Arsenal Release Financials to a Weeping and Gnashing of Teeth

Usmanov, your money is no good here

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.


  1. The cash on reserve is presumably operating cash flow, with turnover of £300m and profit of £35m, that implies outgoings of £270m a year. Whatever the figure, they need to have plenty of cash on hand to keep the club running and certainly can’t allocate too much of it towards transfers and additional wages. However it goes to show we are in very rude health financially which should ensure long term stability, and it also suggests the money is now there for Wenger to go out and make a few killer purchases like Arshavin and Vermaelen. I’m in complete agreement with you about our potential weaknesses, but whether the right players are available for a decent price is another matter…I for one would cry if we paid £22m for Lescott!!

  2. Hey fella

    Good post. I am as frustrated as the nexy Gooner, i guess, but we were told things would be tight when we moved for several seasons, although the profits and talk of money being available leads us to the conclusion Wenger simply refuses to spend the money, as if he is on some stubborn as fook, one man mission to do it his way and to hell with the consequences!

    I cannot see that eith though, as Wenger has been an advocate of splashing the cash when needed. So, unless he has changed dramatically, the club are keeping hold of the money for a reason; to pay off the debt quicker, or to safe guard against the loan payments they need to make next April?

    We are light in defence and midfield and I like the fact you refuse to slate or scapegoat our players. Far too many blogs are prone to this and I hate it.

    We just have to have faith, till january t least, in the current team and we have started reasonably well, although the news Denilson is out for 2 months, once again shows how light the squad is. But, maybe, just maybe, it will give a chance to Ramsey, or merida?

    Good work.

      1. Two months for a fractured back sounds optimistic to me, especially as players, once the back itself has recovered, often pick up further problems elsewhere – hamstring, groin, whatever. How long was Gilberto out? The best part of a season as far as I remember, so I don’t think we can count on Denilson being available to take Song’s place in Jan-Feb. Anyway, Song is our only decent cover for central defence, which means an injury to Vermaelen or Gallas could spell very big problems indeed. For the holding role there’s only Mark Randall (please not),Gibbs (who has played in that position for the under-20s) and Coquelin, who, though wonderful, isn’t old enough for Chelsea, Barca, United, etc. He was barely old enough for the Carling and got taken off after 70 mins against West Brom because he was knackered. I see why Wenger won’t buy an expensive, mediocre, cup-tied holding midfielder when we’ve got Song, who is still very young, and Coquelin who looks like he’ll be everything you could possibly want in two-three years time. But it’s a big worry.

        So is the striker situation. We won’t buy Chamakh in Jan. He’s cup-tied, he’s an African, what would be the point of wasting a million on him when we’d get no use out of him and he’s free in the summer?

        Same old story, isn’t it?

  3. Good post and nice to see support for the manager and team.

    The high cash levels are often a requirement of big loans: i.e. they lend you £300m but require that you always have £50m of cash at any time. As the development loan is paid off, I expect that requirment will ease, but the £100m certainly could not all be used as of today. This would not apply to the remaining mortgage secured on the Emirates.

    AW has talked of this being a critical year. I think it is for 2 reasons: firstly with the flats now selling the financial squeeze on the club looks to be ending and secondly the “kids” are now old enough to win or be moved on. So if a few don’t step right up this year, it will justify in AW’s mind that he takes them out of the team and buys the best.

  4. The figures presented in the accounts are for general consumption, and paint a relatively rosey picture. Cash-on-hand and other liquid assets need to be maintained at a relatively high level. I do not know off-hand the wage bill, but guess in the region of 1-2 million per week.

    Payments have to be made on time to the UK Treasury, for VAT, Income Tax Deductions, and National Insurance contributions. That has to be one hefty bill. You don’t want to be owing them money.

    Take in to account the possible problems that could develop, then I say things look about right.

    I know we can all berate Le Boss for not buying. But their is no point in buying for the sake of it. Also buying in to specific positions can have a debilitating effect on existing squad members. It’s not all about skill and technique, it’s also about personalities. (Ade, need I say more).

    There is no knowing how the economic position will pan out, for all the cries of ‘new shoots’ and ‘over the worst’ I am not convinced we have seen all the skeletons. Tax take in the UK will have to increase, and it’s certain that the Football Clubs will not be forgotten when that happens.

    If extreme caution is the name of the game to ensure long term benefits, and a hedge against ‘the slings and arrows of outrageous fortune’ then so be it.


  5. Serious injury to Djourou and Denil + Song away at ACN + lots of money + reduced debt = new CM or CB?

    Perty please. Only for peace of mind, I don’t much want to see Diaby “playing” holding mid. Hehe.

  6. Money from sponsorship deals was front loaded. Cash accumlated years ago has to be posted in P&L each year. Until we finish the Emirates sponsorhip profits will not always equate into the extra cash.

  7. Expressions elude me to describe the majority of commenters here so far. Will, GunnerSinceIWasAGlintInTheMilkman’sEye, Toby, viva los gooners, all have contributed very good comments such that I feel there is not much else to add. However, I am confident that should any player become available who can truly add quality to the team at a reasonable price, Arsene will be there like a shot to sign him. It must be remembered that signing a player for X amount of money is not the only thing to consider. The player’s wage demand and the dent it is likely to make on the club’s cash reserve, as well as the bump it is likely to add to the expenses, should all be carefully considered as well.

    Good to see that our club is in good financial health. Up Arsenal.

  8. I recall seeing that Man United and Arsenal had some of the lowest wage bills when viewed as a percentage of total turnover (not nominally). There are a lot of youngsters on this club that will surely be due long-term deal extensions with wage increases, so that has to be a consideration. Second, we’re still in a recession, or at best, a period of great economic uncertainty. Third, the transfer market was severely inflated. Even though some of the players available would’ve helped us, I can’t say I’m opposed to adhering to discipline in these frothy times. My thinking is that Real Madrid and Man City could take a breather starting this January and the summer’s offseason, however, Man City seems to have an unlimited pool of resources with which to continually upgrade, on paper, the talent there. The point is, without those two clubs upping the ante and with some more clubs surely to post worse financial results this year than in years past, my guess is the board is thinking some semblance of sanity may return.

    With regards to transfers, it seems that the English fan base is as infatuated, if not moreso, as American sport fans are infatuated with trades, free agency, the draft, etc. It’s why fantasy football is so popular; everyone has an opinion and wants to share it. Instant gratification. Today’s society, particularly those of us that live in the lands of plenty, think problems can be solved with money and very quickly. With regards to this, though, I think Arsene and Arsenal are conducting business in a balanced and sustainable way. If you’re a club, like Arsenal, that doesn’t have (or want?) the access to funds of a Man City or Chelsea or Real Madrid (we’ll see how they fare, though), you’ll have to rely a lot on developing youth, as we are trying to accomplish at the moment, while also making selective add-on purchases, again, as we have done. I really do believe that’s why we’ve been more successful in recent years attracting the best youth. If you’re a young player that has his pick of clubs, would you want to sign with Chelsea or Man City, knowing your path will likely be blocked each year by the flavor of the year offseason signing, or will you sign with Arsenal, a club committed to developing and throwing right into the fire, its young talent. While I’d agree that we’re slightly underweighted in terms of necessary “veteran” or “noteworthy” talent, I do think that generally the Arsenal approach is the most sustainable given the financial dynamics of the ownership here. Again, that’s not to say that I don’t think that what stands between us and the title is Karim Benzema manning the forward position for Arsenal for the next 8-10 years. (Can you imagine? 🙂 ) Things will continue to be interesting here, particularly after this season. Honestly, I’ve no idea if Cesc or Wenger will be with us next season, but let’s not get too far ahead of ourselves; this season’s going to get even better.

    Lastly, as for Highbury, as I wrote to some over an email before, it’s appearing that we probably should’ve converted it into the Arsenal Infirmary given the mindboggling gaggle of injuries we continue to accumulate.

  9. Nothing to comment on Financial matters, I just wanted to say: Have you noticed what an impact sub was Eboue on sat’s match?! hehe. Plus, TRAVIS, re: fantasy league, is still the rule of no top4 teams nor sp*rs players still holding?

  10. just got my shirt. all of my roommates think it is amazing. the ladies, well hopefully they will feel the same way. thank you for making an American Arsenal fan feel not so very alone all the time. I am getting goddamn tired of all the Rooney jerseys I see on campus.

    Well, the financial situation isn’t surprising. At least Gazidis seems keen on spending, especially compared to Wenger. Could we be looking at a situation where Wenger is moved to a Dein role and a more hands-on (aka transfer oriented or willing) manager is brought in? I doubt it. Wenger is one of the best in the world. We need more quality in midfield and in the back four, and we don’t need it in the form of 17 year old prospects. Le Sigh.

    Anyway, the shirt is terrific.


    The Financial Times piece explains how Arsenal went from 133mil to 47mil in the ‘blink of an eye’ on the property deal. The devil is always in the details, eh Bernie?

    With regard t the Arsenal injury saga (er, soap opera), it reminds of an old Blues lyric: “If it wasn’t for bad luck, I wouldn’t have no luck at all”- Albert King. That could become Arsenal’s theme song in fact.

    I watched some of that Man City-WMU game today. I have to say that the ref was atrocious if you’re a Man City supporter and spying on this site. Your boy Tevez scored but WMU were allowed to kick the shit out of him and I didn’t see 1 yellow card.

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