Tag Archives: Finances

Image and phrase "Cesc la Vie" copyright 7amkickoff.com and Tim Bostelle, no use without permission

Follow up to yesterday’s Liverpool-Arsenal article

Yesterday’s article has sparked a lot of debate, some name calling, and an interesting reaction from Arsenal fans on both side of the supposed divide. I want to follow up on a few thoughts.

1. The release clause: I think the Liverpool fans’ absolutist position on Suarez not having a release clause is based solely on the PFA interpretation. But it’s important to remember that the PFA ruling is just one interpretation. The other interpretation is that John Henry has bragged that Suarez had a release clause, Suarez and his team of lawyers believed they had a release clause, and Arsenal and their team of lawyers believed he had a release clause. What never happened was an actual test of that clause, through the courts, which Henry knew that Suarez wouldn’t do in a World Cup year. So, based on my evidence, I firmly believe there was a clause and that Liverpool refused to honor that clause. Based on the other side’s evidence, likely the PFA interpretation, they say there was no clause. Since we will never see this tested in court I can stand by my interpretation and be correct and so can they.

2. There’s a common misinterpretation that I am arguing against Arsenal spending money. This is almost certainly because I included the paragraph at the end about Arsenal’s bad luck with injuries and had earlier ridiculed Liverpool’s spending. This misconception happens because certain arguments about Arsenal and spending have become cliched. But here’s something you might not know: one can hold two beliefs simultaneously. For example, the argument that Arsenal’s injury record hurt our chances in the League is rock solid. But so is the argument that Arsenal should have bought more this summer and perhaps even in January.

The fact is that I have been calling for Arsenal to spend money for two years now, to the tune of £100m+. This is money that the club have (they don’t have to rack up debts) and with their public proclamations of newfound financial ability and dry powder have fashioned into a golden albatross to hang around Wenger’s neck. One could, then, read my lamentations about Liverpool’s spending not as a cry against spending but a cry in favor of spending because it is, it is again both.

Part of the reason Arsenal had such a huge problem with injuries in midfield was because, as Wenger himself admitted, Arsenal didn’t rotate enough. Ramsey, in particular was a huge miss and Wenger said ”Maybe we overplayed him a little bit, we should have rested him before he was injured.” Since I know how this works and that you won’t like that quote you can also go back to early December, before the injury to Ramsey, and see that Wenger knew Ramsey was getting tired. He even rested him on the 11th, just two weeks before he picked up the strain.

And there were a lot of injuries all at the same time, plus Giroud was caught with another woman, Flamini’s suspension, and suddenly things went from bad to worse. Some of that is down to luck, some of that is down to the fact that we didn’t buy a Luis Gustavo or Sven Bender in the summer, some is down to overplaying certain players, some is down to buying Kallstrom in January and having him come to us crocked. It is all of those things and spending some money would have helped a lot of them.

3. Here’s what I want to say about Financial Fair Play – Swiss Ramble thinks Liverpool will make it just fine under the FFP tests because they will be able to include their Champions League money, their increased revenue from partnerships, and their increase in prize and television money. Still, though, he was clear that they will not be able to write off the stadium planning money and that they will need to include the accounts for the last two years and their losses of £90m. We have to see how much more revenue they are bringing in with their new deals but I almost wonder if they will be able to spend a little on transfers and still break even? What they won’t be able to do is lose £50m again next season and not run afoul of FFP.

Conclusion

The reaction to this article has been interesting. I wrote it in a very open fashion which encourages multiple interpretations because that is how I feel — I see almost every side of every argument about Arsenal at the moment. This open writing allowed people to read into it whatever they wanted. For the Liverpool fans they wanted something to get upset at because that’s where their comfort zone is. For others they could read into my article a sense that financial prudence is the right way to go, or that financial prudence is the wrong way to go. But what is truly fascinating is that in over 100 comments I didn’t read a single person griping about my assertion that Arsenal should have done more to keep Cesc. It was, for me, the most controversial position in the whole piece and yet no one seemed to notice because they were too busy arguing contract law and the morality of spending money. 

But winning the League isn’t about moral arguments or arguing contract laws, it’s about having the best players, keeping the best players, and getting the best out of those players. Something that Arsenal haven’t done well for at least 4 years now.

Qq

What is the sound of one Stan talking?

Mystery buyers seek to destabilize Arsenal’s owners ahead of North London Derby

The Telegraph are reporting tonight that unnamed Qatari and UAE investors are poised to launch an astonishing £1.5bn takeover of Arsenal FC. And make no mistake about it, this announcement has only one intention: create the talking points needed to destabilize the cub ahead of the biggest game of the season.

Tomorrow morning, millions of Arsenal supporters will be getting ready for the big game, a game which should just be about football but which we all know could do much to swing the club’s fortunes from feeding at the Champions League trough to “Being Liverpool.” Those fans should all be talking about how Wenger is going to stop Bale or how Theo Walcott is going to unlock Tottenham’s defense but instead they will almost certainly be arguing the finer points of ticket prices, whether Kroenke is the right owner of the club, stadium debt, and whether Arsenal could still remain compliant under UEFA’s Financial Fair Play rules should Arsenal fall into the hands of what Nick Hornby called the Sheikhigarchy.

The bidders carefully leaked out the plan; double Kroenke’s money, pay off the stadium debt, fire the board (especially Gazidis), fire Arsene Wenger, and give the new manager the money to invest heavily in the squad. The knock-on effects, they say, will be to keep homegrown players like Jack Wilshere, push Arsenal back into the elite of world football, and bring back the “true fans”.

Doubling Kroenke’s money is easy, they have said that they plan to offer to pay him £20k per share and as a result will put about £400m profit in his pocket. Paying off the stadium debt, also easy, just pay it off. Or so they say, but it’s a limited time offer, act now.

The timing of this announcement isn’t coincidence. The “bidders” know that by releasing this information on the evening of the North London Derby they will set the narrative about Arsenal for the next six months. They even reveal as much in their official quotes

We will not bid for Arsenal if they go into decline. Kroenke and Usmanov will not get this kind of valuation if Arsenal do not succeed and will not get this kind of valuation ever again.

“If they go into decline” = “if Arsenal lose tomorrow, you should be worried that we will not make another bid for this club”. It’s intended to quicken the mind, focus it on the main question; Kroenke, in or out?

I have no doubt my friends will be dipping toast points in their eggs tomorrow before the game and musing over whether they would rather have Kroenke or “anyone but Kroenke” as the owner. That is precisely what this statement is intended to do. It will plant the seed in the mind of the average fan who might be wary of Usmanov taking over but who can now look at this as an “unnamed” owner. Who would you rather have, Silent Stan or Mega Bill?

Who knows whether Mega Bill is a great guy, whether he would be good for the club, whether he is a fan of football, whether he would have tea with the Arsenal Supporter’s Trust, or even if Mega Bill isn’t just Usmanov in disguise? It’s not important right now, the important thing is that they get you thinking that Kroenke isn’t the right guy.

Along the way they throw out the populist bone and remind everyone that ticket prices at Arsenal are expensive. Their solution will be to lower ticket prices. How, exactly, they plan to do that and have further money to invest in the club and not run afoul of Financial Fair Play is not revealed. But they want to bring back the “North Bank feel” and some of the “true supporters” — buzz words, PR spin and wonderfully placed to hit two major points that have been under great media scrutiny all year.

They also make their intentions over Arsene Wenger’s future very clear:

No big club can go eight years without winning anything. No manager of a big club, not even Sir Alex Ferguson, would have survived eight years without winning.

As I said in my match preview, this game always has the rare ability in the season to set the narrative for Arsenal Football Club. In lean times Arsenal fans could feel good as long as they got one over on Spurs. In fat times Wenger went 11 years without losing to them and fourth place didn’t feel so bad as long as Arsenal finished the season above Spurs. We even coined a term “St. Totteringham’s Day” as an annual celebration of our dominance.

But this year follows on a season in which Arsenal were the closest they have ever come to being overtaken by Spurs in the League Table during Wenger’s tenure at the club. Spurs are above Arsenal in the table right now and tomorrow’s match is the proverbial “six pointer”: a platform on which they could build and overtake their rivals or which could see them seven points adrift.

But sadly, before and after this game I suspect that the fans won’t be talking much about the actual football. Instead we will all be debating Financial Fair Play, stadium debt, Wenger’s future, and whether Kroenke is the right owner.

It is a perfectly crafted leak from start to finish and it hits all the major points at just the exact right moment laying out all of the talking points for everyone to mull over before and after the game. Van Persie is mentioned, ticket prices, Gazidis, lack of trophies, Kroenke’s supposed greed… on and on every point is hit perfectly.

Make no mistake about it, this is the first shot in a hostile corporate takeover. Should Arsenal falter in the North London Derby I expect to see stickers with “Kroenke Out! Nameless Rich Benefactor In!”, “We want our North Bank back!”, “Save Jack Wilshere”, and the ironic “Kick Greed out of Football” litter North London.

Qq

Where can I watch Arsenal on television?

How the £30m in increased television revenue is shrinking by the minute

Back in the Fall of 2012 the Premier League announced a bumper new television contract that was set to top £5bn for the first time ever. This new contract included huge revenues from domestic television rights and crazy new money from overseas television rights. My American readers, for example, will be happy to learn that the Premier League has finally outgrown the shackles of Fox Soccer Channel and will now be part of the NBC Sports family.

The reason I break both of those domestic and overseas rights out as different contracts is because they are divided among the 20 teams (minus parachute payments for relegated teams) in two different ways. The domestic rights are divided on a 50:25:25 scale with top teams taking more money and bottom teams less based on appearances while the foreign rights are divided evenly among the 20 teams. What this means in practical terms is that the winners of the Premier League will be earning £26m more from the domestic rights and the losers will only earn £13m more. But when you add in the additional £7m for foreign rights that every team gets (us bloody Yanks!) the League winners still “only” earn that same £13m more than the bottom team. That means that the worst team in the Premier League is now guaranteed an additional £20m per year. And… the relegation teams also get a kicker to their parachute payments of about £8m the first year £6m the second, and £2m the third.

From an Arsenal standpoint this means about an additional £30m per year or about £10m more than the League losers. But this fact that suddenly every team in the Premier League gets at least an additional £20m in television revenue every year had me wondering. Is that actually additional revenue or is it just inflationary? Let me put that another way. Santi Cazorla cost Arsenal £16m in transfer fees and starting next year every team in the Premier League will be able to buy their very own Santi Cazorla, but there’s only one Santi Cazorla, what happens to the price of Cazorla in that situation?

Granted, not every team will want a Cazorla. Also, not every team starts in the same financial situation. And further, some teams will not really be competitive for players like Cazorla because they can’t give him the higher profile (read: more endorsement money) that a club like Arsenal can offer. And finally, of course there is the additional £10m in TV money that Arsenal get. So, there’s still a competitive advantage for the big clubs like Man U and Arsenal.

Where can I watch Arsenal on television? GREAT MOMENTS IN GUNNER’S HISTORY: Vassiriki Abou Diaby nearly kicks John Terry’s head clean off.

I warned of something similar before when the Premier League introduced their foolish “25 man rule”; that such a change would only drive up the price of English players. And of course what we have seen is an explosion in prices teams are willing to pay for that all important “homegrown” passport. And I’m saying something similar now: this so-called “extra” money from television revenue is only going to drive up the prices for the types of second tier players that Arsenal shop for.

Cazorla at £16m already looks like a good deal but in two year’s time, £16m for a player like Cazorla will look like an absolutely genius buy. And Michu at £7.5m will look like some kind of mastermind.

So while Arsenal fans are all excited by our “extra” £30m, the rest of Europe is quietly stocking up on caviar and champers. Because with all of the analytics, the cash, and the exposure of the Premier League to the global market, uncovering the next Cazorla is going to be increasingly more difficult. And uncovering the next Vieira will be impossible. Well, it won’t be impossible, everyone will know exactly who he is and the big, big money clubs will be ready with the big, big money offers. Getting the next Vieira for next to nothing is what will be impossible.

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