arsenal finances thread

mdgoonah41

i looked if there was a thread to cover all finances discussions, i didnt see one (i spent 3 seconds looking, so i probably missed it) but i wanted to have a place to discuss. i posted this in the wenger thread but it didnt belong there

http://www.standard.co.uk/sport/football/arsenal-have-only-54m-to-spend-in-the-summer-unless-they-sell-players-says-report-into-gunners-a3247791.html

i question the validity of it to some degree, but even swiss ramble said something similar to this back in the fall when the finances were released.

my question is, when are we going to be able to act like a big club and spend accordingly? the move to the emirates was a decade ago. we have no short term debt. we have massive cash reserves. but we're limited to what we can spend in the transfer market. so what was the point of the move to the emirates? we were cautious with our money at highbury, and we're seemingly just as cautious now even though revenue across the entire game has exploded and we continue to get outspent by mid-table teams.

so, what was the move for? how much cash is enough to have in reserve? what is the plan?

lorddulaarsenal

They'll be £72 light this year - cancelled me membership

Burnwinter

There goes Yaya's pay rise. We've got to pursue our goals sustainably.

Biggus

@lorddulaarsenal wrote:
They'll be £72 light this year - cancelled me membership

Good man, fight the power.

Claudius

We discussed finances to death in one of the many Wenger threads this week.
There isn't tons of money. If you want to unlock more than 50-60 million pounds of spending you need to do one of the following
a) refinance the stadium
b) change stadium covenants to remove the stadium debt finance reserve
c) sell Theo and other overvalued extras
d) take out a loan on future TV income
e) sign a deal with a new sponsor - Budweiser, the preferred beer of Ospina and Wilshere

These are all doable. The first three are most doable and would give the most impact.

Anzac

Let's try to put this into some sort of context.

We were told that the stadium generated about 3m in gate each match day from the time of the move in 2006.
As of 2014 we improved our sponsorship deals by at least 35m per season.
At the same time the current TV deal increased revenues by a similar amount, and assessments at that time suggested a sustainable spend of about 50-70m per season without touching the Reserves.
The Cash Reserves are the largest of any club in the game anywhere.
We turn profits each season.
The new TV deal will increase revenues by another 30m+.

For the available budget to be only 50m it means that it is about half the increased revenues, and that there has been no residual each season despite the increased revenues. It would also suggest that our overheads / operating costs have increased at least as fast as the revenues.

Bottom line, if this IS correct a decade after the move, our transfer budget does not appear to have even doubled since the Highbury days.
As such it suggests that there is something VERY wrong off the pitch as much as there is on the pitch.

Anzac

Claudius wrote:
We discussed finances to death in one of the many Wenger threads this week.
There isn't tons of money. If you want to unlock more than 50-60 million pounds of spending you need to do one of the following
a) refinance the stadium
b) change stadium covenants to remove the stadium debt finance reserve
c) sell Theo and other overvalued extras
d) take out a loan on future TV income
e) sign a deal with a new sponsor - Budweiser, the preferred beer of Ospina and Wilshere

These are all doable. The first three are most doable and would give the most impact.

The stadium debt servicing only takes about 20-25m per season = about 5-8 Home games.
We meet this via The Emirates Cup, the 2 domestic Cups, and our CL Home Games, leaving the PL gates untouched in terms of the stadium.
IIRC Gazidis has said that since the debt was restructured in 2006 into 25 year bonds there is nothing to be gained by making any changes to the stadium debt structure.

https://en.wikipedia.org/wiki/Forbes%27_list_of_the_most_valuable_football_clubs#2015_rankings
despite the new sponsorship deals and the constant CL revenues,
our total revenue remains about 50-60m more than LFC = the same figure as 2010.
This year with the new TV revenues next season, LFC will essentially earn the same amount AFC did for 2015.
In 2010 we had the 4th highest operating income.

This club is f*cked both on & off the pitch & has squandered any advantage the stadium was supposed to deliver because the BoD & Co got complacent with the improved revenues and thought they wouldn't need to left a finger to do anything more.

Claudius

Here's an option that has not been discussed yet: sell our TV deal to an investment bank

Think about it - the new TV deal should give us 40-50m pounds extra a season for 3 years, a total of around 120-150m pounds extra. we sell that to the banks with a ₅% financing on it, which means we would get a one time shock of 120-150m pounds, and then need to repay 40-50m pounds each year + 5% (2-3m pounds extra each season. Even 10% (4-6m pounds) would be affordable.

Why do this? It allows you to go nuts in one summer and build the squad you actually want. So you go out and get Higuain, Griezmann, Xhaka and a defender. Next season, you don't need to go out and buy. Just nurture. Also allows us to frame this as Wenger's last season where he goes out with a bang! Everyone could get behind this.

Anzac

Claudius wrote:
Here's an option that has not been discussed yet: sell our TV deal to an investment bank

Think about it - the new TV deal should give us 40-50m pounds extra a season for 3 years, a total of around 120-150m pounds extra. we sell that to the banks with a ₅% financing on it, which means we would get a one time shock of 120-150m pounds, and then need to repay 40-50m pounds each year + 5% (2-3m pounds extra each season. Even 10% (4-6m pounds) would be affordable.

Why do this? It allows you to go nuts in one summer and build the squad you actually want. So you go out and get Higuain, Griezmann, Xhaka and a defender. Next season, you don't need to go out and buy. Just nurture. Also allows us to frame this as Wenger's last season where he goes out with a bang! Everyone could get behind this.

Alternatively use the funds we already have sitting in Cash Reserves to provide that same 1 off kitty,
and use the increased TV revenues to directly replenish the Cash Reserves.

Thing being that I don't want AW anywhere near any 1 off kitty either now or later, as I simply do not trust him in his judgement or priorities. He has said that the new revenues will not see a change in our policy or methodology re player development. As such we will always be short in terms of starting capability and squad balance.

Burnwinter

Claudius wrote:
Here's an option that has not been discussed yet: sell our TV deal to an investment bank

Think about it - the new TV deal should give us 40-50m pounds extra a season for 3 years, a total of around 120-150m pounds extra. we sell that to the banks with a ₅% financing on it, which means we would get a one time shock of 120-150m pounds, and then need to repay 40-50m pounds each year + 5% (2-3m pounds extra each season. Even 10% (4-6m pounds) would be affordable.

Why do this? It allows you to go nuts in one summer and build the squad you actually want. So you go out and get Higuain, Griezmann, Xhaka and a defender. Next season, you don't need to go out and buy. Just nurture. Also allows us to frame this as Wenger's last season where he goes out with a bang! Everyone could get behind this.

Just another variant of borrowing to invest, something we could easily do, despite our considerable debts we are not a heavily leveraged organisation.

In reference to MDG's opening post and its mention of Swiss Ramble, I'd just refer to one point from his most recent overview (which does take into account the various encumbrances others have raised as objections to a naive interpretation of our gargantuan cash balance):

http://swissramble.blogspot.com.au/2016/02/arsenal-brass-in-pocket.html

Despite all of these factors, there is still substantial money available to spend. It’s clearly not as much as the figure in the books, but we can say with some conviction that Arsenal should have around £100 million to spend in the summer on improving the squad.

The club can say we've only got £54m if it likes—but that's pretty much George Osborne logic when what the club needs is a bit of Clement Attlee logic.

Claudius

Burns, difference is that it gives you a 150-200m pound transfer kitty for one summer. Spent wisely (by anyone not named van Gaal), and that could catapult us to elite club status in one go.

Burnwinter

Couldn't we just borrow that cash tomorrow any old how and use our income projections to persuade the lender? (Which would be the same thing as selling the TV deal, as it were).

Anzac

Burnwinter wrote:
Couldn't we just borrow that cash tomorrow any old how and use our income projections to persuade the lender? (Which would be the same thing as selling the TV deal, as it were).

That would not meet our strict 'self funding / self sustaining' criteria.
The club has spent a lot of effort scare mongering about borrowing running wild and bankrupting the club.
Tales of LUFC, Pompey, and the near miss at LFC.
We supposedly pride ourselves in doing things the right way, and we only spend what we earn.

Burnwinter

Look I know all the reasons the morons who make the decisions at Arsenal would give, but borrowing money that you can pay back is far from unsustainable.

Ray

We have topped the PL prize money league, receiving an all time PL record £100.8m this season. Got the extra £1.2m by leapfrogging Spurs to 2nd.

speedy

If we borrowed big to buy 2 or 3 top players. We'd have £10m interest on top of £15m per year increase on the wage budget. We've spent almost nothing in 2 years and have 56m cash. We'd have practically nothing to build the squad with for a few years after. It's robbing Peter to pay Paul. Buying big works if you're consistent but we don't have the money to do that. Increasing interest payments would only make it harder to stay close to the top.

Burnwinter

£10m interest? I'm not suggesting we borrow £300m.

innervisionscm

Our poor spending (and poor player development) the last two seasons is part of the problem as well. £95m on Alexis, Chambers, Welbeck, Gabriel, Debuchy, Ospina, and Elneny, plus whatever their wages are, is generally money I'd like to have back. Walcott extension was a big waste of money too, especially given the market for English players who run fast and score goals. Building needs to take place over three years, you don't ever put a great team together over a summer.

Gunner89

Why are people believing this obscure report to be true?

Highest matchday revenue, ensured Cl revenue, Record tv deal and one of the biggest sponsorship revenues.

Lazy skimmed reading doesn't take into account factors such as-

"As a reminder, player amortisation is the way in which player purchases are reflected in the profit and loss account. To illustrate how this works, if Arsenal paid £25 million for a new player with a five-year contract, the annual expense would only be £5 million (£25 million divided by 5 years) in player amortisation (on top of wages)."

"Unsurprisingly, Arsenal have more cash than any other club in world football. Although not every Premier League club has published its accounts for the 2014/15 season, the North London side is clearly in a class of its own with the closet challengers being Manchester United, though their £156 million was still £72 million lower than their London rivals, followed by Manchester City £75 million."

All from

http://swissramble.blogspot.in/2016/02/arsenal-brass-in-pocket.html

speedy

Burnwinter wrote:
£10m interest? I'm not suggesting we borrow £300m.

Well interest and repayment it could be more than 10m per year

If we borrowed 130million how much would interest be?