Comments on: Stoked on Profits and Losses http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/ The Arsenal blog from an American perspective Wed, 08 Feb 2012 01:51:25 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Teampossible http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15047 Teampossible Sat, 27 Feb 2010 00:24:56 +0000 http://www.7amkickoff.com/?p=4666#comment-15047 <a href="#comment-15034" rel="nofollow">@Grimbo</a>,I am not saying we should we buying Villa, I apologize if my thoughts came in a little too black&white. In fact, I have no problem with our current policy of creating instead of purchasing, but only when it comes to cases of players like Vermaelen, or maybe Chamakh, which is the type of player not far from the finished article. I sincerely have a problem with my patience when it comes to signing another 8year old great prospect, who may or not be a fantastic player in 30 years time, when it is clear that we are only two or three players shy from being one of the top five teams in the world. What I am saying is that maybe we should stop competing who is the biggest expert on our debt issue, and what consequences it payment may bring to our club, since all the signs point to Wenger not buying a 30 million player, even if he has the cheddar for it. That was all:) @Grimbo,I am not saying we should we buying Villa, I apologize if my thoughts came in a little too black&white. In fact, I have no problem with our current policy of creating instead of purchasing, but only when it comes to cases of players like Vermaelen, or maybe Chamakh, which is the type of player not far from the finished article. I sincerely have a problem with my patience when it comes to signing another 8year old great prospect, who may or not be a fantastic player in 30 years time, when it is clear that we are only two or three players shy from being one of the top five teams in the world. What I am saying is that maybe we should stop competing who is the biggest expert on our debt issue, and what consequences it payment may bring to our club, since all the signs point to Wenger not buying a 30 million player, even if he has the cheddar for it. That was all:)

]]> By: Tim http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15042 Tim Fri, 26 Feb 2010 22:29:47 +0000 http://www.7amkickoff.com/?p=4666#comment-15042 <a href="#comment-15024" rel="nofollow">@kevin</a>, yep @kevin, yep

]]> By: Alex http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15035 Alex Fri, 26 Feb 2010 21:22:13 +0000 http://www.7amkickoff.com/?p=4666#comment-15035 <a href="#comment-15024" rel="nofollow">@kevin</a>, I agree 100%. Well said. @kevin, I agree 100%. Well said.

]]> By: Grimbo http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15034 Grimbo Fri, 26 Feb 2010 21:04:53 +0000 http://www.7amkickoff.com/?p=4666#comment-15034 <a href="#comment-15028" rel="nofollow">@Teampossible</a>, the Stadium, debt, youth academy and our approach to the transfer market cannot be separated, they are all factors in the same equation. You are oversimplifying the issue... Lets say we buy David Villa for 40 million quid. He's also then paid in accordance to his cost 120k a week... he'd completely break the wage structure we have in place. Cesc, RVP, Arshavin and everyone else then gets their 'Mr 20%' to turn up at the club and ask for more cash, this then effects the dressing room and consequently what happens on the pitch. These are HUMAN BEINGS, and react to things emotionally. It's not just about cash and buying this guy or that bloke. The only way to ensure you don't get a bad apple, is to pick it from the tree... @Teampossible, the Stadium, debt, youth academy and our approach to the transfer market cannot be separated, they are all factors in the same equation. You are oversimplifying the issue…

Lets say we buy David Villa for 40 million quid. He’s also then paid in accordance to his cost 120k a week… he’d completely break the wage structure we have in place. Cesc, RVP, Arshavin and everyone else then gets their ‘Mr 20%’ to turn up at the club and ask for more cash, this then effects the dressing room and consequently what happens on the pitch.

These are HUMAN BEINGS, and react to things emotionally. It’s not just about cash and buying this guy or that bloke.

The only way to ensure you don’t get a bad apple, is to pick it from the tree…

]]> By: ArseChicago http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15032 ArseChicago Fri, 26 Feb 2010 20:10:48 +0000 http://www.7amkickoff.com/?p=4666#comment-15032 The one other interesting tidbit surrounds players wages. According to the semi-annual report, player wages went up 8.6MM pounds for this 6 month period versus the same period one year ago. Clearly this is the impact of the myriad long-term contracts signed with the youngsters. So for a year, player wages will have gone up more than 17MM pounds. Grimbo, I think you've pointed out that this is the other part of the equation that many folks forget when considering transfer economics. Nevertheless, even with that wage inflation, the club's football operations (excluding property) raked in 100MM pounds in revenue and 25MM pounds in profit before taxes. Roughly annualize that and again, with all the investment in our youth, the club still is at a run-rate of 50MM in operating profit. The annual interest and principal burden on the Emirates is between 15 and 20MM by my calcs, so we're sitting with a nice chunk left over as cushion. Now as for these 17 players that the club has locked in to longer-term deals, I would be surprised if one or more are not sold over the next few years. But let's assume any salary savings from player sales are negated by now having their salaries go to players currently on loan to other teams (we'll have to pay them when they're back from loan spell). So here's where we are sitting at the moment: -80MM+ pounds of unrestricted cash -13MM pounds of Highbury debt, to be more than offset by the ultimate sale of 131 remaining units (32.5MM pounds raised if each sold for 250,000 pounds) -3 properties with no debt attached to them to be sold -50MM of annualized operating profit (pro forma for the inflated salary structure) -Most if not all the remaining debt related to the Emirates mortgage The story hasn't changed much from 6 months ago. The club's in terrific financial position and management should be commended for that. Wenger should have the means to add the final 2-3 pieces this offseason without adding 1 pound of debt and without materially diminishing the incredible profitability of the football operations. It won't just be the supporters this offseason calling for the later action. It'll be Fabregas and Robin and Arshavin among others..... Let's get a W at Stoke tomorrow, yeah? C'mon you GUNNERS! The one other interesting tidbit surrounds players wages. According to the semi-annual report, player wages went up 8.6MM pounds for this 6 month period versus the same period one year ago. Clearly this is the impact of the myriad long-term contracts signed with the youngsters. So for a year, player wages will have gone up more than 17MM pounds. Grimbo, I think you’ve pointed out that this is the other part of the equation that many folks forget when considering transfer economics. Nevertheless, even with that wage inflation, the club’s football operations (excluding property) raked in 100MM pounds in revenue and 25MM pounds in profit before taxes. Roughly annualize that and again, with all the investment in our youth, the club still is at a run-rate of 50MM in operating profit. The annual interest and principal burden on the Emirates is between 15 and 20MM by my calcs, so we’re sitting with a nice chunk left over as cushion.

Now as for these 17 players that the club has locked in to longer-term deals, I would be surprised if one or more are not sold over the next few years. But let’s assume any salary savings from player sales are negated by now having their salaries go to players currently on loan to other teams (we’ll have to pay them when they’re back from loan spell). So here’s where we are sitting at the moment:

-80MM+ pounds of unrestricted cash
-13MM pounds of Highbury debt, to be more than offset by the ultimate sale of 131 remaining units (32.5MM pounds raised if each sold for 250,000 pounds)
-3 properties with no debt attached to them to be sold
-50MM of annualized operating profit (pro forma for the inflated salary structure)
-Most if not all the remaining debt related to the Emirates mortgage

The story hasn’t changed much from 6 months ago. The club’s in terrific financial position and management should be commended for that. Wenger should have the means to add the final 2-3 pieces this offseason without adding 1 pound of debt and without materially diminishing the incredible profitability of the football operations. It won’t just be the supporters this offseason calling for the later action. It’ll be Fabregas and Robin and Arshavin among others…..

Let’s get a W at Stoke tomorrow, yeah? C’mon you GUNNERS!

]]> By: viva los gooners http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15031 viva los gooners Fri, 26 Feb 2010 19:51:51 +0000 http://www.7amkickoff.com/?p=4666#comment-15031 Thanks for the link. EXACTLY!!! 60k, 70k, 80k, more? I'm sure is part of the plan. Little by little, capacity will increase, and planiing problems will be circumvented. With debt paid off, the scenario is awesome. There is also a two edged sword at work, or one with a very long cutting edge. In the current period and forseeable future, Arsenal will continue to grow, whilst other leading clubs will have to retract. A business model that sustains and grows an enterprise financed from cashflow is a thing of beauty and strength. If I was in charge of any other club, I would be very apprehensive of what is taking place at the Grove. This is a plan for world domination! Viva! Thanks for the link. EXACTLY!!!

60k, 70k, 80k, more? I’m sure is part of the plan. Little by little, capacity will increase, and planiing problems will be circumvented.

With debt paid off, the scenario is awesome. There is also a two edged sword at work, or one with a very long cutting edge. In the current period and forseeable future, Arsenal will continue to grow, whilst other leading clubs will have to retract.

A business model that sustains and grows an enterprise financed from cashflow is a thing of beauty and strength. If I was in charge of any other club, I would be very apprehensive of what is taking place at the Grove.

This is a plan for world domination!

Viva!

]]> By: nycgunner http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15030 nycgunner Fri, 26 Feb 2010 19:35:42 +0000 http://www.7amkickoff.com/?p=4666#comment-15030 i do think there is some truth to this. although i also think that even by arsene's standards he has been frugal of late - so if there is minimal debt to worry about then he may be willing to reach a little deepeer. i do think there is some truth to this. although i also think that even by arsene’s standards he has been frugal of late – so if there is minimal debt to worry about then he may be willing to reach a little deepeer.

]]> By: ArseChicago http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15029 ArseChicago Fri, 26 Feb 2010 19:02:17 +0000 http://www.7amkickoff.com/?p=4666#comment-15029 This doesn't even take into consideration 3 other property developments the club has to ultimately sell. Apparently there is ZERO debt affixed to these 3 property projects and so any cash coming in from those sales over the next few years will flow to the club. Ka-ching. This doesn’t even take into consideration 3 other property developments the club has to ultimately sell. Apparently there is ZERO debt affixed to these 3 property projects and so any cash coming in from those sales over the next few years will flow to the club. Ka-ching.

]]> By: Teampossible http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15028 Teampossible Fri, 26 Feb 2010 19:00:42 +0000 http://www.7amkickoff.com/?p=4666#comment-15028 All of this talk that we are not spending a lot of money on players because of the debt is fine, but there is just one little flaw in it: It has always been like that. Of course, I can only speculate about this, since I have no idea when the plan for the building of a new stadium was made, and if Henry, Toure, Silva and Pires were bought because there was a project in plan, and they fit the bill and have the talent, but Wenger almost NEVER bought an expensive player. So, we can console ourselves that this debt is the reason for us buying unknown Tasmanistanian 16year olds at the moment, and as soon as the debt is paid off, we will buy the Villas of the world, but I think we need a wake up call and stop overanalyzing how much does Arsenal owe, are the flats selling well, is the dividend for the board too high, etc. I believe that this is just the way Wenger works, and we should not fool ourselves that this will change as long as he is around. In no way am I saying that he should be sacked, god forbid, I just think that this debt thing has nothing to do with the man's agenda. All of this talk that we are not spending a lot of money on players because of the debt is fine, but there is just one little flaw in it: It has always been like that. Of course, I can only speculate about this, since I have no idea when the plan for the building of a new stadium was made, and if Henry, Toure, Silva and Pires were bought because there was a project in plan, and they fit the bill and have the talent, but Wenger almost NEVER bought an expensive player. So, we can console ourselves that this debt is the reason for us buying unknown Tasmanistanian 16year olds at the moment, and as soon as the debt is paid off, we will buy the Villas of the world, but I think we need a wake up call and stop overanalyzing how much does Arsenal owe, are the flats selling well, is the dividend for the board too high, etc. I believe that this is just the way Wenger works, and we should not fool ourselves that this will change as long as he is around. In no way am I saying that he should be sacked, god forbid, I just think that this debt thing has nothing to do with the man’s agenda.

]]> By: ArseChicago http://www.7amkickoff.com/2010/stoked-on-profits-and-losses/comment-page-1/#comment-15027 ArseChicago Fri, 26 Feb 2010 18:54:35 +0000 http://www.7amkickoff.com/?p=4666#comment-15027 So I'm currently reading the full report over lunch here and had to pause to do some math. Currently there is 13MM pounds of Highbury Square-related debt outstanding and there are 130 apartments to be sold. From what I can find online, the apartments start at 250,000 pounds. For illustrative purposes, let's assume each remaining one sells for 250,000 pounds. That gets you to 32.5MM pounds. Take 13MM of that to pay down the debt and right there the remaining activity could spit out at least 20MM pounds for the club to do with as it pleases. Here's hoping they sell the rest and take that profit to splash on someone to man the striker spot next to Van Persie for the next 5 years or someone to be Vermy's partner for the next 5. So I’m currently reading the full report over lunch here and had to pause to do some math. Currently there is 13MM pounds of Highbury Square-related debt outstanding and there are 130 apartments to be sold. From what I can find online, the apartments start at 250,000 pounds. For illustrative purposes, let’s assume each remaining one sells for 250,000 pounds. That gets you to 32.5MM pounds. Take 13MM of that to pay down the debt and right there the remaining activity could spit out at least 20MM pounds for the club to do with as it pleases. Here’s hoping they sell the rest and take that profit to splash on someone to man the striker spot next to Van Persie for the next 5 years or someone to be Vermy’s partner for the next 5.

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