Arsene Wenger is probably going through the toughest time of his illustrious spell at the helm at Arsenal. Attacks from both the media and his own fans have shocked and surprised many, given Arsenal’s success over the years. However, Arsenal is in a very strong financial position and well positioned to launch a brand new era of dominance.
When the former Monaco manager took over at Highbury in 1996, he inherited a predominantly British squad. Few could have envisaged what Wenger would build in the years to come. A series of quality signings arrived for prices that would not look out of place in League 2 these days. Nicolas Anelka and Patrick Veira were added for a mere £1million! They would both later leave for sums in excess of £20million.
Arsene’s knack of buying cheap and selling high has put Arsenal in an almost unprecedented position in the Premier League. While Chelsea have a net spend of over £150million over the last five years, Arsenal have spent a mere £3.5 million net. While many fans will argue that this policy has failed to deliver any trophies to the Emirates Stadium, there is a much bigger picture to consider.
Arsenal’s move out of Highbury to the Emirates cost the club £390 million. While 70% of this was financed from bank loans, the remainder had to be found by the club. Wenger’s frugal management of the club accounts must surely have made this sort of investment possible. Also included in the Emirates Stadium development was a housing development. While raising eyebrows at the time, this venture has added much needed funds to the Arsenal coffers, enabling substantial debts to be paid down earlier than expected.
When the foreign invasion began, with the purchase of Chelsea by Roman Abramovich, Arsenal was not a very attractive proposition. Relatively large debts, coupled with a complex mesh of ownership meant the billionaires went after Liverpool, Manchester City and Manchester United. While fans bask in the glory of winning trophies and spending hundreds of millions on player purchases, they are oblivious to the reality.
Both Manchester City and Chelsea are receiving these ‘cash advances’ for player purchases in the form of interest free loans. In the case of Chelsea, the debt has been converted into bonds, owned by Abramovich himself. This means that both clubs, at least in practical terms, actually have huge debt. As long as the billionaire owners stick around, everything should be fine. However, if they get bored with their new toys, or need to rationalise their personal finances, the future will be an uncertain and precarious one.
Arsenal have had their problems with boardroom battles for control of the club, but the billionaire owners are already there. Stan Kroenke and Alisher Usmanov already own significant shares in the club. Unlike the Liverpool purchase by Hicks and Gillett, or the Manchester United purchase by the Glazer family, there will be no need to secure huge loans against the value of the club. Manchester United are about to launch a bond issue in Singapore in an attempt to reduce the club’s crippling debts. Many say that issuing bonds is simply a way of moving debt from one place to another.
When Malcolm Glazer announced his decision to buy United, few would have realised the way in which he planned to do it. Incredibly, it was possible to borrow the money from several banks against the value of the club. This meant a club that made money every year and was completely debt free, became saddled with crippling debt almost overnight. Sadly, this picture of hidden debt is all too common in English football and many experts predict this debt ‘time bomb’ may devastate the entire industry at some point in the future.
On the field, Arsenal are in apparent disarray at the moment. They have just lost Fabregas to Barcelona and it would seem Samir Nasri’s move to Manchester City is imminent. A poor start to the season has instigated some calls for Wenger to go. Arsenal fans are used to competing for trophies, so this current predicament is obviously hard to take. However, the fans need to be patient and be careful what they wish for.
While all of the other major players in the Premier League continue to battle with debt, Arsenal are almost debt free. They have the most modern stadium in England with the option to further develop it. In only a few years, a debt-free Arsenal will be able to exercise their financial muscle with relative impunity. While Chelsea and Manchester City will be worrying about losing their sugar daddies, Wenger could be leading Arsenal to decades of domination.
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