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July 2019
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Arsenal’s reasons to be cheerful part 2: The money

A couple of years ago there was one financial story about Arsenal – the club was bust.   It had over-stretched itself with the grand plans for the new ground, the bubble was bursting, Henry was finished, it was all over.

Now we can see exactly what the story is.  Arsenal have more money than everyone in the EPL apart from Chelsea, who continue to be financed by the unlimited supply of Russian oil money – and even there, there are signs that all is not right.  Arsenal are the Rich Club.

What happened was that the people who wrote Arsenal’s money made several errors in their accounting.   First they ignored the fact that there was a clause in the loan deals which allowed Arsenal to refinance the deal once the stadium was built and filling up for every home match.   That refinancing reduced the cost dramatically and meant that Arsenal were making much more profit per game than they did at Highbury, even when the mortgage was taken into account.

Second they forgot the sale of Highbury.  Arsenal cleverly put the redevelopment costs in one set of figures, but the income from sales a couple of years later.  Now they are getting the windfall from Highbury, and it is all going into paying off the mortgage.

Third they forgot Wenger.   Last summer Arsenal were unique among EPL clubs in that they made a profit on transfers.  Having made a profit out of the sale of Vieira a few years before, they did so again with Henry.  Incomers remain cheap for the most part (Clichy £2m, Flamini free) while the players are sold for huge profits.

So while the commentators expected Arsenal to have a £25 million outflow of transfer money last summer, Arsenal actually made £10 million – making the club a further £35 million better off.

Compare this with the other clubs in the EPL.   Man U made a profit last year – but it then all went to pay the Gillett loan cost.  This is not the same as Arsenal paying off their mortgage year by year – the Gillett’s just pay interest – the debt remains.   They are holding on year by year – and one poor year and they are done.   Ferguson went out and spent £40 million at the start of last summer – they might not want him to do that again.

Liverpool are in financial meltdown – unable to afford the proposed new stadium (not least in part because of the state of the business markets) and unable to keep up the demands of the Benitez character who demands another £40 million this summer.

Chelsea, despite the owner’s wealth, are trying to balance the books, and it has become clear that the owner just wants to sell the club at a profit.   In fact he can now do that, the club being worth more than the money his has poured in thus far.  But the problem is, without continuing player investment the club will sink – they do not have Arsenal’s world-wide scouting system, nor a decent youth policy of their own.

Beyond that, eternal wanna-be’s Tottenham, have been spending £30 million in each transfer window for years, and still no one can work out where the money is coming from.  Man City seem to have the dosh – as long as their chairman remains free to roam the Earth, rather than banged up in a Thai prison.   Everton don’t show much sign of having a fortune, and the owners would certainly prefer a new stadium.

Beyond that little group there are mostly clubs who cut their cloth.   There is now only one team that really has the money: Arsenal.

 (Coming up in part 3 – the players coming in next season; in part 4 the board)

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