afc Arsenals money situation - whose confused

[n/a]

I was gonna allow doing this cos it is long, ive summed it up at the bottom Baically there have been contradictory messages coming from the board and arsene wenger principally regarding transfer funds and this has led to confusion amongst arsenal fans i no. Alot are gettin frustrated with Wenger for not spending but nobody really knows the facts.

• Keith Endlemen (then chief executive) said before leaving earlier this yr that wenger had a sum transfer figure (i think 70 million) at his disposal.

• Then Arsene Wenger said more recently that he has to come up with £24million every summer from the sale of a player, or net sales of players, in order to pay back the loans for the stadium and the property developments. And that will be the case for the next seventeen years.

the 2 dont add upKen Friar (MD) explained in an interview that the 70 million suggested from Endleman never existed, and was a tactic for him to fend of predators who were trying to takeover the club, therefore protecting the club and his own shares.The details below give a more accurate reflection of whats goin on moneywise

Arsenal's annual revenue is roughly £200 million.Of that £200m, about £90 million comes from gate receipts and most of that is cash, apart from the upfront payments for four years of season-tickets in Club Level.About £3m per year.Another £50m comes from TV games in the EPL and the Uefa Champions League.Retail from replica shirts and assorted merchandise is about £10m.The gate receipts, TV money and shop money are, effectively, cash.The other £50 million is commercial money, but that is not all cash because much of it has been received in advance. That is where the shortfall arises. The club doesn't get that money because they front-loaded their commercial deals ands have received a lot of that cash already. The Emirates deal was £100m gross and £90m net to Arsenal.Of that £90m, £72m is being paid in the early years of the deal, with very little in the later years.The Emirates shirt deal is £48m over eight years. Which is £6m a year.The naming rights is a 15-year deal for £42.5 m. Which is only £2.5 million a season. That is : less than the gate receipts from one game !As everyone knows, Arsenal borrowed £260m to build a stadium that cost £400m. So they had to find another £140m from their own resources. That is a helluva lot of money for any football club to find, in any country.Some of that £140m was cash from the shares sold to Granada for £77m. Most of Nike's £55m was paid up front, and the Delaware North catering contract for £15 million was paid up front. That was cash that went into building the stadium. It's not rocket science: MD Keith Edelman needed money to pay the builders and some of his deals would never have been done if Arsenal did not need the money to build the stadium.Those deals now look poor and cleverclogs columnists tend to say : Arsenal always know their price, but don't know their value. But others argue that you have to take the best deal on the table and get on with it.Recapitulating, Arsenal has £150m in annual cash receipts. What do they spend that £150m on during the year?Obviously, it's a big operation and costs are high.Wages are £80m.Running costs for the stadium are £15mOther costs total a remarkable £35m. Debt servicing on the stadium is £25m.So £145m of cash is spent in the year.And you've only earned cash of £150m before any commercial income. They may accrue £15m in commercial income in a year.This is where the size of the squad, and the composition of the squad, becomes critical. Because there is no way that Arsene can allow his wage costs to creep up from £80m to £90m to £100m. That cannot happen. It's impossible. The money isn't there to pay it, even though there is a small amount of commercial money coming in.When you look at it, the only variable cost is your squad. And the cost of the squad has been trimmed and trimmed again. That's why Arsene cannot put Adebayor's wages up from £35,000 a week to £70,000 a week. He can't double Ade's wages, let alone treble his wages, even if he wanted to. And he doesn't want to. ANR readers do not need me to tell them why Ade's wages should not be trebled.Today the test of whether a club is being sensibly run is the wages/turnover ratio.Michel Platini and his buddies think your wages/turnover ratio should be 50-55%. Remarkably, during the latest accounting period, Arsenal's wages/turnover ratio will be less than 50%.So I was wrong yesterday to repeat The News of the World's suggestion that AW has to generate £24m profits on player sales. But that £24m has to come from somewhere and has to be paid. That is money which the team is generating by playing in their big new stadium, but which the manager doesn't get to spend on his team. Because servicing the debt is more crucial than buying Fernando Torres, even if Torres wanted to join Arsenal.The six banks originally loaned Arsenal £260m. Later on, the refinancing deal included a raft of covenants which are there to protect the lenders. One of the covenants explicitly forbids a fire-sale of players, as happened at Leeds United when they got into big financial trouble soon after their Champions League semi-final in 2001, when they lost 3-0 in Valencia after beating AC Milan, Besiktas, Lazio and Deportivo La Coruna. Then the performance declines, and the club gets relegated, and that hurts the banks as well as the football club. There is a clause in the financing agreement which says that 75% of player sale proceeds have to be re-invested in the team, in new players and/or wages.Where Edelman scored was his re-financing at a fixed interest rate. That means that Arsenal now enjoy very cheap money, which would be impossible these days. No banks would lend £260 million to a football club now, on any terms.What about the property portfolio ?In February 2008 we had the half-year figures up to November 30, 2007. Peter Hill Wood wrote that the proceeds of Highbury Square and Queensland Road would about £350 gross.He did not break down that ball-park figure.It is thought that would come from £300m gross at Highbury Square, and £50 gross from Queensland Road, a site that the club acquired Arsenal as part of a land package. It is now is surplus land at the time of a credit crunch when banks will not even lend money to each other. The club always planned to get planning permission and then sell the site to a developer. In the current climate they might have to choose between holding onto the site for five years or flogging it for £20m.At Highbury Square they have taken over £30m in deposits on the apartments and penthouses.There is a loan of £150m and if they achieve £250m in sales, they net £100m of cash. If they make £200m in sales, they still clear the development loan of £150m.But here is where the arithmetic gets interesting : If you need £200m to complete the development of Highbury Square, and your loan is £150m and your deposits are £30m, you are still £20m short.So where did that £20m come from ?Its highly likely that it came from money that the manager hoped to spend on new players and wages. Why? Because Keith Edelman could not find that £20m from anywhere else. That seems to be where the finances have gone wrong, and seems to be why Edelman was fired.How should this situation be improved?Well, Arsenal should renegotiate their commercial deals with Emirates.When Abramovich bought Chelsea, they blew out the Emirates deal that Ken Bates had made.They paid the Emirates £30m to go away and made deal for much more money with Samsung. And they also blew out Umbro to make a better deal with adidas. And Manchester United walked away from their shirt deal on a break-clause two years before the end of their Vodaphone contract. But that was not their call. Vodaphone made that decision. Then the Glazers got United a £14m-a-year deal with AIG.That's how big clubs operate. Arsenal get £6m a year from the Emirates, which is less than Ajax gets from AGEON, a Dutch insurance company. So Ajax have a bigger shirt sponsorship deal than Arsenal.Unfortunately, Hill-Wood's attitude is : We are Arsenal, we have more integrity than other clubs, we've never renegotiated a contract with anybody in our history. That policy is old-fashioned, snobbish, and self-defeating. It's complete bollocks. Arsenal is a modern business like any other. And that's why they need a worldly CEO with some balls, rather than an administrator like Ken Friar.Yes, it looks as if Stan Kroenke will join the board but when he does, if he does, it will be on his terms. Stan always negotiates from a position of strength and does not mind how long the negotiations take. But it's clear that Stan will not buy the whole club. And even if he did, he would have to borrow the money to do it. That is not what Arsenal want, or can afford, or what their supporters want to see happen.What's interesting is that Arsenal have not yet hired a CEO.Why is it taking so long? Is it because Stan wants to choose Arsenal's next chief executive? Or wants, at least, to approve the appointment.?The question Arsenal fans should ask themselves is : If I'd invested £75m in a football club, would I want a say in the appointment of the new chief executive?

http://www.arsenalnewsreview.co.uk/index.p...nt01returnid=42SUMMARYour annual rev = 200mannual rev which is actually cash =150mexpenses (wages, running costs, debt repayments) =145m (*any increase in player wages would therefore mean makin a loss, so no 100g a week signings)we expected to get a load of money from selling flats at the old highbury site and a next placebecause of the credit crunch/propery mkt collapse we aint and dont look likely to get this money anytime soon. This has left a shortage in our finances that needs to be covered from somewhere, and that somewhere is basically wengers transfer budget.This shortage could be sorted out by renegotiating the emirates shirrt deal (which is basically a sh*t deal money wise) but because peter hill wood is a old fashioned english gentleman he refuses to renegotiate contracts (even tho this is what everyone in the busines world does) he'd rather do it the 'arsenal way' nd honour the exsisting contract.So Wenger is basically working in conditions where 99% of managers would break down and have a heart attack, it suits him cos he can work well with the youngsters.He aint god and can get criticised he does favour breeding younsters rather than signing decent/good players, but if wenger doesnt sign the top top players like villa, robinhio, kaka its not cos he'd rather sign a 15 yr old he clearly wants them jus cant because we dont compete on the same level as the mancs, chelsea, or scousers.

[Guest haze-e]

Did you write this? Or get it from elsewhere?

[Davicious X]

Did you write this? Or get it from elsewhere?

Chances are he will claim to have written it but if he truelly did then maybe we need to remove his pink status.But thats probably what he is looking for so maybe not on this occasion

[n/a]

all the facts/figures are from arsenal news review theres a link in there

[n/a]

Did you write this? Or get it from elsewhere?

Chances are he will claim to have written it but if he truelly did then maybe we need to remove his pink status.But thats probably what he is looking for so maybe not on this occasion

dont be silly bruv

[Lenny]

very good topicMe personally i have no idea what our situation is regarding money, as you've said.. theres been mixed messages from both the board and Wenger himself

[Flojo]

Interesting read, clearly written by a pro Wenger fan.Highlights what I've been thinking for time, somewhere down the line Arsenal fans were lied to. I might be wrong but I swear prior to the move fans were assured the upkeep of the squad wouldn't be affected?

[Samir Carlos]

Good Topic,remove this guy from clueless fans ASAP

[mp*]

Interesting read, clearly written by a pro Wenger fan.Highlights what I've been thinking for time, somewhere down the line Arsenal fans were lied to. I might be wrong but I swear prior to the move fans were assured the upkeep of the squad wouldn't be affected?

Keith Edelman said that.. and now hes gone

[Agony]

So basically Arsenal can use the money excuse for the next 17 years or until a billionaire buys your club. Great.

[TF S4DK]

Basically somebody got their numbers wrong. Why the board are CUNTS is they knew about this pretty much as soon as we moved into The Emirates.Over that time we've just been lied too. The lies have intensfied since Dein left.Edelman didnt lie about the 70m per say, basically we can borrow another 70m from the banks if need be, and that was the money he was talking about, however the board REALLY REALLY REALLY dont want to use that 70m and while they dont say no to Wenger they have explained the situation to Wenger and Wenger doesnt particularly want to put the club at that much risk for a player that could flop or not be the difference between bringing in any extra revenue.The numbers being wrong (not Dein's fault) and Dein's reaction to it is why he got sacked too.

[TF S4DK]

I might be wrong but I swear prior to the move fans were assured the upkeep of the squad wouldn't be affected?

No. The then current squad was assured it could be kept & maintained. which it was, just when one went out the replacements had to be on same terms or lower, which is what happened.

[Bardissimo]

pissedsurely, we get more money for winning things so we should push forward for honours..problem is its a risk and would be f*ckeries in thsi financial climate

[will h]

I read this articel a few days ago. How on earth would this guy know our finances inside and out? As far as i'm aware we release only limited financial info for public consumption as we are not a public ltd company, it certainly doesn't go into detail to say this bit of the loan was repaid from what we got from Nike and this is what we did with the granada shares etc. I'm not saying there is no truth behind the article, but i doubt the realiability of the financial info he has used to draw his conclusions.

[Kompressor]

how can a club/institution like Arsenal be run so badly and all that Integrity nonsense is rich coz in that case surely Arsenal wouldn't partake in the poaching of young players that seems to be rife in the game at the moment The keeping with tradition lark is also a load of crap looking at the origins of the club of where it started and where it is now and we thought the Glazer were bad Arsenal need people in charge who will make the right decisions for the club 6m a year is an absolute joke however even with all this surely it makes more sense to gamble and spend big money on players in the hope that more progress in the champions league would mean added revenue and if things do start to fall apart (a la leeds united)it shouldn't be too hard to find a buyer with the Young players and new stadiumfeel sorry for Wenger if all this is true no wonder everytim i see him he's got more grey hairs

[TF S4DK]

I read this articel a few days ago. How on earth would this guy know our finances inside and out? As far as i'm aware we release only limited financial info for public consumption as we are not a public ltd company, it certainly doesn't go into detail to say this bit of the loan was repaid from what we got from Nike and this is what we did with the granada shares etc. I'm not saying there is no truth behind the article, but i doubt the realiability of the financial info he has used to draw his conclusions.

While the finances aren't broken down when they are released, they tend to give a guideline which if you pay enough attention to along with the additional comments made and the general goings on, you can form a rough idea.

[TF S4DK]

how can a club/institution like Arsenal be run so badly and all that Integrity nonsense is rich coz in that case surely Arsenal wouldn't partake in the poaching of young players that seems to be rife in the game at the moment The keeping with tradition lark is also a load of crap looking at the origins of the club of where it started and where it is now and we thought the Glazer were bad Arsenal need people in charge who will make the right decisions for the club 6m a year is an absolute joke however even with all this surely it makes more sense to gamble and spend big money on players in the hope that more progress in the champions league would mean added revenue and if things do start to fall apart (a la leeds united)it shouldn't be too hard to find a buyer with the Young players and new stadiumfeel sorry for Wenger if all this is true no wonder everytim i see him he's got more grey hairs

Its not particularly ran badly, however it seems to have a air of ignorance with dealing on particular matters.Arsenal dont gamble, think people have to understand is, like I said a lot of the board will leave when Wenger leaves, this final period is to guarantee they get there retirement share dividends every year.

[darkman]

None of us really know whats going onBut both Arsene and the board have said many times there is money to spend on players but Arsene choses not to.

[will h]

I read this articel a few days ago. How on earth would this guy know our finances inside and out? As far as i'm aware we release only limited financial info for public consumption as we are not a public ltd company, it certainly doesn't go into detail to say this bit of the loan was repaid from what we got from Nike and this is what we did with the granada shares etc. I'm not saying there is no truth behind the article, but i doubt the realiability of the financial info he has used to draw his conclusions.

While the finances aren't broken down when they are released, they tend to give a guideline which if you pay enough attention to along with the additional comments made and the general goings on, you can form a rough idea.

This is what i mean, the author may have a rough idea where money is going, but in the article he portrays it as fact and then a lot of people believe it as fact.The people who know how and where money is spent will be the directors because the general public are not given enough info to know everything. You will struggle even with PLC's that release thier annual accounts to the public, to know exactly the ins and outs of the finances.It seems to me this author has gathered together info from many various sources, some of which are likely to be completely unrealiable (notw, the sun etc) and then pieced it together and came up with his own opinion and presented it as factual. Like i say i'm sure there is some truth to the article, as i believe currently we are experiencing some cash flow problems, but i'm not believing for 1 second this guys figures or opinion are 100% accurate unless he is a director, accountant or an auditor for Arsenal.

[TF S4DK]

None of us really know whats going onBut both Arsene and the board have said many times there is money to spend on players but Arsene choses not to.

Nobody said there is no money...There just isnt this pot of gold that some of you seem to suggest there is. Dare I say Wenger had been told he could spend about 20m this summer, with a little bit more left over for improved contracts.

[Guest Eduardo]

This is mostly speculationWe don't have a lot of money to spend, technically we can't spend as much as say Chelsea, Liverpool, Man Utd and even Spurs but we could say match Liverpool and Man Utd whilst risking the stability of the club which firstly, Wenger doesn't want to do and secondly, the board doesn't want to do.

[n/a]

This is what i mean, the author may have a rough idea where money is going, but in the article he portrays it as fact and then a lot of people believe it as fact.The people who know how and where money is spent will be the directors because the general public are not given enough info to know everything. You will struggle even with PLC's that release thier annual accounts to the public, to know exactly the ins and outs of the finances.It seems to me this author has gathered together info from many various sources, some of which are likely to be completely unrealiable (notw, the sun etc) and then pieced it together and came up with his own opinion and presented it as factual. Like i say i'm sure there is some truth to the article, as i believe currently we are experiencing some cash flow problems, but i'm not believing for 1 second this guys figures or opinion are 100% accurate unless he is a director, accountant or an auditor for Arsenal.

all them figures the person got are straight from the arsenal holdings plc annual report , u can see most in the profit loss and balance sheets. http://www.arsenal.com/userincludes/docs/results24092007.pdfAs i understand it arsenal holdings plc (the co. that owns arsenal and the highbury propety companys) are plc but u cant buy shares cos the majority of them r controlled by a few who dont sellbut accountants will tell u a set of accounts aint as objective as it seems people look at it different waysthis is another angle cos im sure the board wouldnt admit to all of thisnone of us really no whats goin on, but given whats gone on season after season, the figures shown from last year, and the current economic climate i find it hard to believe we have 50million available and money for big wages but who knows

[Young £]

lol @ the amount of people that are cluelessresearch about your club

[TF S4DK]

This is mostly speculationWe don't have a lot of money to spend, technically we can't spend as much as say Chelsea, Liverpool, Man Utd and even Spurs but we could say match Liverpool and Man Utd whilst risking the stability of the club which firstly, Wenger doesn't want to do and secondly, the board doesn't want to do.

The second means we cant do the first.

[Guest Eduardo]

Exactly.