The worst kept secret in world football is finally a fact, Arsenal have announced that starting in the summer of 2014, Puma will be the official kit supplier. Terms of the deal are undisclosed but are rumored to be £150m over 5 years. That works out to £30m a year and an upgrade of over £22m per season on the Nike deal. This is the biggest kit deal in England and signals some real changes at Arsenal in terms of signing new commercial deals and bringing in boatloads of cash.
The deal, along with the £150m Emirates deal last year, signals that the club have turned a corner of sorts. Arsenal needed cash up front when we built the new stadium and as a result the management team locked the club into agreements which were front-loaded and ended up looking poor as the years went by. But the club are now earning an estimated £60m a season on their shirts alone (Emirates + Puma) and it’s looking like Arsenal are going to have a lot of dry powder for the foreseeable future.
Gazidis and Wenger have gotten a lot of stick over the last 8 years but this is really one of the most incredible sports stories I’ve ever witnessed as a fan. In America, the owners almost never put money into a club. Instead, they take money out of the clubs, they threaten to take the team to another state if the local taxpayers don’t fund their new stadiums, they get tax breaks, they get land gifted to them for parking, on and on. The idea that an American sports team would build their own stadium, out of pocket, and include affordable housing, like the Queensland Road project is doing, is nearly unimaginable. And to do that in an economic landscape where they are competing with oligarchs and whole countries, whilst maintaining the high level of football required to get into the Champions League is beyond astounding.
And let’s make no bones about it, this project, up to now, has been largely funded by the fans. Arsenal fans pay the highest ticket prices in the land and half of Arsenal’s income is generated on matchday. Gazidis was keen to point that out today:
Ivan:”Look how far we’ve come. Not from outside benefaction, not from state funding, but the efforts & energy of people who love this club.”
— gunnerblog (@gunnerblog) January 27, 2014
And Arsenal are keenly aware that the fans are upset over ticket prices but they aren’t looking like they are going to lower prices any time soon. Because the problem is that unlike Chelsea and Man City, Arsenal’s ticket prices aren’t subsidized.
Ticket prices are a reflection of operating costs at Arsenal. That means that player transfers and player salaries are the single biggest driver of Arsenal’s ticket prices. In a quote that will go largely unreported, Gazidis responded to the ticket price question by saying that player costs are the real culprit.
No matter what great deals these clubs keep getting, the money goes straight into the players and their agents pockets. £30m increased TV revenue? Straight to the players. £30m from Emirates? Straight to the players. £30m from Puma? Let me put it this way: remember when Wenger said that Diego Costa would cost £145m? Costa has a £32m release clause but after taxes, agents fees, and salary, the boss reckoned £145m was Costa’s true price tag. That’s your entire Puma deal in one player. Pretty incredible, except it’s not really all that incredible. It’s just what players cost these days.
And that’s the thing: you have to have the expensive players to compete for trophies, winning trophies means better endorsements, and so on. But you can’t buy the world’s best players and reduce ticket prices at the same time. At least, I don’t think you can. So, it’s ironic that there are fans who demand exactly that: complain that the club has cash on hand and should buy expensive players, then turn around and complain that ticket prices are out of control. You can’t have both.
Something has to reign this in because as it stands it’s unsustainable. And here’s Arsenal, a club trying to spend sustainably in an unsustainable economy.
Think about it: Chelsea currently have 23 players on loan. They are literally hoarding talent at Chelsea and nothing is stopping them. Unlike American football, there are no salary caps, no player registration caps, nothing to stop clubs like Chelsea, City, Monaco, and PSG from literally buying up all the world’s talent and loaning it back out to clubs inside their own league thus skewing the competition.
And if you’re one of those folks who believe that FFP will reign this in, here’s Gazidis again shedding light on the situation:
Ivan Gazidis had lunch with Michel Platini last week, with FFP on the menu. IG: ‘We remain healthy sceptics’ [on the subject].
— Philippe Auclair (@PhilippeAuclair) January 27, 2014
And I see no end to any of this. If anything, player power is gaining in leaps and bounds. It was leaked yesterday that Wayne Rooney is consulted on Manchester United transfers. That was one of his demands two years ago and Sir Alex Ferguson told him to get stuffed. If you remember, that was one of Robin van Persie’s rumored demands, that he wanted Arsenal to sign certain players, like Afellay. But under Moyes, who must be terrified of Rooney, the Roo gets his wishes.
And it was also leaked (in what is literally the most incredible piece of “reporting” I have read in my entire life) that Manchester United basically didn’t do anything in the Juan Mata deal. Mata, who is friends with Abramovich, Mata’s father, and some third agent brokered the deal. Ed Woodward sent them a fax and then refused to take any Chelsea phone calls! Manchester United is the biggest club in England. Who is in charge of Manchester United? The players? That is the scariest thought imaginable.
It’s pretty clear that players and their agents have more power than ever, thanks to the richest clubs in the world spending freely as if there is no tomorrow. And there will be no tomorrow for football if something doesn’t reign this in. Because here we are on the eve of Arsenal signing the biggest shirt deal in England. Arsenal just raked in £150m, to go with the £150m that they got from the Emirates deal.
In other words, two Diego Costas.
That has to be the definition of unsustainable.