The Perfect Pitch

Following Dein’s departure yesterday, now might be a good time to discuss if a takeover is something that will be good or bad for Arsenal Football Club.

3 of the top 4 clubs in England have all been taken over by investors that have no previous links and history associated with these clubs. Note I did not mention the word “foreign”, since I don’t believe it is a big issue. The big issue is whether these investors are here to make money, or to be part of a football club which they support.

Chelsea’s situation is different to the other two in that its owner is not interested (at this stage) to run Chelsea as a business, and so the usual rules about spending less than what you make does not apply to Chelsea. Chelsea have spent more money than most other clubs in the Premier League are worth, and while this has “bought” success, it is not guaranteed (their first season was trophy-less, this season they are not running away with the league like previously). Liverpool has only just been taken over, so it’s not clear what the new owners’ intentions are. Liverpool is also seeking funds to build a new stadium, and if the new investors can provide the funds, then this would have been a good reason to sell to them. It is worth noting that Liverpool have won the Champions League recently and are in the semi-finals without the help from any investors. Manchester United has been bought by the Glazers, and they are doing well on the pitch at the moment. However, very little financial investment has been put in by the Glazers, Manchester United’s success has little to do with players that were brought in after the Glazers’ takeover. If anything, Manchester United reminds us that good teams playing good football win trophies, not investors throwing bundles of cash into the mix.

Arsenal’s situation is different to all of these clubs’. We have just spent an enourmous amount of effort and funds to build a brand new stadium, and the benefits from the move will not be evident until a season or two down the track. In the short term, we might need investment to allow the manager to buy players, although looking at Wenger’s past records, it’s unlikely we will spend big even if we have the funds. So the advantages of having an investor step in right now would be to provide short term relief, which would not guarantee success. And even the short term investment would not be guaranteed if the takeover was expensive.

Looking in the mid to long term, the increased revenue from increased capacity at the stadium is already having a positive effect on the financial side of things. Figures for the first half of this season show that turnover has nearly doubled, operating profits rose a massive 150%. Although an overall loss was recorded, this was due to the once-off cost (£21.4m) of relocating stadiums. Without this once off cost, we would have seen a profit of nearly £16m, and this is only for half of the financial year. The new stadium is expected to generate significant profits for Arsenal, even after the debt repayments.

There is also the new TV deals starting next season would also see revenue increase significantly. Even the team finishing bottom would see around £26m, that’s only £4m less than what Chelsea received last season for winning the league. While all clubs would enjoy the benefits, Arsenal would benefit more because its current owners are not in it for the money, and money will be put back into the club. Investors at the other club might also put money back into the club as a means to bring more success (and hence, more profit), but there will be a point where they would expect money to be made and this means taking money out of the club and away from football.

In any case, Arsenal’s mid and long term future means we do not need any investment from anyone. Arsenal have already done the hard part (re-branding, built up our reputation as a major football club with the help of Wenger, building a new stadium), and we are just about to start seeing the rewards. This is perhaps why Arsenal is seen as a fantastic target for a takeover, a club on the verge of a financial boon.

Another issue is that in order to buy Arsenal at its current value of more than £500m, this would require the new owner to seek loans much like what the Glazers have done in purchasing Manchester United. It is still not clear what effects the Glazers’ financial situation will have on Manchester United, except that a once debt-free club is now debt-laden, and unlike Arsenal, they do not have a brand new stadium to show for it.

With all of these points considered, I can only come to the conclusion that a takeover would not benefit Arsenal Football Club in the short or the long term. The combined wealth of our current owners is as great if not greater than the wealth of someone like Kroenke, and this is without going into heavy debt to fund a potential takeover – there is no reason nor need to sell for the good of Arsenal Football Club.

This entry was posted on Friday, April 20th, 2007 at 1:37 pm and is filed under Arsenal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.