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With the emphasis on profit against investment Arsenal finances slip

By Tony Attwood

The Deloitte Money League which records the position of clubs from a financial point of view shows, for the first time, six English clubs in the world’s top ten football clubs, thanks to Wembley.

Wembley is not a club of course but a source of additional revenue for Tottenham Hotspur.  For with that extra income they have leapfrogged Juventus and sauntered into the top ten for only the second time in their history. The last time they made it into the top league was 2006/07.

Tottenham’s match day revenue is shown as being 54% higher than before, which is the biggest ever percentage increase of any income stream by any of the top ten clubs in the history of the Money League.

What this means is that Tottenham have now almost caught up Arsenal in terms of turnover with Tottenham sitting on £379.4m and rising, and Arsenal sitting on £389.1m and falling.

Arsenal’s issue of course is that they are in the Europa and not the Champions League. But as we shall see from the figures below, all Arsenal’s revenue streams are in decline, and that is not good news.

However Tottenham also have a problem and it is a big one.   Turnover is not profit, and Tottenham are now sitting on a mountain of debt which has to be serviced by their turnover.   If, for example, they slipped back to the Europa in a year or two, and Arsenal rose up, Tottenham’s problems would be magnified greatly.  They have a debt that needs servicing.

But of course we can expect multiple accounts of Arsenal slipping out of the top 10 clubs – which is now very likely unless Kronke moves away from his model of profits before trophies.

So Arsenal have now slipped down the world rankings to ninth – the lowest place since 2004/5 along with the largest revenue decrease of all the top 20 clubs (down £29.9m).    It was the first decline in revenue for the club since 1995/6 and much of the decline was due to a fall in revenue from Europe of €27m.

Here’s the revenue table for 2017/18

Club Revenue in €m 
Real Madrid 750.9
Barcelona 690.4
Manchester United 666.0
Bayern Munich 629.2
Manchester City 568.4
Paris St Germain 541.7
Liverpool 513.7
Chelsea 505.7
Arsenal 439.2
Tottenham Hotspur 428.3

Of course we were helped a bit by reaching the Europa League semi-finals but overall it was our broadcasting revenue (including the Champions League revenue when we were in it) which declined (down by £18.4m).

The worrying trends for Arsenal are matchday income down from a peak of 134 million euros in 2016 to 112 million euros.  There has been a significant drop in broadcast revenue from 235 to 207 million euros in the last year alone, and a decline in commercial income from 143 to 121 million euros across the last two years.

Now I am not a football finance expert and the companies I have run are very tiny indeed compared with those of Premier League football clubs, but my experience, and that of others to whom I have spoken, is that reversing declines like this is very hard going.

Of course what would make it all change would be Arsenal challenging at the top of the Premier League, but even that has become an increasingly inflated demand – for when Arsenal came second in the League in 2015/16 it was not particularly seen as a sign of progress.  Challenging is not enough – we have to be winning it, and that means beating the big money clubs.

The problem we had in coming second was that further investment was needed in the team at that time, and that investment was not available, and so the slippage started.  Of course the manager can be blamed, because it is not just the availability of money for a club (to cope with the investments made by other teams challenging for top four positions) but also the way it was spent.  But still the availability of money both for transfers and salaries remains a key feature.

However the past can’t be changed (rather obviously) and we are where we are (equally obviously).   All revenue streams are down, and we want the club to go upwards.   Something has to be done if the desire of staying in the top ten is to be achieved

6 comments to With the emphasis on profit against investment Arsenal finances slip

  • AKH

    A number of recent comments on the internet have suggested that KSE (Kroenke Sports Enterprise) is now having the success that it deserves with its investment in the LA Rams, a team that have now reached the American Super Bowl, coached by the youngest ever chief coach in the NFL.
    Mr Kroenke, the owner of KSE is also married to the daughter (heiress?) of the owner of Walmarts, one of the world’s biggest retailers. KSE is the sole owner of Arsenal Football Club!
    Whilst KSE and Walmart are mutually exclusive multi-national companies, (despite the Kroenke links), working practices within each organisation, when compared, show a number of similar patterns to each other.
    Much has been written about Walmarts and KSE. I have suggested two links that UA readers might like to download for future reference. The specific Kroenke link is taken from the News Now link above, as featured on UA site
    .
    The lengthy book, concerning the practices of Walmart with associated evidence, has been taken from a google search of Walmart! Apologies if the book is too long but its content makes interesting reading, especially when compared to those of KSE.

    UA has continually commented upon the ethical and moral work and investment practices of various owners of football clubs in the UK and Europe more generally. Indeed, it is one of the few media sites to undertake such a venture and it is to be applauded for doing so.
    Whilst I have followed Arsenal since 1957, I am still not averse to criticise the club if and where I feel it and its associated owners and shareholders fall down on business practice. Here is further evidence of practice that Arsenal supporters might like to file away.

    https://www.thenation.com/article/rams-stan-kroenke-patriots-super-bowl/

    https://books.google.fr/books?id=OmhVDwAAQBAJ&pg=PA23&lpg=PA23&dq=walmart&source=bl&ots=_mVn0biLfx&sig=ACfU3U0jNRSA1SjDrVFvIOo2rMw5d46jrw&hl=en&sa=X&ved=2ahUKEwis0b2C74TgAhVJRBoKHThvBqQ4PBDoATAGegQIAhAB#v=onepage&q=walmart&f=false

    Again, sorry if the book is too long to enjoy for some. Being a retired worker now allows me more time to search the internet and read/file articles for further use.

  • 49Unbeaten

    Bleak….

  • insideright

    Doesn’t the change in kit sponsorship this summer somewhat change this picture? Is it not also the case that Arsenal don’t need revenue to pay off debt as this is covered by cash holdings large enough to take us until 2028 when the mortgage comes to an end? The ‘new’ policy of promoting youth and bringing in ‘free’ transfers at the end of their contracts also reduces the strain on revenue.
    The persistent holding down of ticket prices reveals, I think, the true nature of the long term strategy.
    As for Spurs – how much sits on the other side of their balance sheet re the cost of hiring Wembley? Turnover is indeed vanity.

  • Gord

    AKH

    You should also look into the landholdings that Kroenke is involved in. I think he is 4th in the USA in terms of land owned. He also owns a huge amount of land in Canada. With some of these lands, there may also be substantial amounts of land that is not owned, but is otherwise controlled by Kroenke.

    I believe via the Douglas Lake Ranch in BC, he also owns every New Holland equipment dealership in BC.

    He has his fingers in many things.

  • Samuel Akinsola Adebosin

    Possibly, Arsenal may invest to recruit 1 to 3 new top quality players on permanent deals next summer and at the same time offload 3 Gunners they don’t want to keep in their squad anymore. The 2 of the 3 could be Welbeck and Lichtsteiner due to the constant injury problem suffered to Welbeck and for the lack of being the required top caliber player needed in the squad in the case of Lichtsteiner. This adjustment in rationalizing the weakness in the Gunners first team squad next summer for strengths acquiring is in continuation of their first team squad strengthening rebuilding but in line with the new financial policy guide line for the club. Which the club management has started to operate on it from this current January transfer window could see the Arsenal first team squad have a sustained Premier League title win campaign challenging to the end to give Arsenal a strong chance to win the title next season. And not fall away again during when the heat to win the title has turned ON to start challenging for the title win after 10 PL matches have been played during which Arsenal are in the challenge challenging strongly. But only to latter fall out by the wayside from the challenging which is often the case with the Gunners in the last 14 PL campaigns when they have failed to sustain many of the title wins challenge they were in which they could have been winning had they kept challenging to win it with a sustained challenging performance to the very end.

    The money generation that is accrued to Arsenal has started fallen primarily due to the club’s failure to win the PL title at least for a minimum of 5 times in the last 14 PL campaigns that they’ve not won it. And secondarily for Arsenal not winning the UCL at least 4 times in the last 14 UCL campaigns during which they haven’t win it could be responsible for the fall in revenue generation by the club. And I think Stan Kroenke must have noticed this downwards trend in revenue generation at Arsenal. Hence, the rationalization measures in the management and the field departments he has enforcing at the club from last summer to this January windows that us Gooners are now witnessing with disgruntlement. Hmmm. What can us Gooners do? Us can’t force Kroenke to be putting his personal business earned profit money into the transfer kitty at the club to be used in recruiting new players in every transfer window, could us? So, first, let’s wait to see if Emery and the Gunners under his coaching will get a top four place finish for Arsenal this season to qualify for the UCL campaign next season which if Arsenal make the top four, the making could bring in more money for Arsenal. And from there, the club should be moved to the next level of to win the PL title and possibly win the UCL title too next season which are not impossible for Arsenal to achieve next season but are two possibilities that they can achieve.