The foundations of future football success

By Phil Gregory

I read a great book over Christmas, Michael Lewis’s Moneyball.

Despite my total lack of knowledge on the sport it is concerned with, I was fascinated because it’s actually a baseball book which follows a particular American team that consistently outperforms its rivals  despite severe financial constraints (see where I’m going with this now?).

The basic theory behind the way the team (the Oakland Athletics, in case you know baseball) was ran was a  effectively exploiting the prejudices in the game. Certain types of players with certain qualities were discovered (via statistical analysis of the way the game is played) to be over-priced and avoided. Less “fashionable” players, who perhaps didn’t fit the traditional profile for a Major League Baseball star were bought, made into superstars and sold at a vast profit, funding the next generation.

While the methods are not exactly the same, the principles themselves are very similar to those extolled by our own Arsène Wenger. Ignoring prejudice and purely choosing players on merit, refusing to pay over the odds and knowing when to sell.

These principles are not simply idealism, they are the foundations of the next generation of future footballing success (Tony’s football 3.0). See how Barcelona have swept aside all before them with a home-grown team while playing an exhilarating brand of the beautiful game for all the evidence you need!

Clubs such as Bolton are Blackburn are victims of a vicious circle. Poor football is played due to a lack of finance, and so the team can only play a certain style (apparently). This leads to falling attendances, less games sought for live television coverage and so on unto financial oblivion.

Wenger’s financial principles actually ensure we remain competitive (and not the Frenchman tying one arm behind his back as the D and G brigade would try to argue). Arsène refuses to pay over the odds, going as far as to drop our interest, regardless of the “need” for the player.

This refusal to overpay is most evident if you examine the nationality of our squad. Manchester United paid a figure between £8-£12million (depending on your source) for Smalling. How much did we pay for Vermaelen? £12million. English players cost, and Wenger refuses to play this game. Other teams know this, and when Aaron Ramsey decided he wanted to come to the Emirates, it cost us a bargain £5million. If we had foolishly overpaid for domestic talent in the past, we would have paid far more for Ramsey.

Or there is the Berbatov case. Manchester United still “needed” a striker on the last day of the transfer window and paid vastly over the odds for a 28 year old, because they had “no choice” apparently. A friend of mine refers to it as “United mark-up” i.e. United pay more because they have the money (oh the irony!).

In fact, they pay more because Fergie consistently caves in to demands, meaning the selling party knows they can drive a harder bargain.

This doesn’t work with our Lord Arsène, who walked away from the Arshavin deal for an entire summer and even during January, and voila, we get a Russian genius for £12million, or, to put it another way, half a Lescott or one third of a Robinho. Arsène’s refusal to bend his principles may lead us to not getting a midfielder when it was needed in 08/09, but he was thinking of the long term, knowing that a reputation to bend to the will of selling clubs will only lead to constantly paying over the odds in the future.

And while I’m on the subject of Manchester United, I think a little financial update is in order. The Americans have pulled off the bond issue, but only because they offered a high rate of interest: 9%. In terms of interest payments, the bond issue won’t therefore save them very much money, as the average payment on their debt beforehand was around 10%.

Assuming they can use part of the £500million to pay off the high-interest PIK debt, they could lower their average interest bill a little more but not significantly. Paying off the hedge fund’s PIK debt is not even a given: the banks want their money back too and are dictating the terms, not the Glazers.

Really want to laugh? The fees costs of this bond issue was roughly equal to a year’s interest payments – so even though they are saving a little bit every year, the bond issue will take time to pay for itself.

The end result is United have delayed when the debts are due, but they are only delaying the inevitable. Their operating profit is almost entirely eliminated by the interest bill, so I really don’t see how they will pay it off when it is due. They end result in the short term? They need to sell to buy.

Want another laugh?

Read Making the Arsenal.   If you buy it from the publisher, don’t laugh within the first 30 pages, and then return it in decent condition within a month of buying it, I will apologise.  Can’t say fairer than that.   Signed Honest Tony.

(c) Untold Arsenal.  You know it makes sense.  Sometimes.

23 Replies to “The foundations of future football success”

  1. Another great one Phil.

    I always believe in Wenger especially when it comes to buying and selling players.

    Lescott’s fee was ridiculous and he’s not even that good. Wenger will always make sure when spending big on a player, a concept many people can’t and won’t understand.

  2. True, and and wenger has tried buying English players at big prices before, look what happened with Francis Jeffers and Richard Wright. Its still amazing to think Reyes was one of our most expensive signings, and that was about 6-7 years ago, Wenger doesn’t play the transfer market, he does things his own way, consistently buying quality players at low prices, if they flop they go and its no biggy, if they are succesful and want to leave (always a bad career move!) The transfer market works for us! Even with all the money Citeh have, i bet they wish they had a business model like ours

  3. Phil, a very well-written and logical argument. Nicely done.

    I know this is not the man point of your argument, but there’s one minor thing the D&G brigade would get you on: the Oakland Athletics portrayed in _Moneyball_ always came close but never won the “World Series” (the championship as we arrogant Americans call it, despite the fact that teams from only 2 countries are involved: the US and Canada). To me, this echoes the favorite D&G comment, “F%ck financial prudence. If we only had 2 more big money signings, we’d win the league!”

    I think your argument still largely works, though. Because compared to the Oakland Athletics in American baseball, Arsenal are a much, much bigger club in English football. (I think Oakland’s payroll for those years was one of the lowest in baseball; eomething like $30-40 million compared to New York Yankees with a payroll in excess of $200 million. For them to even be anywhere near the Yankees is like a team like Burnley being able to make it into the Top 4).

    Arsenal does play “moneyball” a la Oakland (Wengerball!). I do believe, as you say, that this is the foundation of future football success for our beloved club.

    It’s just that Arsenal are a wealthy, big city club with a rich history and huge following (the Oakland Athletics cannot say that about their position).

    We spend money. We just do it very, very intelligently.

    In the near future, we won’t just come close to championships. We will dominate. All thanks to Wengerball.

  4. Good job Phil. When more realities of the ManU situation begin to bite, more people, beginning with the iZombies, will begin to backtrack or do a U-turn. In the meantime, it is to our advantage that they are in cookoo land. As for Smalling, he will realise soon enough when he has to be sold again in desperation.

  5. Tim is exactly right about the “moneyball” comparison, but only so far as the present day is concerned. During the new stadium building Arsenal were in exactly the position that Oakland are always in. Salaries had to be slashed and the only transfer budget that AW had was whatever he could generate himself through selling players. During that time he had to look at players in a different way than he might have done traditionally. For those four years we were indeed playing “Billy Ball” as they would say in the Bay Area.

  6. Tim – that’s why I would always give AW a free pass for what has occured for the past 4-5 years and why, in my mind, he started “being on the clock” this past summer when our latest accounts finally showed that everything was rosy and the Highbury redevelopment was steaming ahead. At that point the financial worries ceased and the club could start looking ahead confidently, rather than nervously. At that point we should ALL have given AW a rousing standing ovation for the amazing work he has done in the past 5 years, not the abuse that many people have been giving him.

    Having said that, with the resolution of our financial worries, AW is now (or should be) under the same pressures that all managers at top clubs should be to deliver success. I think he gets a free pass this year as I think this side is still very much in the rebuilding phase. Next year is a big one.

    I love AW but do not think he should get a free pass indefinately. However when people say “we havent won anything for 5 years” I want to smack them, since ensuring top-4 status has been our League Championship Trophy for the past few seasons, given the financial constraints we were under. Now those constraints are gone. Now we start counting. Now we start judging AW by traditional methods of success and trophies.

  7. Totally disagree with your post @ 3.43pm Paul C. Arsene has sacrificed his own ego to keep the team competitive in a time of financial constraints yet you expect that the moment things start to look up he’ll be out on his ear if he doesn’t deliver a trophy? Arsenal are challenging for the PL title despite the worst injury record of the top teams, what more can you expect? If the squad was fully fit and there was no ACN this year I might accept your argument, but personally I think Arsene has earned some more time by what he has achieved in the last 4 seasons. Please name me the clubs who remain competitive after moving stadiums and please name the clubs, which have qualified for the CL every season for the last 10?

  8. Great article Phil.
    I also think that AW has done an unbelievable job this season. We have had some injuries in the past seasons but like this season I really think this is the worst of all.
    And yet we are still in it even if we lose every game one or two players.
    I really believe that if RVP would have stayed fit we would be far, far away from the rest by now. This is beyond my expectations. I was convinced that we would stay in the top 4 but I thought we were 1 year away from seeing the raw potential delivering. And how they have deliverd untill now….

    I don’t now if we will win it this year, hope so, but I really think from next season on we will be almost unbeatable.

    And like J.C. (Johan Cruijf) said every bad thing has a good thing: again some youngsters have gained more experience thanks to this terrible injury crisis we face.

    We will be unbeatable next year.

  9. Just remembered there is some silly tournament going on in the summer and I now want to adjust my statement:

    We will be unbeatable IF we don’t lose half our team with injuries in the World Cup.

    Ooh I hate it already….

  10. Thanks for all the positive comments Untold, very much appreciated. Great to be back and posting articles after the exam-enforced absence!

    Tim and Paul C: I neglected to mention in the article that, the Oakland A’s lived within their means and as a small club couldn’t take that final step. Arsenal, on the other hand (as Tim mentioned) play the transfer market efficiently while having high revenues. So really, we’ll still be spending less than other clubs, but will get far greater return on our investment.

    IN Moneyball, there is reference to a “wins-dollars” ratio, ie the amount of runs a player will bring per dollar spent. For us, I imagine a similar measure would be “points per pound” ie the number of points gained per pound spent.

    What you get, however is what economists call diminshing returns. For a bottom half team, £5million may bring in 3 extra points over a season, whereas for Arsenal, it may only bring in 0.1 points a season. (Naturally, you don’t get decimal points in a season, so consider it as an extra point every ten seasons instead) So in order to take that “final step”, a team must spend significant amounts.

    Look at City. For a £200million outlay, they’ve gone from bottom half to top four hopefuls. But what will it take for them to make that final step and win the league? In football terms: stars. A Bellamy must be replaced by a Torres, a Barry with a Fabregas, a Lescott with a Puyol (I use these names figuratively, to illustrate the gulf in class). But to buy only 2 or 3 of these calibre of players would probably require a similar £200million investment. The same money is spent, but perhaps only 8-10 points are gained as a result, compared to maybe 25 for the initial spending.

    Paul, you raise some interesting points in your last comment too. There surely must be a point when Wenger can take that final step, and spend a greater amount (but still within our means, as our means will be increasing over time with the debt being paid down etc). Once that happens, and he is on an equal financial footing, I agree that the same yardsticks must also be applied to him as other managers. That said, no manager in the world could do the job he has done over the last four or five years.

  11. Walter, exactly right! We will only be unbeatable if we don’t have the same old injuries! With Wenger bidding for Smalling, and offering Gallas a new contract, that says to me that he wants a new centreback for next season, which should go some way to allaying fears over one of the few positions on the pitch we don’t have impressive amounts of cover at.

    Thanks also Walter for explaining the language situation in Belgium a few weeks back! I didn’t get a chance to comment then and say thanks, it has always confused me somewhat!

  12. No problem Phil, great to see you back and looking forward to your match previews. Hope you had good exams ?

    About the young players delivering: just take Cesc. He still is only 22 and this is the age other players in other teams get to start regurlary. He has an enormous amount of games already.
    Last year he had due to injuries (sigh) and the EC with Spain a more difficult season but he has stepped up and made almost the last step in his learning process.
    If he keeps that up and keeps fit then next year we will have a combination of Kaka (the vision and playmaker), Ronaldinho (the skill and dead balls) and Ronaldo (scoring midfielder) in our team. Just the thought of it makes the water pour out of my mouth….

  13. Dont Believe the Hype – I think you need to read my post a bit closer. In it I clearly state that I consider the team to still be in a “rebuilding” phase this season and therefore do not consider a trophy to be particularly important. I also support your view that AW did remarkably well keeping us competitive through the stadium building. I thought I made that perfectly obvious in my post.

    That period is now over however. We are one of the richest clubs in Europe (and therefore the world) now. Easily. With the exception of Real Madrid we can compete with anyone financially now. We can now pay comparable wages to anyone (I do not believe profits should be spent on transfers, but on wages. I believe a manager should generate his own transfer money through his wheeling and dealing, as AW does). Now it is quite right that fans expect AW to continue to build a side that can consistently compete for major honours season after season.

    I simply dont think people should say “we havent won anything for 5 years” in a bad way, because we havent been playing on a level playing field for the past five years. Now we are. Moving forward AW should be judged as any other manager should be judged.

  14. I think the biggest problem Arsenal has had in the last 4 years is miserable, fickle glory hunting plastic fans whose main problem is that they’re embarrassed by their bragging Chelsea and Manure friends and colleagues.

    You really have to be a platinum idiot not to appreciate the constraints that Arsenal has worked with over the last 4 to 5 years.

    I’m sure – in fact I’m bloody sure that there were mistakes made tactically on the pitch in periods during the last 4 years that could have been avoided. But honestly, which team hasn’t made those mistakes.

    I think people also need to manage their own expectations about what this team can deliver and when they can.

    I personally feel this season we can actually challenge (well, the league table suggests we are challenging) for the title and actually win it. And if we don’t, I’m not going to lose the plot – we dust ourselves down and start again.

    For some reason, I’m under the impression this is what being a supporter is about. The team needs us most when they have to fight and scrap for a draw or an elusive win. When the team is playing champagne football, it’s for us to enjoy. But when they’re going through a difficult patch, we get behind them and help them cross that patch.

    I seem to have missed the point at which supporting your team during hard times became ‘moaning and groaning’ about not spending big money for over-hyped and over-rated players.

    How the hell is Lescott a better player than Vermaelen, or Berbatov better than Arshavin to warrant the obscene difference in the price tags?

  15. We’ll have to agree to disagree Paul C. because whatever you might mean, to me your comments read like you think we have been making do with the players we have because we had no money and now that we have money we should be able to buy better players and expect to win trophies and if we don’t the manager should walk. Whereas I think we are only just beginning to see the light at the end of the tunnel and the manager has earned the time for his team to deliver given what he has already delivered with both hands tied behind his back. To me “Moving forward AW should be judged as any other manager should be judged” is highly disrespectful to Arsene under the circumstances.

  16. as a supporter of Arsenal i ask only we challenge for the title and we continue playing beautiful football.Winning the trophy is just a bonus for me (a sweet reward for my support) .I really enjoy more watching some young players progressing and playing good football than Chelsea overpaid bunch of tossa winning the title

    In the last few years we saw so many team going in to administration just because their fans and owner want leave the premiership dream (Leeds,crystal palace ,portsmouth soon,Southampton and few other), that i don’t mind Wenger not spending the money,it s just two finger to all this team who continue to spend spend and still looking at us on the top of the league.

  17. Hi Phil – good article – thanks. I wrote a similarly effusive book-review about “What sport tells us about life” by Ed Smith on here a while ago.

    Moneyball is certainly fascinating and “What sport tells us about life”, whilst not as involved, is similar territory but more a further set of analyses and conclusions. Each chapter is basically a short essay posing a few seemingly simple questions. The book gave me new perspectives on key areas which sports throws up – many of which are fascinating and are directly applicable to The Arsenal (or any other team and sport for that matter).

    It is pretty much essential thought provoking material to elucidate why we care about sport so much, what that says about us as people and why.


    The book references Moneyball repeatedly.

    I’d suggest anyone who is interested in sport and life should read them both.

  18. Dont Believe the Hype – before the season AW said “begin judging me on this season”. Those were his words and it was the first time in 4 years he had said something like that. Personally I am not going to judge him on this year because i think we are still far from our peak, but who am I to argue with AW? I believe AW knows his players better than you do and if he feels that his players are ready and should be judged accordingly then I will trust him more than your opinion. Sorry, but that is just a fact I am afraid. And where have I ever said we should buy new players? I expressly said in my previous post that I DO NOT BELIEVE PROFITS SHOULD BE SPENT ON TRANSFERS, BUT RATHER WAGES. Can you read? And I never said AW should walk either, I simply said that he should now be judged normally, as any other manager of a top club should be. He would expect nothing less. You may not trust AW’s ability to build another great side, but I do. I dont believe we need to treat him like a baby and give him time and make excuses anymore. I dont believe he would feel that way anymore either. I think he loves the fact that he can now compete on an even playing field and loves the fact that he can now be judged normally. You dont think AW loves being back in the Championship hunt? I certainly do. I think he hated “settling” for 3rd or 4th place.

    I certainly dont think expecting AW to produce great football sides again is being “disresectful” of the man. I think he expects nothing less of himself. If he isnt able to do that anymore, then he should be thanked for the wonderful things he has done for our club and we should look for someone that can do it. Arsenal are bigger than any one man, and AW would be the FIRST person to agree with that. I think that if this current team doesnt mature fully and remain competitive then AW will not wait to be sacked, he will resign gracefully himself. I dont think it is “disrespectful” to say that if we dont remain competitive for the next five years that AW might be asked to move aside. Would you honestly accept just barely finishing in 4th and being out of the Championship race before December every season now that we no longer have to worry about finances? I personally think we should now aim higher and I personally think AW would agree with me on that, and not want to be given “special” treatment just because he did such amazing work during a tough financial period in our history.

  19. Nice comments all around.

    Walter, I completely agree. AW’s plan all along has been to keep a young core of spectacular footballers together, and he has signalled his intent with all those contract renewals in the past year. Sorry Barca and you shitty British media, Cesc is not leaving. Young Theo will blossom. The sky’s the limit for Diaby, Rosicky oh my…the list goes on.

    Even with a few injuries next year, we will still dominate. All the players are improving and maturing, and there’s confidence brewing. The toughest part of AW’s job is deciding what eleven to play at any given time!

  20. nothing new with the post but PAUL C….i think u shud write a post on this blog….i think ur the only one that gives a balanced view of arsenal….i totally agree what u said at 3:43pm…..well done..and hats off….

  21. Time and again I get swayed by the D&G brigade, and I start criticising Wenger’s lack of spending inspite of being a great admirer of his youth and self-sufficiency philosophy. Time and again, I get carried over by the lack of recent successes whilst ignoring the potential of long term greatness.

    Thanks for putting my thoughts back in proper perspective. There is no doubt that Wenger is a genius! A modern day prophet amongst the tribe of football managers! The Nostradamus of football! While Managers who’ve built their success on the back of short-term excesses get lauded as ‘the special one’ and ‘our own ‘arry’; Wenger’s legacy will prevail long after he has left in the form of a hugely successful and self-sustaining football club and business model! Truly, Wenger man ahead of his times! Thanks for reminding me that!

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