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What does Ronaldo’s move mean for Arsenal and the EPL?

There is muttering in Spain. Real Mad are known to have government support – the deal they did over the training ground, the way they can borrow when others can’t – I won’t go into that in detail – you can read it all elsewhere.

So Barca et al are unhappy, but, at least for the moment, that is not our problem. Our problem is what the activity in Spain means for Arsenal and the other senior teams in the EPL.

As always I have to say I have no more knowledge than anyone else; all I can do is make suggestions in the sure knowledge that you can point out where I have gone wrong, and what bits I am missing.

Manchester IOU would still be bankrupt even if they used all the Da-Do-Ron-Ron money (that’s a trivial reference to a 1960s hit from the Phil Spector laboratory – don’t worry about it, its not important). The £80m will be paid by Real Mad over five years, so even if it all went into debt management it would still only cut this year’s losses by £18m which is nothing given how much Manchester owes.

Besides Sir Alex F Word is out of the control of the owners, and he’ll spend what he wants. I would guess he’ll be looking to splash around £100m – also with payments over five years. He’ll move on one or two of his less successful past buys, and try to promote from the ranks too, to deal with an aging team. (Giggs is 100 this year, so he won’t start so many games).

KGB Fulham have a new manager so that means spending other people’s money (most particularly Abramovich’s money). What we saw in the early part of last season is that Abramovich gave up on the club and wandered off to lick his financial wounds. He’s back – but if the new boss repeats the form of his last two years he won’t be happy. 5th place in the Italian league for Milan was not quite what the KGB are looking for.

But more to the point – with money to throw around in both KGB and Manchester IOU there is going to be a bidding war going on – unless KGB buy Italians (which IOU rarely do). Everywhere clubs are putting their prices up, and even if the two big buying clubs go for utterly different players the prices will rise to take account of the dosh available.

Liverpool Insolvency will be groaning at this. While their two spend-spend-spend rivals have more money they have less. If RBS do refinance them, it will be with guarantees from the American owners. What’s more, almost all of the £350m loan has been spent on buying the club, past transfers and interest on the losses. The new bank deal must include a clause that says the interest to RBS must be paid monthly, and can’t be rolled over.

Put that lot together and you have no capital for player purchases without sales. Worse, Liverpool’s player wages are already considerably below their rivals in the top four of EPL so they can’t cut back there.

Any purchases they make will either be on delayed payment or funded by sales of others – until they can find a new source of money. At a time of hugely rising prices, they are scuppered, and will, I believe, turn to the Arsenal model of youth development. Although their youth team is nowhere near as good as Arsenal’s, it is still very good by normal standards and they might be able to promote a few players, and bring in one or two unknowns on a gamble.

Arsenal of course are already there. World-wide scouting, a brilliant youth team, and a number of reserves ready to break through – it is all in place. Plus, because Arsenal go shopping where others often don’t look we are not affected by the Crazy Prices game that exists among the big names. This is, in fact, the moment when it all comes good for Arsenal, just as it all goes bad for Liverpool. It might only be two purchases in the £10m bracket, but there will be the players back from loan, the players stepping up, the return (hopefully) of Eduardo and Rosicky, and the further development of Song, Denilison, Vela, Wilshere, Djourou. Plus the certainty that we have solid reserve full backs. Merida could burst on the scene, and ahead of him is Ramsey as Cesc II.

Aston Villa, Everton. These are the two pretenders of recent years – Everton once actually came fourth if you recall when Liverpool came fifth – and they are forever talking up their chances of breaking in. In the current climate they simply won’t be able to buy. Villa lost Barry because he lost faith in them, and their turnover and wage power is tiny coimpared to the top four. Their only hope is a wholesale fall of Liverpool – but even if that happens there is a new threat below.

Manchester Arab are not affected by the rise in costs, because they can play the money game too. But, think of Kaka. He refused to leave Milan for Manchester (a perfectly reasonable decision) but rushed off to Madrid for half the amount the Arabs were offering. And that is Manchester’s problem. No one takes them seriously because they offered stupid money. They will build a team – and I suspect put in a challenge – but they still can’t buy top players at the top table, and they don’t have a world-wide scouting or youth policy. If Liverpool do slip this year because of their money troubles, it could be the Arabs who take their place, not Villa or Everton.

The Tiny Totts. About ten players are up for sale and this is the year that the Totts will break into the top four. So its the same as last year, the year before, and so on back to that moment in the 13th century when Danny Blanchflower killed a dragon and rescued Lancelot – or something like that. Arry is a wheeler dealer who gets arrested by the police, and people of that ilk either get it totally wrong (Southampton) or semi-right (Portsmouth). Who knows. Maybe Bentley could go to Manchester Arab.

Beyond these clubs it is hard to see who else in England is going to be bothered by the return of the Real Mad cheque book. I expect the manager at Hull Spitty will announce next week he is signing David Beckham, and in his head he probably will.

I wish next season’s football fixtures would hurry up and arrive. I can’t plan my theatre visits without knowing when we’re at home.

(c) Tony Attwood, Planet Zorg, the Outer Rings of the M25.

11 comments to What does Ronaldo’s move mean for Arsenal and the EPL?

  • daokta

    This is positive for Arsenal. ManU will spend some of the Doo Da money and bolster their squad but they will take one or two seasons for the new team and tactics to gel. Chelsea is being outbid for once and has an ageing team. Liverpool has a good team NOW but will Rafa be able to cope without any new signings?

    In the meantime, Arsenal is out of the press radar for a change and can quietly strengthen its squad with names the likes of RM, ManU etc wouldn’t have heard of.

    I am excited about the coming season.

  • james

    why are arsenal fans so delusional…u r nothing but a selling club with a cheapskate manager and board…keep dreaming maybe in another thousand years

  • Jonny Neale

    ‘Cheapskate’ ha-ha! Of all the most pathetic, pointless and incorrect insults that takes some beating.

    James is probably just a bitter Man Utd fan crying over the lost of the preening ego-factory ‘Twataldo’.

    In case I am being at all opaque – Ronaldo is a desperately talented footballer but as a human being he is far uglier than Tevez is aesthetically.

    He was one of the worst cheats the Prem has ever seen, loves himself above all others and I am delighted he has left the EPL.

    I hope Tevez snubs them too.

    *grins*

  • shotta-gunna

    It will be interesting what Fergie eventually spends this summer and on whom. We will get confirmation whether the Bank’s see them as viable risks from which to squeeze more interest or will they say no more. The Glazers, who have had a history of asset stripping, witness their selling-off their best talents at Tampa Bay Buccaneers when the bills became due, cannot be trusted at their word. The ultimate pay-off for an investor of their ilk is to flip the asset to another sucker but with ManU’s debt levels and the current deflation in credit markets, their chances with this option is either slim or none (and slim is out of town). But let’s wait and see.
    One thing Tony I think you underestimated is the impact on all the buying clubs of this inflation in the transfer market. If Wigan’s Valencia is being quoted at 15-18 million pounds vs Arshavin for 15 million then it must be heart-palpitating for every owner of a club whose manager wants to strengthen. All the clubs who have not seriously invested in a youth policy like our club will have to take on substantial long-term debts for short-term assets. Again I stress this cannot be good for the long-term health of professional football clubs.
    All Arsenal supporters are in eternal debt to AW for helping us avoid the plague of cheque book football.

  • kelsey

    http://finance.yahoo.com/news/Real-Madrid-spending-raises-apf-15514313.html?.v=1

    I have just read this article, and it appears no one really knows how Real Madrid are funding these two purchase.The more I read into the finances of our PL clubs, it appears that we at Arsenal are conducting ourselves in a proper manner in these flucuating recession times, and ensuring football at a top level for years to come.

  • Marc

    Tony – Thanks for the reply yesterday. It is going to be interesting watching what happens with ManU. They need to replace Ronaldo and Tevez. On top if this they need to strengthen at left wing and CM and could probably do with another striker. With what will be seen as £80 million in their bank account clubs are going to hold out and milk every penny, also the weakness of Sterling against the Euro puts the price of many players up (There are reports that B. Munich have slapped a £90 million price tag on Ribery). It looks like they will get Valencia for about £15 million, a replacement for Tevez will probably cost in the region of £20 million. Another 3 players will cost £50 odd million. Will the creditor’s really be happy to go on not receiving interest payments? When Man U are splashing such huge amounts of money? What happens if the new players take a season to gel and ManU finish 2nd or 3rd and go out of the CL in the Q’s? One small slip up could have almost catastrophic effects for ManU and as with all things in life when things tend to wrong, it all happens at once.

  • Marc

    Just another thought. If the pendulum is going to switch to La Liga being the dominant league in football. Will this effect the interest of potential overseas owner’s choice of club?

  • Nhan Le

    i actually fret over the ronaldo money. sooner or later rm will go out on the market for a few defenders and inflate price of this item, which we are competing in.

    even if we don’t get to compete directly with rm for a certain defender, that they are buying will cause some big clubs to be short of defenders and forced to jumped into the market, raising prices in the process (remember we are talking about a market of a dozen top players going between a handful of clubs).

    at the same time, the rm saga raises an important point: global marketing is a key strategy. rm execute this strategy by polishing their european glorious past with today’s bright stars. they probably are not even maximizing on the number of trophies won, as if saying, “it’s the gloss, stupid.”

    it’s important to put this point in context when we think of what strategy is most suitable for Arsenal. rm start out with a huge fan base and huge financial foundation. maybe it makes sense for them to build on that base with glossy players and prioritizing blings over football. this is not necessarily true for us – we are still building our world-wide reputation by our brand of football. It’s a different strategy: you have to do three things at the same time (in order of priority): survive the financial pressure, stand by the football principle, and win prizes. this strategy is based on our relative strength of an established scouting system and a youthful and hugely talented staff. at the end of the day, we’ll still need to win some prizes to fully vindicate our strategy. but given the difference in strategy, any linear combination between us and rm is set to be irrelevant.

  • Finance is not my greatest area but so I’d like to know Real Madrid’s ownership type. Actually this is sort of a rhetorical question as I’m going to try and answer it. They are a public trust company therefore not in the same pressure as a PLC (like Arsenal) to actually make that much profit. Of course, making money is good that’s why they do it (and do it well as they are the highest grossing club on merchandise).

    Apparently Santander have granted 7o mill euros credit line which 2o mill euros will be paid back each year for four years. Tehy sold their taining ground last time to fund Galacticos and this time if things do go bad then it may be the stadium….

  • shotta-gunna

    RM hasn’t stop spending as was predicted. According to Sky they have offered/agreed to 40 million pounds (or Euros) for David Villa. We know they need better defenders and some balance in their midfield. Santander had better have a mortgage on the Stadium as well as the training facilities!

  • Valentin

    According to source in the French media, officially Real Madrid debt is at € 350 millions, but unofficially it is near € 720 millions.
    The problem is that for political reason and popularity reason (Imagine how Santader would be lambasted) nobody is willing to call the debt.

    I kind of disagree with Tony with the respective position of Manchester Untd and Liverpool FC respective owners’s position. To me the Glazers are in a more precarious position than Hick and Gillett.
    Manchester United’s is a Plc with publicly traded debt. The debt is currently traded at a huge discount. Everybody with a modicus of common sense can see that the current business model is not sustainable. That could open the door for somebody to buy the debt on the cheap, call off the debt and force a take over of the club. If the club is valued at £600 millions, but has debt of £800 millions but you buy the debt for £450 millions then it is still a good deal. Vulture funds draw their name from their activity and their ruthlessness. If there is a business opportunity on the back of somebody misfortune, miscalculation or incompetence, they will not hesitate. For those reason, to me the ownership of the club is very likely to change within the next two years.

    Liverpool situation is different. In a ironic twist, because the debt is not publicly traded, they may be in a better situation than the Glazers. As long as they can promote the idea that sometimes in the future, full repayment will be coming they can cling to the club. As RBS and Wachovia knows that in this current financial climate they are unlikely to receover the full amount of the loan, their vested interest is to keep lending the money and hoping that they pull through. Liverpool will receive an extension of their loan, but with new guarantee on their own personal assets of the two americans. Because of those personal guarantee, Liverpool is unlikely to bet their own financial security and so I can see a slow exodus of player and staff, follow by a sharp decline due to new money (Manchester City, Pompey, Sunderland, …) coming in and blowing them up the market. Maybe not this summer but unless somebody buy the club definately next summer.