By Walter Broeckx
On a number of occasions Tony has written about the financial situation of clubs in the EPL and lower leagues. And Tony’s point has been consistent throughout: that the way Arsenal is working is the best way to develop a club and to keep it in a good shape. It is an approach much removed from the problems that can ruin other clubs like Liverpool, Manchester, West Ham and Portsmouth.
I don’t know if the news has reached England yet but there is another club that is facing a big financial crisis. It is our next opponent in the Champions League, AZ Alkmaar.
The president of AZ, Dick Scheringa is also the owner of the DSB Bank. And it is this bank that is almost bankrupt. DSB bank is the main sponsor from AZ, it has financed the building of the new stadium, given cheap loans to the players, and also loaned a lot of money to AZ.
Now the bank is placed under guardianship of the authorities and they are searching for another bank who is willing to take DSB bank over. But it has now been reported that all the possible take-over companies have withdrawn. This is yet more evidence of how bad the financial situation of the bank is.
For AZ Alkmaar this is a disaster – as it is for the players personally but I will get back on this later. The club has got a new stadium, (Arsenal played the opening game in a few years ago) financed by DSB bank. DSB bank has loaned a lot of money to the club and when the bank really is bankrupt this could mean that AZ Alkmaar has to pay its debt back to the bank as soon as possible. Even a blind man can see that this means trouble with a capital T.
For this year AZ Alkmaar has said that there is no trouble. DSB bank had already paid their 5 million euro sponsorship for the current season. But for next year AZ will not receive any money and with the current economic situation the chance of another company paying that amount of money every year as a sponsor looks rather small.
The possibility of having to pay the loan back and the lost of the sponsorship means that AZ will have to cut back its operating cost and then the players come in line. Last summer AZ turned down offers for Dembele (12 million from Genoa) and a big offer for Maarten Martens from CSKA Moscow. Instead they gave a big raise in salary to those players. They weren’t short of money in those days.
But now it could well be that AZ will be all to happy to sell their best players for any reasonable offer. And as we all know when a house is for sale and you really have to sell it, the price goes down and so will the price of the players go down.
So it is well possible that the club will be facing an negative spiral and nobody knows how it will end.
For the players it also could spell problems. A lot of players have received a cheap mortgage for their houses and now they are afraid that they lose that benefit. How this will affect the players is unknown for the moment. But there is some uncertainty in the group that is for sure.
When players don’t know if they still will be at the club in January or when they fear financial problems regarding their houses, then they tend not to be at their best when preparing for a football game.
The club has ordered it players not to talk about the problems to the press. Only manager Ronald Koeman was allowed to give a short statement to the press in which he said that the situation is not easy but that they will try to focus on the football side of matters.
So what have we learnt today ? First that the financial crisis is not over yet. Second and most importantly that it is so dangerous for a club to have all its eggs in one basket. You can rely on a rich man for some time but in the end of the day it always ends in a catastrophe.
The only way to run a club at the long term is the way Arsenal does it. Thank whatever God you worship for the way our board and our manager run our club.
Walter Broeckx is a passionate Arsenal follower since 1979 from Flanders, Belgium. Since a couple of years he is the main news reporter for the Arsenal fans in Belgium, Holland and Luxemburg where he tries to bring them a daily portion of Arsenal news. His passion for football goes so far that he even is a referee. In the real world he is married, has 4 children including some Gooners, and he works as a civil servant in a small town and provides building permissions.
MAKING THE ARSENAL – the new book about Arsenal FC – can now be ordered ahead of publication at the end of October. For details of the book and to place an order just click on this link.
Walter,
you are nearer to the situation than I am, but i read that DSB Bank was officially made bankrupt on the 19th.October.
I wrote the article last week and yes this morning DSB Bank was officially made bankrupt. So we will be playing a team that will have the name of a bankrupt company on it’s shirts tomorow.
Also on the pitch the results this year have not been as expected so far. You could say we play against a club in problems on and off the pitch.
The last sentences become more important than ever.
Thanks for the article and the update walter. Only a fool will still doubt that the Arsenal Financial Management Ethos is the best for a football club as in other forms of business.
True LRV, we all know that.
But we also know it only takes one point dropped somewhere on the road to let those fools come out their sewer to demand to buy players, for a take over by whatever rich man who doesn’t give a damn about our club but who is bored and not knowing what to do for the moment with his money.
We cannot remind them enough of what could happen…
In a way I felt, over the last years, a bit of sympathy for AZ. It was a small town club that came between the big players in Holland like Ajax, PSV and Feijenoord. It was a bit refreshing in a way. But now it seems it all was done with money not belonging to the club. There goes my sympathy….
Walter – Great point about the doubters jumping out of the woodwork at the first sign of a draw or loss. There is a depressing lack of long-term thinking sometimes. People often seem to forget that once your money is spent, it is spent. There is no getting it back, unless you buy low and sell high exactly as Arsenal has done for the past decade. Yes, that means that great players will often be lost to Real or Barca but it also means we will never be in a position like Chelsea, with a squad of highly paid players of almost zero worth approaching the end of their careers.
I always like to ask “where will we/they/you be in 20 years?”. Arsenal will still be around, will still be competitive, and will still be in very sound financial shape. To their (and Levy’s) credit, Spurs will probably be around as well. But can many other clubs say that with 100% confidence?
Along the same lines of “where will we/they/you be in 20 years?” – I just read on that tabloid site football365.com where one of their regular columnists was mourning the future of Liverpool FC. He acknowledged, as most of us have long done on this blog, that it is a financial basket case, burdened by the debt the owners have put on the club and could easily do a Leeds and go into administration if they don’t qualify for the Champs League this season. Even Pool fans wrote in to share their concerns. The irony is this website has for the past two years ridiculed Arsene Wenger for his emphasis on rebuilding based on youth and not overspending on ageing players. The chickens are certainly coming to roost.
My interpretation of David Dein’s position is that you don’t fart against thunder. We live in a neoliberal environment where there is no limit to what can be done with money. Therefore, we need plenty of that money for ourselves.
I feel very strongly that this is wrong. Rather, I think I do. I really admired what Elton John did with Watford. In principle that is no different from Abramovich, just a different scale. I think I hate Chelsea so much because the money is so tainted. The Russian government pays no pensions but Abramovich was able to buy his share of Russian oil with a $50000 loan because he was a boyfriend of Yeltsin’s daughter and the IMF told Yeltsin to privatise.
The Lord Wenger has demonstrated that you can fart against thunder. AZ Alkmaar has been unlucky. They have not done anything outrageous. They were sponsored by a bank that went bankrupt. ManU are sponsored by AIG, and they are bankrupt by any reasonable system of accounting.
Outrageous is ManU and Liverpool, massively in debt to banks, and totally unable to repay these debts from revenue. Only a serious rise in the value of football clubs or a large inflation can save them.
Of course, the last sentence is not true. They can go the Chelsea/Man City route; a rich and benevolent owner. High risk as he can change his mind, but not outrageous. What is outrageous is that we are have reverted back to a situation where the entertainment of the masses is at the pleasure and mercy of the very rich.