Are Arsenal Splashing the Cash at Last?

As we await the imminent announcement of Santiago Cazorla from Malaga, there has been a lot of discussion on whether we are now looking at a change in transfer policy from Arsene Wenger.

On July 4^th, the media smelled blood with van Persie’s statement that he will not be signing a new contract at Arsenal. Yet, many were forced to stop short of making widespread accusation towards Wenger as by this point (4 days into the transfer window) he had already secured the signings of Ligue 1 top scorer Olivier Giroud and one of Bundesliga’s top goal-scorers Lukas Podolski.

During the course of the past 7 years, there has been lots of accusation at the over-reliance of youth and shopping in the bargain basement. So what is different this year? Has Wenger’s philosophy changed from investing in youth? Or perhaps there is more cash available at the club?

Back in early June in a supporters trust meeting, Ivan Gazidis, the Arsenal Chief Executive, repeatedly stressed the importance of the self-sustainable model of the club. Alarm bells were ringing as fans have been concerned in the manner in which the club are heavily relying on UEFA to enforce financial fair play. It is no secret that the club are not likely to have substantial funds to compete financially with Europe’s big teams until atleast 2014 when the current sponsorship with Emirates expires.

So the question begs that with the handicap of having not as much resources as our rivals, why is the club on this current spending spree? There needs to be perspective when casting eye on Arsenal’s recent transfer dealings. Can the acquisition of Podolski, Giroud and Cazorla be classed as “splashing the cash”?

Arsenal have acted very early in the transfer market, conducting business in a lot of secrecy from the prying eyes of the North East. The most effective of all weapons that the club possess is the Champions League football next year. Players want the opportunity to compete among the best and the club can offer that next season.

The backroom staff have been hard at work over the course of the year. Gazidis and his team look to have stepped up their operations significantly to make sure Arsenal can sign some top quality players without being outdone by the rich boys. Credit not only has to be given to the scouting network, but also those that conducted research and identified available opportunities for the club to exploit.

German Efficiency

First there was the signing of Lukas Podolski from German club FC Koln. The 26 year old striker had a torrid time when he played for German outfit Bayern Munchen a few years ago. The idea that he doesn’t have the mentality to play in a big club has stuck among many around Europe. However, by his own admission, the move for to Munchen came too early in his career. Some players hit the ground running when they are young while others take time to mature and Podolski has found himself in the latter category. He doesn’t shy away from admitting his attitude was not acceptable during his time at the Allianz Arena but he has worked to put things right and became one of Bundesliga’s most prolific strikers.

The fee paid for Podolski was in the region of £10m and his wages are believed to be in the region of £90k a week. In comparison to the going rate of a player with over 100 appearances for the German national team, it is a good piece of business by Arsenal.

Same old Arsenal

Then there was the capture of Olivier Giroud from last season’s surprise package Montpellier. Giroud’s signing was shrewd business by the Gunners who capitalised on the €12m (~£9.6m) release clause of the Ligue 1 Golden boot winner. It is widely known that club’s around Europe have nightmares about Arsenal calling in for their players. It is a due to the club bidding bare minimum prices leaving the selling club being in a situation whereby they are forced to sell as the player in question has their head turned.

Montpellier’s president Louis Nicollin openly admitted his frustration at the low release clause on the player’s contract. Despite interest from clubs across Europe, Giroud favoured a move to the red half of North London and Montpellier were forced to sell at the release clause rate at what became Wenger’s second signing before the transfer window opened.

Struck Oil!

Finally came the long awaited signing of Santiago Cazorla from debt stricken Spanish outfit Malaga. The deal has been equally if not even more ruthless business by the club. Countless media and clubs across Europe have been left surprised at the manner in which Arsenal not only capitalised on Malaga’s dismal financial situation but also at the speed in which the club closed the deal out.

The Cazorla signing is one that that very few could have predicted. On the surface of it, this is a Spanish European cup winner with over 40 appearances for a national side that boast players in the calibre of Iniesta, Xavi and Fabregas. Furthermore, Cazorla only moved to Malaga a year ago. As difficult it is to prise away a player in those circumstances, Malaga were looking in excellent shape, securing a Champions League Qualification spot in next year’s competition.  With that in mind, many clubs would consider it a waste of time and resources to make any enquiry on the player let alone submit a formal bid.

As I mentioned earlier, Arsenal look to have done a lot of research over the course of the year so Malaga’s financial reality would not have been new information. The club secured negotiations and a deal for Cazorla before Malaga’s financial state became apparent, while holding off late attempts from Chelsea to hijack the deal.

Despite several figures being thrown around, the fee is believed to be in the region of £11m plus £4m add ons. It’s a great price for a player like Cazorla and a low fee due to Malaga’s request to pay the money up front immediately so they can relieve some debt. It is not the norm to pay up whole transfer fees straight away and usually requires a series of instalments. Arsenal had the advantage of being able to pay money up front and in turn driving the transfer value down.

Splashing the Cash?

So with Podolski at ~£10m, Giroud at ~£9.6m, and Cazorla at ~£15m, Wenger has taken his summer spending to around £35m. Now if you consider that Chelsea paid out £36m for Eden Hazard is this what we can call “splashing the cash” or efficiency in the market?

Whereas Manchester City, Manchester United and Chelsea can spend £35m on one player, Arsenal must get by spending that amount over 3 or 4 players in total. Wenger’s budget every year has been known to be around the £40m although there has been massive debate in how much of that money has been made available to the manager due poor commercial income.

Yet, the whole situation is not so simplistic. The club must still sell before closing all transfer dealings for the summer and adhere to a 1-in-1-out policy. Whether van Persie, Bendtner, Squillaci or all of them are shown the exit door, it’s a continuous battle to balance the books in North London. One of the most high profile casualty of such a policy was Juan Mata last year. While the fee and terms were agreed with the player, the club could not close out the deal until Fabregas’ move to Barcelona was finalised and wages were freed. This allowed Chelsea to capitalise on the delay and Arsenal lost out on an excellent player.

Arsenal look to have made no such mistakes this time. While Wenger confirmed last week that Bendtner, Park and Squilacci will be leaving, the club have taken no chances in securing the signing of Cazorla.

Though attention must now turn towards improving the defence, Arsenal look like a club heading in the right direction. Now an exciting Premier League season beckons for the Gunners.

Has He or Hasn't He Got the Money - Arsenal Supporters Trust Meeting

A lot of anticipation was surrounding the Arsenal Supporters Trust meeting, especially from the media. Undoubtedly, many were expecting a tirade of “Wenger Out” cries and therefore it may be worth noting that perhaps not many of the back-pages will carry the story in a double page spread that Charlie Wyett from The Sun loves to compile.

There is a view that the Arsenal Supporters Trust are just a bunch of scarf waving Gooners that like to feel important but are insignificant in the running of Arsenal Football Club. A reminder therefore that the Supporters Trust board are due to meet Chief Executive Ivan Gazidis and the Commercial Management team this week to discuss the views of the members from the meeting. In the past the pressure from the Arsenal Supporters Trust has also pushed the manager to take domestic cup competitions more seriously, resulting in our Cup final visit to Wembley last year.

So first up on the agenda was the issue of empty seats and ticket prices. There was a huge outcry from me and fellow Gooners on the sudden hike (approximately 6.5% increase) on the price of season tickets.
Essentially there were 2 choices for the board regarding the matter:

a) Increase ticket prices in small increments every year incurring the wrath of disgruntled fans year in year out who will remind them of the lack of trophies every summer.

b) Increase the price in one big hit after a few years. The advantage of this for the board is that they will take on all the abuse in one instalment and can amuse themselves over our anger at being mislead into thinking ticket prices were actually frozen for 5 years.

Unsurprisingly the board opted for the latter of the two options and the Supporters Trust unanimously agree they don’t want to see any more increases in the future.



The topic however, brought about some interesting points:

• 400 Club Level Season ticket holders attended one or less games last season. To put some perspective on that, I am a Club Level Season ticket holder. My seat is in the North Bank behind the goal and currently, I pay £3000 while Club Level seats at the half-way line are around £5000. The phrase “More money than sense” comes to mind.

• Opinion on the ticket exchange feature whereby season ticket holders cannot attend games and post their tickets on the website is that improvement is needed as it’s not always useful. For example, if a fan realise he/she cannot attend the game the night before the match, there is no way of posting the ticket so late on the site.

• Debate started on what happens if the club enters the Europa League. This is where a major shock comes in. While many supporters wanted the cup credits on season tickets to be separated, a fan plainly refused to attend any Europa League matches. His excuse was “I am used to dining at the top table, not at Joe’s tavern”. A truly amazing statement summing up the state of the modern football fan. Everyone is of course entitled to their opinion and therefore my opinion has always been that you support the team start to finish. Most fans usually wish the players on the pitch reflected the same passion as the fans. I personally would not want a player not bother simply because it’s the Europa League.

• A suggestion was made to drop ticket prices for all cup games. While most agreed, an AST member pointed out that it sends the wrong message and de-values the competition in the players’ eyes.

• Ticket prices would remain the same had Arsenal dropped down to the Europa League following defeat in Udinese (had it not been for an excellent penalty save by Szczesny).

• If the number of empty seats continue, Arsenal are likely to lose a lot of Television rights. TV companies like Sky Sports do not like to show matches with empty seats as it fails to attract the viewer’s interest at first sight. This is understandable as the noise generated by full crowds at stadiums gain bring attention to the match.

• Arsenal’s current season ticket waiting list is around 30,000 and is one of the most expensive in Europe (surprise surprise). The drop in the list over the last couple of years must have been a lot by my understanding. I am currently in the waiting list for a Gold Season ticket and in one season my position has gone from 44,000 to 26,000.

• A fan suggested there should be some loyalty scheme available to Arsenal fans that have held season tickets for years and the Arsenal Supporters Trust board will look into discussing this with the club. An example is Barcelona FC giving loyal season ticket holders around 5% discount off merchandise in the club shop. Of course, to Mr. Hill-Wood this would be the equivalent of giving away his kidney!

HAS HE OR HASN’T HE? IS MONEY AVAILABLE TO ARSENE WENGER TO SPEND ON TRANSFERS?




Now, I’m no financial expert and even a “Dummies Guide” book on finances would put me to sleep. An Engineer by profession, I have little know how on finances and therefore I will just state the obvious figures that even Harry Redknapp can understand without a twitch!
The Arsenal Supporters Trust know there is money available at the club. What we don’t know is whether the money is available for Arsene Wenger to spend on transfers. Anyone that says Wenger isn’t spending due to his stubbornness is as wrong as the one that says the board is hiding the cash. Ultimately, only the higher powers at Arsenal know the real story!
Once again, some very worrying points were brought up!

• The current Arsenal wage bill is £130m – which is the 4th highest in the league. In layman’s terms, 4th highest wages is what gets you 4th place and with the current wage bill, Arsenal have been finishing in 4th.
  
  Of course, it doesn’t exactly work that way! The problem, as famously known for a while now is that too many average players are sitting on high salaries that are limiting the top players earning higher wages. This in turn allows clubs that have more cash to take our players by offering them better contracts. Whatever way you look at it, a truly shambolic structure. In a nutshell, no one is willing to buy the likes of Squillacci, Denilson and Almunia with the wages they are earning (unless any of them decide to take a pay-cut) and this in turn is affecting the club’s wage structure. Players like van Persie can only earn a capped amount which makes us vulnerable to rival clubs.

• Of the £130m that is used for wages, Arsene Wenger is in charge of approximately £90m. Make of that what you will but it’s incredible that the manager of the football team is being given cash to distribute among the players. You have to ask if this is really the way a club should be run! Imagine ‘Arry being asked to do the payroll at Spurs! He would be chasing down Rosie for help faster than John Terry forgets about his wife!

• Stadium debt is in the region of £220m - £230m depending on how well you heard the speaker at the meeting.

• Approximately £30m cash reserve is kept in the bank for what’s essentially “darker days”. This is to cover the club for around 2 years should Arsenal fail to reach the Champions League. The money for this has been arranged through the property sale.

• £40m was available at the club on 1st June 2011. Regardless of whether this was for transfers or not, a further £55m was added with the sale of Fabregas and Nasri. Deducting taxes (as Rosie47 does) and loyalty payments (!) Arsenal Supporters Trust believe there is approximately £60m available although the club argued an additional £10m was paid out in agent fees on transfers and renewals of players like vice-captain Thomas Vermaelen.

• At present, the UEFA Financial Fair Play (FFP) is Arsenal’s glimmer of hope. Off the field, the club can more than balance the books. However, if Arsenal fail to qualify for the Champions League, then the Gunners may themselves become a victim of breaking FFP rules! Champions League football can be worth anything up to £45m a season for the club which is crucial for the long term sustainability.

• The commercial side of Arsenal is beyond a laughing matter. Manchester United make approximately £100m in revenue while Arsenal are and will be around the £30m until atleast 2014 when the deal with Emirates expires. This is hampering Arsenal’s chances of competing with the big boys financially. There has been talk a while back that the club are looking into the possibility of ending the deal with Emirates early and incurring any penalties in order to secure better future deals.

• Nike currently play Arsenal around £14m on shirts while Liverpool, who have not been in the Champions League for a couple of years now have landed £40m kit deal.

• Every club in Europe live in fear of Arsenal making a phone call for their player. This is due to the paltry figure Arsenal offer in as transfer fee and though clubs have the power to reject the offer, they cannot stop the player’s head being turned.

• In 2009, Alisher Usmanov and his team made their calculations and suggested a figure of around £100m to be injected to strengthen the team. Further, Red & White Holdings (Usmanov’s company) offered to put the larger part of the amount. The Arsenal board refused Usmanov’s offer as some of the wealthy shareholders were not ready to part with their own cash and give their share of the money.

• Usmanov’s lawyers will be working away as he passes the 30% mark to be classed as an “owner” of the club by the Premier League. The Arsenal board can technically accept any cash injection provided by Usmanov but that would require a VERY big change in philosophy. However at this stage, the board and Kroenke would rather die than accept any charity from Red and White holdings that will essentially be a gesture of acceptance that they were wrong all along!

• Kroenke is behaving in a way that makes it seem as though Arsenal and London is just a Tourist attraction for him. A novelty factor of owning something British. Some Americans take pride in knowing a posh British man from across the Atlantic and for Kroenke, Arsenal is like his very own show off piece. Ultimately, the club means very little to him.

• Arsenal’s opportunity in Nigeria (where the team will head to over the summer) is massive as the country can boast more Arsenal fans than in the UK.

Another very interesting point was brought up last night. We all may remember the Arsenal board once famously claimed that if they offered Arsene Wenger £100m, he would just give it back to them. While it may seem like an amusing story there’s more to the story than meets the eye.

The board had apparently offered Wenger £100m through the possibility of certain rights deal. Wenger refused the money and the rights deal was called off.

Now this clearly is the cue for a section of fans to take out their axes and pitch forks. However, we cannot see at this as the end of the story. Looking at a wider picture, we have to take into account that Arsenal must make approximately £20m profit every season. If we say for arguments sake that the £100m was given to spend over a period of 3 seasons and yet continuing to return profit of £20m a season, this means giving a return of around £160m by the end of 3 seasons (£100m initial injection + [£20m profit per year x 3 seasons = £60m] = £160m). That is an astronomical amount and while I accept that things don’t necessarily work that way, the money ultimately is not coming from any sugar daddy and some return on the £100m will be required or the club will start to go plunge downhill. The largest part of the income would have to come through Television and Season ticket renewals as competition prize like £2m for winning FA Cup is very little.

Of course it may be that the board don’t ask to see a high return on profits but then would this satisfy Financial Fair Play rules?

Arsene Wenger

For several seasons the debate regarding the suitability of Arsene Wenger to do the job at Arsenal has been under the microscope by the fans and media alike. The split among the fans opinion of the Frenchman has been divided and in broad context the majority of fans fall into 3 different camps:
1. The first group of fans believe Wenger has had all the money to do how he pleases and his stubbornness and blind faith towards his players has cost Arsenal silverware over the years.

2. The second group of fans believe the board and Wenger have been lying and there is no money to spend on transfers with stadium debts being top of the agenda.

3. The third group of fans fall into the camp that believe money is available but very little or almost no money has been made available for Wenger to spend in the transfer market.


Regardless of where your views lie on the matter there is one factor that unites the three camps: The impact of former Vice president David Dein’s departure from Arsenal.

A lot of the club’s infrastructure and scouting system has gone downhill since Dein left the club in the most unceremonious ways imaginable. The Supporters Trust has questioned in particular why it is that Arsenal have produced only two talents from the academy (Gibbs and Wilshere) in the last 10 years.

It is widely know that Dein and Wenger had a very close working relationship throughout their years at Arsenal. After all, it was Dein who appointed Wenger as the Arsenal manager back in 1996.



The day-to-day running of Arsenal was rather straight forward. Dein would bring forward the availability of players across the world whether its convincing a Sol Campbell to move to the red half of North London or signing a World Cup winner Gilberto Silva from Atletico Mineiro. Wenger would pick the ones he wanted and then Dein would see to it that the player is taking pictures with the Frenchman and a red shirt as soon as possible.

There was always a healthy rivalry between Managing Director Keith Edelman and David Dein. Edelman was the business minded figure at Arsenal and would often argue with Dein on money spent on players. Dein in the mean time would fight tooth and nail for Wenger’s corner and often won, landing a host of talent from across the world that eventually created title winning sides.

Then, after that miserable in April when it was announced that Dein left the club due to “irreconcilable differences”, large changes within the club’s hierarchy had to be made.

The departure of Dein was triggered due to his support for Usmanov and Red & White Holdings to take over Arsenal in order to allow the club to compete financially. The remaining members of the board did not support the idea and it therefore ended in the two sides parting their ways. Such was the fury towards David Dein from the board that they eventually sided with Stan Kroenke’s take over as Usmanov was from David Dein’s camp. The effects of this even affected one of the major shareholders that was Lady Nina Bracewell-Smith who was ousted from board after being seen having a coffee with a member from Red and White Holdings.

This is the key point which determined Arsenal’s future for the next few years. Wenger was handed what was essentially “full control”. To go into detail as to what kind of control he has would be speculating but it is clear that a large part of this control involved taking over the duties Dein carried out on a day-to-day basis. It was said that since Dein’s departure, Wenger became somewhat of a “nervous shopper”.

Furthermore, Wenger was audaciously involved on the panel of judges that chose what is essentially meant to be “the next David Dein”. Although I agree that Arsene should NOT have been allowed to choose his boss, I can only assume that the club was trying to re-create the same relation Dein had with Wenger. That is a very big task as Wenger and Dein were close friends and still are. Despite his departure, Dein and Wenger spend more time with each other Gazidis does day-to-day with the Arsenal manager. Wenger once described David Dein’s commitment to Arsenal as, “Red and White are the colours of his heart”. And that is quite clear when you see Dein walk through the turnstiles every match day like every other Arsenal fan.

As mentioned earlier, it is believed that of the current £130m of wages being paid out at the club, almost £90m is in Wenger’s control. This essentially makes one wonder what exactly Ivan Gazidis does on a day to day basis. The commercials have failed rather spectacularly and completing transfers has been a task more difficult than finding out Robbie Keane’s real boyhood club.
Conclusion

In conclusion, Wenger has had quite a task on his hands doing some of the former vice-presidents job and managing the team. Though he is far from being innocent at not doing the tasks properly and making some basic elementary tactical mistakes, the bigger issues at the club have to be addressed at this moment in time.

Lets put this a situation to you: You’re excelling at your current job till one day your boss tells you expand your workspace to accommodate for another person leaving. Considering you love the job and the company you’re working for, would you say no? Probably not.

Now consider this. Your new role (unsurprisingly) has had an impact on the job you previously carried out and you’re not doing as well as you used to. To add to the stress, the company you work for has had limitations put in place on resources. Despite all these measures, you can still perform among the best in your profession but your customers are ultimately unhappy. Your customers want you to provide the same level service as before despite your employer’s limitation and your expanded role which no other person of your profession has to carry out. What would you do? You’re paid well, love the job and love the company. Do you walk out?

Alternatively, would your employer have any ground to sack you considering the limitations and the strategy they took up since expanding your work scope? Probably not, unless they are willing to justify themselves at an employment tribunal.

My point being is that regardless of your opinion on the Wenger, the departure of Dein and abnormal position within the club that’s been handed to him has affected our performances. The board would not sack Wenger because ultimately, he’s bringing the money in and to many extents hiding the true story of what is going on behind the doors.

We have seen two types of Arsene Wenger over the last 15 years
Wenger Type 1: Excellent at Football management, worked in ideal situation with support and competent personnel around him.
Wenger Type 2: Above average at football management, worked with incompetent people while managing the team trying to keep them competitive enough to see out the financial darkness.

Question has to be asked, is it his fault that he has been given full control? Is it his fault that he seems to be working on players payslips when in fact he should only be concerned with how the players play? Is it his fault that he has no previous experience of doing duties as a board member and yet is doing the job?

Now you have to look at the possibility of the situation improving by sacking Wenger. Lets consider for a moment we all want him sacked, the board listens and Arsene is shown the door with an Au revoir. Now we assume Guus Hiddink didn’t sign for Anzhi Makhachkala and instead signed for Arsenal FC. What will this exactly improve? Will Hiddink be a better manager with an extended role of doing duties of the former Vice chairman? Or will the board sack Ivan Gazidis and decide a change is needed and bring in more competent personnel that can justify a £500k bonus and not go on holiday during a crucial point of the transfer window? Or will the board shift more of the responsibilities on to Gazidis and tell him to pull his weight a bit? I think either of those scenarios are unlikely.

Whatever his faults have been, Wenger has done the job thrown at him to the best of his ability. Whether that’s been good enough or not, the point is, circumstances have not been ideal. Does Ferguson/Redknapp/Dalglish/AVB have to go through the players wage packs and distribute the cash? Of course not, it’s not a manager’s job to do that and God help us all if Harry Redknapp is doing accounting work for a club. Wenger ultimately has to be managed by someone but it’s hardly his fault that the board hasn’t put someone in place already to do that. The average age of the people in the board is at the 70 mark and they have run themselves to the ground over building a new stadium but did not do enough to support the manager and build a team. Until stability at board level is not improved, changes in manager will do little to solve the problems. The board lock down agreement ends in April, it will be interesting to see if Kroenke has the right ideas to move forward!