But the sons of the kingdom will be cast out into the outer darkness; in that place there will be weeping and gnashing of teeth — Matthew 8:12
Some things are easy to explain, some things are difficult to explain, and then there’s the financial dealings of a multinational, multi-million dollar sports corporation. It’s not only difficult to explain what’s going on inside these giants but it can be downright maddening. Take the Colorado Rockies as an example, they were asked once, a long time ago to open their books and when they did the famously showed a loss on beer sales. At Coors field, the Colorado Rockies couldn’t make a profit off their beer sales.
So, you’ll pardon me if I take today’s latest report of mega profits from the board with a huge grain of salt. I’m not accusing anyone of cooking any books and actually for the remainder of this blog, I will be operating under the assumption that everything they have said in their report is true. In fact, I will be operating under that assumption that everything they have said over the last few years has been true. Still, in the back of my mind something seems off.
So, what are the assumptions?
- Arsenal reported a cash reserve (cash on hand) of £99.7m — this is consistent with their previous reports, though the amount it grew (£6m, £3m of which is from interest, despite record profits) is not.
- Turnover up £90m over last year to £313m, partially from increased match day revenue (£5m) some from commercial and retail and the largest chunk from property sales.
- The debt on the Highbury Square development has incredibly dropped almost overnight from £133m to a mere £47m, that remaining debt has been refinanced and is not due until 2011 and the board are talking about profits again.
- Profits after tax, and crucially before the sales of Adebayor and Toure, reached an astonishing £35m.
Eye popping stuff, really. No other club in the Premier League posts profits as far as I know and certainly no other club has shown the profit that this club has shown. And they have each and every one of us to thank. We buy the season tickets, we’re red level members, we buy shirts, we watch them on the TV, and so on: a large portion of that £100m that they have in cash on hand come from our pockets.
You’re welcome. Now, what are you going to do with that huge reserve? Ivan Gazidis gives the club’s best answer in the form of a free video on the club’s web site:
The club doesn’t exist for the sake of having sound finances. That’s not an end in itself. The financial stability, the financial health of the club, forms the platform for on-pitch success and actually the focus is really on the team having success.
The club has a philosophy of re-investing all of the money it makes back into the club. Money is not taken out in the form of dividends to shareholders so, it’s important to understand that all of these financial results that we are talking about benefit the club. I think that there’s a little bit of a miscinception that we haven’t invested in the club.
It’s at that point where the free video cuts to Arshavin, Vermaelen, and talk about paying the current squad as a form of re-investment. My regular reader knows that I am not going to take the piss out of anyone on this squad. I like them all, even if they have poor matches, and I think they all are a vital part of this team. But I still think we’re a bit shy in certain areas of the pitch, and I’m not alone in this.
I love Alex Song, I’m even thinking that his might be the shirt I buy this year (more money to the club!) but when Alex leaves for the ACN in January who will patrol our midfield? I’m not taking anything away from Diaby or Nasri or Denilson, they are all fine midfielders but none of them can go toe to toe with a big center forward like Kenwynne Jones, or drop back into the center back spot (as Song does) when Vermaelen or Gallas go forward.
And at the center back spot, the word “thin” doesn’t quite describe the situation. Due to injury and lack of spending, at this point we are forced to play Gallas and Vermaelen in every match. Yes, we have Senderos as cover, but after Senderos, then what? Silvestre? I guess we’ll see of TV5 and Gallas can play in all 50 matches.
All that said, this is all old ground. Obviously the money was there and wasn’t spent but we all knew that. The club has £100m in cash in boxes in the board room, plus the £40m from the sale of Ade and Toure, and I too wonder what they are doing with all that money? I understand, deeply, the emotional position that some fans take over this issue but I guess that unlike some people I’ve just resigned myself to the knowledge that they just aren’t spending the money. I don’t know why, they won’t say, but they aren’t.
Insanely frustrating, I know.
The one really good thing that came out of all this financials talk was an explanation from Gazidis as to why the club didn’t just sell Highbury to a developer. It’s something I speculated about last week and here he hits all the notes that I sounded then:
The club, in keeping control of the development, made sure that 93 years of Arsenal history, all of that heritage that imbue every stone in that building will be preserved, forever. So we have the marble halls, we were there last Thursday looking around and seeing the way this has been really done with respect for the heritage and tradition of the building. We can now say with confidence that all of that history will be preserved forever and I’m not sure that would have been the case in the same way, had it been given to an outside developer.
This is why I just plainly trust them, I guess. No one on the board is taking a profit from the club and they clearly love this club and the history behind it. They are Arsenal fans, probably bigger fans than you or I, and they clearly want to the club to be successful, in the trophy room, not just in the safe deposit box.
I just wish they would tell us the plan because as it stands, with the squad thin in two key areas, £100m on hand, £40m added in from Toure and Ade, the Highbury Square development looking like it will make a profit, and the club generating some £30m a year in after-tax profits… something doesn’t seem to add up.