Club piles pressure on players to agree to cuts

Contrasting reports this morning over Arsenal’s contract negotiations and it’s unlikely we will ever get the truth. But plenty for folks to talk about if that’s their want. Seems like even when there’s no football, there’s always football. Even if it’s just a soap opera of football.

Athletic journalist Raphael Honigstein spoke with Mesut Ozil’s agent Dr Erkut Sogut about contract negotiations and several other issues on his Steilcast Podcast and it’s an excellent listen. Even though he’s Ozil’s agent he doesn’t speak about the whole Ozil deal and instead Dr. Sogut brings a balanced perspective to the entire affair, skirting around the particulars but raising some very important points.

The first is that in these negotiations, the club needs to be transparent. Why, specifically, do they need the players to gift them money? This is a question I’ve raised here and for some reason it feels like a minority position. The much more prevalent argument is that footballers are greedy and that they don’t care about the club.

Erkut speaks directly to that issue, saying that both the players and the management want what’s best for the club but the players have a right to make informed agreements. How much is the owner putting in? What is the money being spent on? Will there be a transfer cap? Will new players have a salary cap to prevent this sort of thing happening again in 6 months?

But for me, more importantly, Dr. Sogut raised the issue of coercion. I’m not going to speak to the law in England but Dr. Sogut said that having Arteta bring the pay cut to the players might have tainted the process. How can a young player like Saka or Guendouzi refuse this pay cut when their manager is asking them to take it? He is after all the one who decides who plays and who doesn’t. I’m sure Arteta handled it well but Erkut suggests that such agreements might not even be binding.

Honigstein gets Sogut to contrast what’s happening in England with what happened in Germany, where players agreed to a deferment. Part of what makes the Arsenal cut so odd is that they want a permanent cut. But we literally don’t know what the financial future of the club will be so a deferral makes a lot more sense than a permanent cut; because the club can sit down with players six months later, open the books, and say either they took too much or too little and the players can be refunded some of their money or asked to take deeper cuts – based on the new evidence.

But that last bit is the huge key here in all of this: based on the evidence. The club needs to be transparent. They are the ones asking the players to basically pay the owner millions of dollars in order to keep his business profitable. The players deserve to know exactly what that money is going toward, how much the owner is putting in (not just in loan guarantees), how much the management team are taking in cuts, and so on.

And back to that issue of coercion for a second, I find it odd that all the sudden Mesut Ozil’s name has been leaked to John Cross. This feels like the club trying to put public pressure on the player. And it follows on what amounts to years of regret on the part of the club for handing Ozil his massive contract. They seem to have wanted Ozil out for a few years now and they also seem to be stepping that pressure up.

We don’t know why Ozil is dragging his feet, from the interview with his agent I’d say it’s because the club’s been less than transparent and is acting in a way that amounts to putting players under duress. But maybe he has other reasons? It’s simply unfair of us to assume that he’s just greedy. Ozil makes a lot of money, for sure, but he is not just one dude, he’s a corporation. He has obligations to people as well. Is he supposed to fire the people who work for his charities, to give £2.25m to Stan Kroenke?

But the bigger problem here is that the club seem to be trying to force through a permanent reduction in all salaries, something Josh Kroenke said they wanted to do last year. And that feels a lot like the club are trying to take advantage of what amounts to an horrific situation to address some past failures.

But then again, maybe none of this is the case. Maybe Ozil’s just greedy and maybe John Cross just guessed at Ozil’s name (I have seen this suggested). Maybe the club are incredibly kind and generous folks and all of the players save Ozil and two others are incredibly generous.

Qq

Source:https://theathletic.com/podcast/163-steilcast/

25 comments

  1. He has obligations to people as well. Is he supposed to fire the people who work for his charities, to give £2.25m to Stan Kroenke?

    My understanding is that’s not how charities work.
    Unless people volunteer their personal time, charity employees get paid fully from the proceeds.

    Whatever the details this isn’t a good look for Ozil.
    My take is he’s thinking he’s played his last game for Arsenal, at least in front of the fans.

    1. Hey Tom, more information has been released since I published: Ozil is NOT refusing the cut but is asking for the transparency outlined above PLUS he wants to know why this needs to be a permanent cut rather than a deferral (which is what they are doing in Germany).

      As for his charitable works – yes, he probably set up a foundation which pays for his charities – but he has a large retinue of staff which run Ozil inc. and this is ultimately his money. They are asking him to just give $2.25m to Stan Kroenke without any assurances and almost no transparency. I think it’s smart to get all the details before you commit such a generous gift to a billionaire.

      1. Tim, in a self sustaining club, is the players salary cut saves money for the club or the owner? If it’s the later does it work both was i.e. the owner can pump in the money if the club needs it and there is no FFP?

        Sorry usually I with pretty much all the points – insights really you provide in the articles. This one however has left me confused, possibly because I missed a few of the posts the last two weeks due to unusual circumstances we are all in.

        All, stay safe.

        1. Let me explain my logic a bit.

          Arsenal are wholly owned by Stan Kroenke. He owns everything and when he sells the club, he banks any profits (if there will be any profits), and takes any losses. Also, if the club goes bankrupt he takes the hit. If the company goes under, the players will still get paid and most of them will find jobs at other clubs.

          I will also point out that while we are in unprecedented times and there is a ton of uncertainty, I feel like Arsenal’s multinational brand appeal would see people step in and buy the club if there was a bankruptcy – similar to what happened to Liverpool.

          So, the players taking a salary cut now, literally only buys Stan time: time in which he doesn’t have to put his own money in (he has some money and could get some liquidity but he’s got a lot of problems with his sports teams, especially the Rams), he doesn’t have to draw down on the cash reserves, so he gets a reprieve. In that sense this is money in Stan’s pocket.

          Another thing to consider here is that a deferral rather than cut would mean that players could sue to recoup their full salaries if for some reason Arsenal were to go bankrupt. A pay cut – a permanent pay cut – means that they would not. Now, obviously that sounds incredibly greedy from our perspective as average people. I get that but if I’m Ozil, looking at this world and my future ability to protect my family, I would probably say no as well. Why give Stan Kroenke £2.25m? He’s a billionaire many times over. If he wants to “save the club” he could sell his ranch and raise the money that way.

          But nothing that is happening right now is “saving the club”. In other words, there isn’t an existential threat to Arsenal as a brand at this exact moment: they have money to cover the bills. And if Kroenke is on the verge of bankruptcy, I can’t say for certainty that would be bad because it might mean a better owner – could also mean a worse owner. They are using this as an opportunity to use public sentiment about “greedy footballers” to trim a wage bill they have publicly acknowledged is too large.

          So, in this dispute, I think I stand with Ozil.

          1. I’m not sure I’m getting this right, but are you saying regardless whether the PL resumes this season or the next players should continue getting payed in full, because the owner is a billionaire and can afford it?
            Even if from the legal stand point this is correct, the optics of millionaire players collecting their full wages while only playing fortnight don’t look very good against the backdrop of the economic collapse this virus has unleashed all around.
            The notion of Ozil forgoing a couple million from his wages effecting his family’s welfare is quite fanciful too.
            Even if he has no further business aspirations once he hangs up his cleats, he’s virtually guaranteed a lifetime of top bracket income from studio punditry work and commercials. If not here, then in Turkey for sure , where he has a god like status and Erdogan’s personal friendship.

          2. I always find it odd that “millionaire players” have to worry about optics but the billionaire owners never do.

            Also, no you do not have this straight at all.

            I have advocated for a DEFERRAL: let’s not bankrupt the club while we wait to see if football can return. “Can” there is important: we are not sure football can ever return.

            If football can return and the club needs cuts to survive, they need to PROVE that they need these cuts to survive. But even if they can prove that they need those cuts to survive, why does that matter to you and me and the players? I don’t care if Kroenke goes bankrupt. If he defaults on his loans (and we still have football around) the banks will bring someone else in to run the football club. I feel very confident that Arsenal will be a football club for a long time and I don’t care much which billionaire owns the club, they are almost all awful.

            But let’s say there’s a doomsday scenario: football starts up but because players refuse to take pay cuts, Arsenal go belly up, no one can afford to step in and buy the club, so Arsenal get wound up and the club name and crest are retired. What are we really fans of? A crest and a name? I would say we are part of a shared community and that we – the fans, the ones who really matter here – aren’t going anywhere. If “Arsenal” goes away, it will probably just be reborn as “The Grove Arsenal”, “AFC”, or “Dial Square Arsenal” or something. And then what if that goes away too? What if no one reforms Arsenal? Well, that would be an incredible loss. But the likelihood of that happening is extremely small and Ozil’s 2m gift to Kroenke in summer 2020 isn’t going to prevent that. In fact, in the doomsday scenario I imagine the creditors get paid first and the players last. So, they probably would take the 100% paycut you argue for above.

            As for Ozil’s future income: he is not guaranteed any future income! He’s probably one of the least charismatic men in football, Germans hate him, who will hire him as a pundit? And I see you’ve hit all the high notes, tying him to Erdogan but Ozil isn’t going to want to live in Turkey. He will want to live in Germany or some place that doesn’t have a dictator (who will either be deposed and/or crack down even more). So, I’m not sure what jobs he will get from Erdogan.

            But ultimately, this is so strange to me that you think he’s going to be fine because he’s a millionaire but that we all need to protect Kroenke and that Kroenke needs handouts from millionaires so that he can keep being a billionaire.

            This is the trickle-down endgame as far as I’m concerned.

          3. “But ultimately, this is so strange to me that you think he’s going to be fine because he’s a millionaire but that we all need to protect Kroenke and that Kroenke needs handouts from millionaires so that he can keep being a billionaire.
            This is the trickle-down endgame as far as I’m concerned.“

            Tim
            I think you know from my track record where I stand on the whole issue of billionaires and the system thats rigged towards funneling as much money their way as physically possible.

            I’m not anti Ozil either, as a matter of fact , I think I’ve spent more time highlighting his value on here than most.

            You are pro deferral, fine. I’m not against that. Frankly I don’t care one way or another but 90% of the team agreed to a pay cut so there’s that.
            The bad optics comment was in this context.
            Most people consider Kroenke to be a soulless leech but regardless what one thinks of him , his performance isn’t dependent on 10 other guys respecting him and not holding a grudge.

            As for Ozil’s lack of charisma as an obstacle in his future punditry employment, have you met Alexi Lalas, Owen, the entire NBC crew and half a dozen others?

          4. Thanks for the detailed reply. I do understand the reasoning better.

            I do think the owner can and should do more. Infact he has failed to do enough.

            I also think the players have done their part in accepting a permanent cut. I’m actually surprised that its actually not just for the time football is suspended.

            However, this putting more money in Stans pockets, I don’t quite get still, given that we are supposed to the run sustainably. Given that it’s the clubs revenue from the fans and sponsors (which again reflects support base), which is used to pay salaries of players and staff and not any investment from Stan to keep us going, I actually think, this puts money in the clubs pockets. The club could/should use this money to compensate the fans this season and next or use it for the transfer kitty.

  2. in my experience, someone is paid not for what they do but what they have proven they can do. mesut has proven that he can do some amazing things. that’s why the club valued him at a certain rate so that’s not his fault.

    mesut is right to ask hard questions of the club and his management team is right to demand transparency from the club. these players have signed contracts and the club has an obligation to honor those contracts. it’s not the fault of the players that there’s a pandemic that has limited their availability to play in front of paying fans. it’s not player greed, it’s ownership greed.

    mesut, to us, seems to be a very rich man. however, his wealth pales in comparison to his employer. he should be the one absorbing the majority of the losses, not asking players and staff to do so. the really big problem is that kronke can take the loses and not miss that money. the players may be able to also but the owner has far more wealth. it’s not that he should be a charity but he should not be asking employees to do something that he’s not willing to do. at a minimum, he should be matching what the staff is doing, pound for pound. it would be in extreme protest that the players accept such a huge wage cut without clarification. is every other club in world football expecting their employees to take such a huge pay cut?

    1. I’m all for transparency and probably the last person to ever take a billionaire’s side, but 12,5 % isn’t exactly a huge pay cut under the circumstances, so long the money doesn’t go right back to Stan.

      1. I’ll go along with this. Yepp, show us where the money goes. If not and in stans pockets, what’s the point?

        He’s not a piss poor owner just a poor one with no interest in football and have overseen this walk into stagnation (probably as a consequence of lack of interest).

        Maybe and just maybe Ozil is adding flame to this by not aiding a uninterested multi billionaire. But maybe that’s giving Ozil to much cred?

  3. This is the best take I’ve read on this. The club is asking for something totally unprecedented and needs to be transparent about its financial situation and what the money will be used for.

  4. To me, from the start, this stunk of a lack of transparency. It wasn’t about Covid-19 impacting the finances. It’s about the club trying to trim a wage bill that underperforming players are not paying for (via champions league participation) . The fact that they will give the money back if they get back into the Champions League is arrogant. It seems to imply that they only want to pay these wages if the team is in the champions league, not necessarily that they can only pay it IF we qualify for champions league. This premier league suspension is a convenient excuse. They are contradicting themselves by saying they are basing the numbers on the season finishing. In that case the money lost will only be the match day revenue, which for the remaining games is far less than the 20-30m that they are try to save with the wage cut AND doesn’t compare to champs league money. Therefore. Ozil is well within his right to ask “w t f Stan?”

    On the other hand if it motivates the players to get back into the champions league for the sake of getting their 12.5 percent back and a 100k bonus then I’m also ok with that.

    And how much exactly is the “significant cash injection” that Stan is putting in? And when?

  5. Great post Tim

    I completely agree with Mesut Ozil’s contention that there should be complete transparency from the club with regard to all the details of any wage cut. The clubs owners need to be forthcoming and explain the numbers. None of us know all of the financial details, but I think a wage deferral seems like a more reasonable option. I think Mesut is the one who speaks up on this because he is the highest paid and by far highest profile player in the squad. He also stands to lose the most money from any wage cut. I wish he would take more of a leadership role on the pitch and in the dressing room. I also think Mesut does not really care what the club thinks about him. He knows that he is on his last big contract. He certainly won’t be getting another deal from Arsenal so he has nothing to lose if he upsets the ownership and front office.

    1. But, don’t you think that maybe, this is Ozil showing leadership? I mean maybe and just maybe he’s not inclined to give Kroenke money. Would rather see that money to the staff, non footballing entities and families and want guarantees for that ?

      I think maybe that’s over the top for Ozil being Father Christmas. Though maybe his not helping Kroenke is a help to get rid of Kroenke and for that I certainly respect his stance.

  6. Josh

    I would argue the amount an owner is willing to pay a player is mostly based on the expected level of production during the life of the contract rather then past achievements.

    1. The future expected level is derived from past achievements though Bill. What you have done in the past is used as a measure of what you are capable and are (hopefully) likely to do over the course of the contract being offered. Unfortunately it is not a full proof method, but it is the way things are done.

  7. Josh

    I agree the contract Ozil signed is not his fault and I don’t blame him or any player for taking as much money as their club is willing to give them. Any one of us would do the same thing.

  8. I’m starting to come around to Tim’s assertion that football won’t return in 2020 and maybe only late 2021. The world is on its knees, football can wait.

    If you restart prematurely and even one person dies as a result, you have just put a price on human life.

  9. another thing i don’t like is why is it we only know of mesut refusing the pay cut and not the other two players? sounds like something the political, “new arsenal” would do; instead of insulating their players and keeping business in house, putting what business they choose out in the streets to make themselves look good. this stinks to high heaven of the koscielny situation.

    whatever happened to victoria concordia crescit?

  10. And since I’m on the subject of funneling money into billionaires coffers here’s a fun fact.
    Apparently the government’s $349 billion loan program to help out small business was designed to incentivize banks to process as many large loans as quickly as possible, netting them over $10b in the process , risk free, for doing the paperwork basically.
    For every loan under $350,000 banks charged 5%, while for loans worth over $2m banks brought in 1% in fees.
    With only finite funds available it made perfect sense for the competing banks to process as many large loans ( $2m and up) as quickly as possible leaving smaller businesses with practically zero chance.
    How predictable lol.

  11. I have been wondering about this. If I was Ozil’s agent and the club is saying they really “need” these pay cuts for Arsenal to survive. I would propose to the club that they can take a 50% pay cut on Ozil’s wages, effective immediately, if they extend Ozil’s contract by a further 3 years. That way we would see if they really need the pay cuts for this emergency or if they just want to take money from the players. That amount of money saved would probably be worth a 12.5% pay cut for several players.

    If they refuse, I could threaten to just go to the other agents and tell them that the club had the option to save enough money to not take pay cuts from their players and take from only Ozil, but instead they want money from all of them AND from Ozil.

    I wonder how they would handle that.

  12. Devlin @ 10:05 PM

    Past performance is obviously a big part of the equation used to help help estimate future production. However other variables are just as important such as age of the player and most important the trend of their performances and productivity in recent years. A huge contract which lasts into his early to mid 30’s is likely to be a big mistake when the players productivity and ability to influence the games clearly had already started to trend downward. Another variable is injury history which is probably the reason the club decided to withdraw a big contract offer to Aaron Ramsey. After the misjudgment with Ozil’s contract, Arsenal was rightfully reluctant to add another long term high dollar underperforming contract. Early evidence indicates Arsenal made a very good decision to pull back from bidding against Juve and Juve probably wishes they could have a mulligan.

    1. yeah I get it, but the biggest consideration will always be based on past performances. I guess its all up to how much you think Mesut was doing at the time of the offer and the potential that was seen for improvement. From my point of view, and it seems the club’s as well, his impact, record and performances prior to the offer justified it. Its the same with appointing Emery for his European pedigree at Sevilla by Arsenal and PSG.

      Unfortunately these things don’t always work out, c’est la vie.

  13. Welsh Corgi @ 8:25AM.

    Wouldn’t it be nice if Ozil would use his position as the highest profile player on the squad to bring some leadership on the pitch and to be a good example of work ethic for the younger players rather then only stepping up when a portion of his wages are at risk?

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