Yesterday, Arsene Wenger reminded everyone of the character, history, and intent of Arsenal Football Club. His simple,clear, concise statement was “We are not Chelsea.” It’s a simple statement and yet answers several fairly complex questions. What is the purpose of the club? Why can’t Arsenal just give Flamini what he wants? And, what should fans expect from the offseason?
I remember feeling very disappointed with the club a few years ago. It seemed like every player that Arsenal were linked to went to Chelsea — and for double the price that Arsenal were offering. Shaun Wright-Phillips, Essien, etc etc. all signed big money deals with Chelsea. What was worse about it is that Chelsea was winning titles too. Instinctively, I wanted Arsenal to match Chelsea tit-for-tat in the transfer market; capture a big name and get back to winning titles.
But we are not Chelsea.
In order to attract those players Chelsea had to offer huge transfer fees and pay extraordinary salaries. All of that liberal spending led to the revelation in December that Abramovich has written off a stunning £270m in debts. That was in addition to the £440m he is estimated to have spent acquiring the club. What’s a billion pounds to Roman? 1/10 of his fortune, that’s what.
I understand what Abramovich is trying to do: he wants to make Chelsea into a footballing world superpower. He figures that if he spends enough money now, he’ll be able to build the brand up and sell enough tee-shirts and other swag to make up for it all in the long run. Maybe that will work, maybe not, I’m not privy to the Chelsea books so I can’t say for certain. But Wenger brings up a great point; “what if he dies?” Forget dying, what happens if he just loses interest or if he starts to see that his investment could never possibly pay off?
This is important because all of these huge salaries that Chelsea are paying are being leveraged through debt instruments (bonds) against the club. The Chelsea board assures the fans that Roman is trusted never to ask for those bonds to be paid. But if something happens, and lets say that he honors his “promise” and doesn’t collect those bonds, there’s still these enormous salaries being paid which the club — even with all their recent success — cannot afford to pay. If they could, they would be piling hundreds of millions of pounds into bonds every year.
You can see how the situation could get out of control real quick: players sold (hopefully their worth what you paid for them!) the team slowly gets worse and worse, until one day you’re staring at relegation. From “top four” to bottom four in just a few years. That’s the scary prospect.
But we are not Chelsea.
Arsenal have a lot of debt from building the new stadium, Wenger puts it at £360m. This debt is currently the limiting factor on transfers, pay scales, and all the rest. Flamini was reportedly offered £144,000/wk in wages by AC Milan. If those reports are to be believed, Wenger couldn’t pay Flamini £7.5m/yr if he wanted to because as soon as he did, he’d have half the team asking for more money and that would mean piling more debt on. So, until that debt gets paid down the wage structure must stay pat or as Le Boss says: “It is not that you cannot respect the wage structure, we cannot afford not to do it.”
There’s a light at the end of the tunnel. First, the new stadium is generating massive revenues. There are nearly twice as many people attending Arsenal matches than there were at Highbury. Even though the bigger stadium was a long-term investment it’s starting to pay off now: imagine what that payout will be in 10 years? Second, the old stadium is getting ready to help pay off a huge amount of that debt. I’m unclear on how this works but there’s something like £200m set to be released from the Highbury project and that will go straight to debt obligations. And third, Arsenal have Arsene Wenger.
You’re the reason for the first, keep up the good work and stay the course. Now is not the time to jump ship. The Highbury thing is just something that has to happen. I guess you could help, if you can buy a condo. But really, the club is in charge of that. And to the third, I trust Wenger to find the right players to make the team competitive. His ability there is unparalleled; just look at Bacary Sagna. There is no person I trust that end of the business to than Arsene Wenger.
So, in this off season, as I have said time and again, don’t expect any big signings. If there was a local place that took propositions I would bet that Arsenal buys just one player. And further bet that that person is someone obscure: another defender. That’s it, anything else that Wenger does will be to keep the players he has. With all this debt, it just doesn’t make good business sense to go out and buy some expensive player, just to appease a few cranky fans.
And in the end, that’s just it; Arsenal FC is being run like a business. Revenues generated are used to pay debts and then build the club. The Chelsea model is not being run like a business. It’s being run like the bank account of some dumb rich kid.
We are not Chelsea… thank God.