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.
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.