Thursday, March 28, 2024

More commercials required

Tim Stillman Column

As the proprietor of this here website has ably demonstrated over the last week or so, the task of the blogger is rendered thankless when trying to pick the thin, stringy scraps of meat off of the interlull carcass. Tis a carcass so bereft of nourishing properties that, at times, you’ve the feeling that even a parasite would starve. Particularly cadaverous looking vultures have been spotted in the endless desert landscape, skulking around with looks of pained hunger spread all across their chops. The beaky little bastards.

But fear not, for I have been a-foraging and come to you replete with juicy rump steaks crammed full of Arsey goodness. That and kegs of foamy, nut brown ale to aid your digestion. I’ll begin the a la carte offering with Ivan Gazidis’ comments at the Leaders in Football Conference last week. Speaking in his velvety smooth, late night jazz radio tones, Gazidis, in response to a direct question it must be pointed out, assured reporters that Arsenal would cope in the event that we don’t qualify for Europe.

What Gazidis says is, of course, totally correct based on the club’s accounts. We’re not going to be taking a trip down Peter Ridsdale Way via Redknapp Avenue anytime soon. However, the reality we all know is that if we were to fall off that golden carriage, it would be incredibly difficult to clamber back on it. For a start, most of our better players would want to leave and we wouldn’t be attractive enough a proposition to replace them with comparable quality.

There is of course the loss of broadcast revenue and the threat to the golden goose laying on the horizon for Arsenal. In 2014 they come to renegotiate the stadium and shirt sponsorship deals. Deals which, for good reason, were front loaded for stadium building purposes, but now see us lag behind our competitors (Manchester United bring in roughly £100m a year in sponsorship deals. Arsenal are currently between £30-40m).

If we are not in European competition come 2014, the size of any deals struck will be significantly smaller. If we don’t even qualify for the Europa League of course, that’s five games that realistically come off the season ticket (which carried seven additional cup credits currently). So that’s hypothetically another £15m in matchday revenues lost too. The club may then look to add League Cup ties to the season ticket, with the accompanying argument that the team be expected to take it seriously without European competition. But I venture they’d struggle to get many to pay close to the £2,000 mark for that.

Anyway, that’s all doomsday scenario stuff and I really think that we’ll qualify for the Europa League at the very least. However, it does dovetail rather nicely with some of the subjects broached at this month’s Arsenal Supporters’ Trust meeting, which took place on Monday. There was a rather eye opening presentation from Andy Green of Manchester United financial blog.

There were a number of rather eye-catching themes in his presentation which, for the main part, focused on the comparative commercial muscle of Manchester United compared to Arsenal. The first point to make is how distorted the market has become since the emergence of the blouveau riche of Chelsea and Citeh. United and Arsenal leave every other Premiership club trailing in their wake when it comes to pure revenue generated. Arsenal’s current revenue is at around £225m, with United’s at the eye watering sum of £300m approx. When one distils those figures, we see where the big difference comes.

I’ve already mentioned the commercial revenues of both clubs above. That difference accounts for nearly the entire chasm between the two club’s earnings. This was largely due to the necessity of Arsenal frontloading their commercial deals to build the stadium. Not only did it mean we had funds upfront to plough into the Emirates cash cow (which brings in pretty sizeable matchday revenues), but it meant we had to borrow less and therefore incur less interest on existing debt payments.

However, it’s clear United’s marketing strategy is earning its corn. The four year sponsorship deal with DHL for training kit sponsorship has been written about recently worth an estimated £10m a year, along with any number of deals struck with Asian telecoms companies. (I’m told that United even has an official Turkish airline). But most surprising to me was the revelation that Nike actually owns the United megastore at Old Trafford and pays the club handsomely for the privilege, guaranteeing them a fixed rate of huge profit from any megastore takings.

There were some interesting factlets comparing the two club’s wage bills too. Whilst it is true United currently pay around £29m more than Arsenal in terms of salary, a portion of that difference is wiped out by the £10m bonus United garner for winning the Premier League. Whilst their wage bill includes an estimated £4-5m for MUTV staff (itself a speculation that invites greater accumulation). So the real difference is probably around £8m in real terms. Their wage spend also, incidentally, correlates almost perfectly with the fluctuation in TV Broadcasting revenues, whereas Arsenal’s bears almost no relation. Curious stuff.

Anyways, as a humble Literature graduate I am beginning to feel somewhat out of my depth relaying this sort of fiduciary information! But there were some very interesting points made. It’s no secret Arsenal have spent a lot of cash putting together an expensive marketing team. We’ll begin to see how much value they can deliver in and around 2014. In the meantime, if football finance is your bag, I’d recommend giving Andy a follow on twitter here. I’d also point you in the direction of this piece by Swiss Ramble.

With the AGM a fortnight away, I am sure these subjects will be deliberated in great detail by parties far more knowledgeable than I in the coming weeks. Elsewhere, it is interesting to see Arsene imply in the club magazine that he intentionally signed a number of players with experience of captaincy in the last minute summer surge. This, he suggests, should leave the team to be better equipped not to, you know, explode like molotofs come the spring.

The team is still acclimatising to one another. Understanding is massively under rated in football and you have to think and hope that this team should become more cohesive (or adhesive?) as the season goes on. Whatever you think of the current squad, they’re better than 15th in the Premier League table and it’s not unreasonable to believe we will have the capability to put some form together that outstrips current results. I guess I’m hoping that we can slightly emulate the 2008-09 season, when we looked massively adrift of Aston Villa in the race for 4th, only to pull ourselves up by our bootstraps after Christmas with a long unbeaten run.

That particular run was based on a newfound defensive soundness. Though we scored a lot less goals to boot. A lot is made of defending at Arsenal, and that’s not an incorrect area to exert focus. But it’s as much about balance as anything. Arsenal’s most miserly season under Arsene Wenger came in 1998-99 when we conceded only 17 goals. But we won sweet Fanny Adams because we scored 21 less goals than Manchester United (who themselves, let in 37 and still won the title). That balance should start to tip once the understanding in the team increases.

Or so we hope. By the Lord Dennis we hope. Next week’s column will likely sit cooling softly on the window sill until Friday once back from Marseilles. Until then, keep it Arse. LD.

Follow me on Twitter @LittleDutchVA

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