- Thomas Tuchel declares war on Arsenal
- Suspicions arise that many children have been trafficked to England to play football
- Are Arsenal the only bottlers or is that just another stick with which to beat us?
By Tony Attwood
It is interesting that the media day after day after day continue with its key Arsenal themes: that Arsenal should be doing better, and to do better Arsenal should spend more money ontransfers. Or rather better said, Arsenal are planning to spend money on transfers, although they are not always aggressive enough and fast enough to get the right players.
What is never mentioned however (except by us, and in the NY Times) is how any of this accords with Arsenal’s financial position. Now maybe there is an excuse for this because for 16 consecutive years up to the time of the pandemic, (and that pretty much means the era coinciding with Wenger’s reign) Arsenal made a profit. But then the Kroenke’s took full control and those losses started to roll in. In fact six consecutive years of making a loss. In the losses over those last six years at around a third of a billion pounds, have pretty much removed the accumulated profits of the previous 16 years.
Now we must admit that since October 2018 Arsenal have been spending money on the thing most supporters welcome – buying players while also getting more and more income through player sales, higher prices, and more and more and more marketing. So we can’t complain that the Kroenkes have been taking money out. Arsenal have simply been losing it, having under Wenger had all those years of making money.
This in turn means that Profit and Sustainability Rules now begin to matter, although these have been mitigated to some degree by the club issuing and the owners buying more and more shares, although this is now said to have reached its limit. Instead, there have been the loans that the Kroenke family have been making to the club.
Nevertheless, Arsenal have started to reign things in, not specifically to make a profit but to ensure they don’t slip into the PSR net and thus have a points deduction.
You will I am sure recall the clubs that have thrown their toys out of the pram when anyone suggests they are in breach of PSR rules – Leicester and Manchester C are the most litigious in this regard, fighting every step of the way. Aston Villa, Nottingham Forest, Newcastle United, and Everton have all been struck down with charges.
Arsenal however, although losing money have still got some wriggle room, meaning they could lose another £90m or so and remain ok – providing nothing goes wrong.
What’s more the player wages are under the “70% of turnover” limit, but big spending on new players without equivalent sales is getting harder by the day. Which means that dashing out and buying the new centre forward that the media demanded while the club was beaten in goals scored only by the Mancs was not easy to manage.
Thus reaching this position of safe loss-making while getting to a position of challenging ManC has been achieved by making more money. Income in fact has risen by £150m year.
Partly this has happened because success brings money. Finish higher up the league, and more money comes in from broadcasting (the club is on TV more often and in more countries), sponsors, fans at the games and advertisers. The Arsenal stadium project which saw the end of Highbury has also been a huge success, ensuring that Arsenal earns over £131m a game. And the return to the Champions League from the wasteland of the Europa has helped too. So has the fact that Arsenal have been winning more games.
Indeed as things stand only Manchester United is now pulling in more money on each match day than Arsenal. Tottenham with their super whizzo amazing “let’s tell everyone this is the best stadium in the universe to cover up the fact that the team is 14th in the league” takes in around £30m less. And the debt remains.
Of course, the fact that ManC only take just over half the amount of Arsenal on a match day doesn’t worry them – they take their money from elsewhere as we know, but there is one problem. Arsenal’s great leap forward cannot be done in secret. Clubs watch each other, and although Tottenham have already spent the cash and sunk into the doldrums others do think they could do it better.. And the word is out, as the NY Times put it, “Since the stadium opened in 2006, Arsenal have booked combined gate receipts of £1.652bn, over four times its initial £390m build cost.”
What’s more, Arsenal can still expect to grow, for in commercial terms Arsenal still lag behind the likes of Chelsea, Liverpool and the like and that means there is still plenty of room for growth from sponsorship and marketing arrangements. Between 2022 and 2023 that revenue grew by 29% in that one year alone.
However, above everything else, there is one trick that Arsenal have pulled off over and over which gives them an advantage, which we see in every match: the constant stream of quality young players who come in with no transfer fee and lower salaries. Just think how much they save the club!
Thanks for the insight Tony
“What’s more, Arsenal can still expect to grow, for in commercial terms Arsenal still lag behind the likes of Chelsea, Liverpool and the like and that means there is still plenty of room for growth from sponsorship and marketing arrangements. Between 2022 and 2023 that revenue grew by 29% in that one year alone.”
I’m pleased to see this aspect of our revenue streams at last start to grow. I have said for a long time that this seemed to me to be, at least from a complete laymen’s point of view, a major flaw in our business model.
I do think part of this is a legacy from the Wenger era, which may sound odd because as you say, we made a profit under Wenger as now we do not.
The reason we made a profit was down to Wenger’s genius on the field, and very little to do with the commercial side, it is as simple as that.
In the first half of his tenure Wenger assembled consecutive World Class teams and he did this on a moderate spend. He was never the biggest spender even in these halcyon days. These World class teams achieved great domestic success and consecutive qualifications for the Champions league, and THAT was key. The Champions League had morphed in to a behemoth. So even when the building of the Emirates curtailed our spend on players to nett zero for 10 years, just being in the Champions League still dwarfed the earnings of everything else. If Wenger had not achieved that, we would be in big big trouble.
Qualification for the Champions League was in reality MORE that a trophy, it was a life saver. It saved our club from possibly doing a Leeds United.
I did some figures a few years ago that showed qualification into the Champions League and the subsequent progression from the Group Stage alone over those 19 consecutive years, earned Arsenal FC the equivalent of the cost of the Emirates Stadium build, dwarfing all other revenue streams, including Trophy’s, Match day and Commercial incomes, which leads me nicely to my point regarding Wengers legacy in the short falls we have seen in this aspect of our business model.
Wenger always put the footballing side first and foremost. Getting his team right came before everything else, and that included pre season preparation.
Whilst Manchester United, Chelsea Liverpool and the like were gallivanting off around the World on what were primarily ‘Commercial’ tours rather than football tours, Wenger was doing what he saw as a proper ‘footballing’ preparations at the likes of Barnet and then mainly in the Nordic Countries. Our biggest commercial venture was basically the Emirates Cup in our own back yard.
Now whilst this was ideal footballing preparation, I’m afraid the legacy of that is that we fell behind in the ‘getting our name out there’ stakes.
And of course it didn’t help that we also fell down the pecking order of commercial desirability, what with both Chelsea, and then Manchester City, gazumping us with their limitless financial doping and ensuing success on the pitch.
So in truth, a few things were behind the reasons for us allowing our commercial revenue streams to fall behind. But, having said that, I still believe, and have said this several times before, that we have been very remiss in allowing our commercial revenue streams to fall quite some way behind the levels of our main rivals.
Manchester United, and Liverpool to a slightly lesser degree, are proof that even when you are not winning anything, these commercial revenue streams can be kept high.
We just have to be better at it. At last, it seems we are.
Why on earth is the club paying 350 000 a week to Raheem Sterling?
Nitram,
Well done. You’ve cut right to the nub. I’ve been attending Arsenal pre-season matches in the States for more than ten years. If you didn’t go to AFC’s website you’d never know they were coming. MU, Chelsea and Liverpool cranked up their PR machines and their names and logos were hard to miss for fans of sport. We have a supporters group here, ArsenalAmerica, which began in 2001 and gets the word out. They organise fan events around the matches played here and raising the Club’s profile. The manager and many players are available meet and greets. I’ve spoken to the Great Man and even Unai Emery, lol. I spent a half hour with one of my all time favourites, Ray Parlour, at one of these events. In addition to the actual revenue generated, these tours generate publicity for the clubs and I’ve seen the profile of the club raised a bit higher each year. New fans are made on these tours. They buy merchandise and help spread the word. Arsenal’s rep in the US has gotten stronger with each tour. Our club is now regarded here as one of the top few clubs in England and the world. It’s great to see the Club taking advantage of this revenue stream. I’m aware of the Club’s losses but also that they fold into the overall financial structure of KSG. That’s why they can continue to spend on players and keep the club competitive.
Gooner72
Thanks
Great to hear from someone who is witnessing this improvement in our commercial ventures first hand.
The truth is, many people find this side of their beloved ‘Football Club’ rather unsavoury. “We are a football club, not a business”.
Alas, that isn’t true. First and foremost, football clubs are a business’s. Some of them very big businesses, and as such they have to be ran as one. And what’s more, if they don’t get the ‘business’ side right, they may well end up without a football club at all. They certainly wont have a successful one.
Obviously the best way to generate money is to have a successful team. But that alone is not enough. On the back of success the 3 main commercial revenue streams have to be maximised. They are:
-Full stadiums with fans paying premium prices every week. (Sad I know, but a fact of life)
-Raking in vast amounts of TV money.
-Sponsorship, Partners and Investors.
But this is not only a time when these revenue streams have to be maximised, this is a time when brand loyalty has to be fostered and as a result your club is hopefully future proofed.
Fan loyalty, and along with that full stadiums should be a given, but there is no guarantee of that of course.
The amount of TV money earned is intrinsically linked to success, and as such can fluctuate enormously.
All this means that Sponsor, Partner, and Investor loyalty, has become ever more crucial.
The ‘catch all’ term for all this is, BRAND loyalty, and it is absolutely crucial.
Man Utd and Liverpool’s incredible brand loyalty has been built on years of success, both domestically, but more importantly Internationally.
Man City and Chelsea do not have the historic success of those two, but have unfortunately, via mega investment, gazumped Arsenal on the International stage. If these recent and relatively short term successes have been enough to generated the same amount of brand loyalty afforded Man Utd and Liverpool, only time will tell. Personally I believe that is highly unlikely. Take away their ‘doping’ and I feel they would fall back to the relative obscurity from whence they came very quickly. Alas, that doping doesn’t look like going away any time soon.
On a positive note, I truly believe Arsenals long term history gives us the potential to match both Man Utds and Liverpool’s status, way beyond that of either Chelsea or Man City. Getting our commercial side performing to their levels is just one side of the coin. The other is to finally win the Champions League.
If we can finally achieve that, I think the sky is the limit. Unfortunately, I believe until we do finally win the Champions League we will be forever in their shadow.