence to anyone .
Tommy I think we might have to accept we simply look at this from a different point of view.
Most people judge success by trophies and positions in the league, not the number of points. If we judged by number of points then you would have to say that 2013/14 was a high point with 79 points, the highest since 2007/08, and yet we were 4th.
I think that is a poor area to judge. I would sooner judge movement over time in many different sectors and I would give as my evidence of progress that we have
a) built the stadium without being relegated. As the Untold article on this subject showed, the majority of top league clubs that have built new stadia have followed that by being relegated. So the Ems is progress over Highbury without the normal side effect.
b) we had the long period of being in the top four, which is real long term progress over all that has gone before. Arsenal never had a run at the top remotely like this – not even in Chapman’s era. So that is progress on a long term basis.
c) to come back to the shorter term, after the building of the Ems we were top four but without a trophy, so the two cup wins against all those previous years was progress.
d) over the last three years the league position has progressed 4th, 3rd, 2nd
e) Personally I find the team has progressed with the arrival of Ozil and Alexis and I hope Granit.
f) The work on bringing players through from the youth system has progressed – I can’t recall a time when three such talents as Iwobi Bellerin and Coquelin have emerged from within the ranks in a two year period, so that is progress too.
Of course you can choose a much more limited approach to the notion of progress, and you can choose to measure league points as part of the conclusion you reach, so we can differ on that, and just agree that we have a different way of measuring progress.
Untold gets over 6 million page views a year, and about half of the comments we get are not published. We also occasionally come under attack from outside agencies either wishing to steal from the site or simply disrupt our work. To cope with this, and given that there are only a small group of us trying to run the site, we have automatic systems, and some personal intervention, that tries to keep the site running. But like all systems, it is far from perfect and errors can be made. There is more on http://untold-arsenal.com/untold-comments
Arsenal’s share price increased 40 fold during AW tenure, wished I had money back then to buy.
http://www.css-investments.com/stock-analysis/arsenal-report/#
‘All of this has led to some fairly silly remarks being made about Arsenal’s finances, as when Swiss Ramble said, “They have “a pocket full of pretty green” (to quote The Jam), but they don’t seem to know what to do with it.” I would say Arsenal know exactly what to do…’
Tsk-tsk! Not silly at all. Actually, Swiss Ramble presents a rational argument for his opinion that Arsenal should use more of it’s cash to strengthen the squad.
Tony
You asked for facts and evidence and i have given them in why we havent made progress from last year.You are now asking me to look at it from a different point of view.Sorry i thought when you meant progress you meant about the playing side of the game like trophy and not bank balances and bringing through young players.
“Spend on players however is always a misleading concept in that such a figure shows Bellerin, Coquelin and Iwobi as having no cost – but there has been a considerable amount spent on their development and training.”
You’re confusing two different things – player acquisition costs and academy running costs.
Player acquisition costs are written off over the life of the player’s contract. That’s normal accounting practice for assets that have a fixed life.
Academy running costs are expensed each year. That too is normal accounting practice.
You claim “considerable amounts” have been spent. Can you prove that?
By the way, there was a minor acquisition cost for Bellerin and Toral.
Tommy, exactly my point, although I didn’t just talk about bank balances. The essence of the debate is the amount of time you measure progress over.