Arsenal's Financial Crisis

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Arsenal's Financial Crisis

Postby PairyGrows » Sun Jan 13, 2019 8:53 am

Although this topic is heavily discussed across various threads on the forums, I think it deserves a thread of its own due to its implications for the long-term future of the club. I’ve done some digging into Arsenal’s finances, and my findings have horrified me to the core: Arsenal are in a financial crisis, which puts our long-term future is in jeopardy.

First, I looked at the latest financial figures released by the club (for six months ending in November 30th, 2017). The figures painted a worrying picture: our football revenue dropped by 12.2 percent (£23.4m), which saw our operating profit drop by a whopping 71.2 percent (£38.6m). Our profit before tax doubled from £12.6m to £25.1m, which was largely due to the net profit of £15.5m on player trading as opposed to the loss of £27.6m. In other words, we had to sell players to get in the black.

The financial figures for 2017-18 haven’t been released because Kroenke’s full takeover of the club has removed the obligation to do so (quelle surprise!). However, Arsenal Supporters’ Trust put out estimates which not only corroborate the story told by the interim report but are even worse. AST estimated that we lost 9.5 percent of our football revenue last season, which led to an operating loss of £44m. We turned in a profit before tax of £69m largely due to net income from player trading of £124m. Chillingly, AST estimated that Arsenal would turn in an operating loss of around £60m and a loss before tax of nearly £70m in 2018-19. They also estimated the club would have around £40m to spend on transfers in summer 2019.

These figures are indeed hair-raising, and the message they send is clear: Arsenal are no longer self-sufficient. Our business model has broken down, which is due to both negligent ownership and poor management over the last few years. Unless we get back into the Champions League this season (which looks unlikely), the consequences will be catastrophic. Unless the new regime (Emery, Mislintat, Sanllehi, Venkatesham) can work wonders on a shoestring budget, I can see us slipping into mid-table mediocrity permanently very soon. That’s a grim vision for the future of Arsenal.

The question is: how can we turn this around? If anyone has any ideas, please tell me. I’m clutching at straws for any positives.
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Re: Arsenal's Financial Crisis

Postby Luzh 22 » Sun Jan 13, 2019 9:12 am

Despite predicted loses, the club still (unless SK has taken it away) has cash reserves of nearly £300m. The issue (perceived) is that the club is at the Premier league FFP wage cap, and can't recruit anyone new until they have freed up some of that.

Dead wood needs to be got rid of, so too do overpaid good players.
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Re: Arsenal's Financial Crisis

Postby PairyGrows » Sun Jan 13, 2019 10:48 am

I'm not convinced we have cash reserves of £300m lying around somewhere. Where's this coming from? None of the financial figures I've seen indicate anything remotely like this. Granted, we won't know anything concrete about Arsenal's finances anymore since Kroenke wants to disclose as little as possible as late as possible.

Getting rid of our best players is simply not a tenable solution. If we get rid of our best players, we'll have to replace them with inferior players, further lowering the competitiveness of the squad. Unless our recruitment is perfect (a la Leicester), our squad is going to be less competitive and thus less likely to challenge the other top six sides.
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Re: Arsenal's Financial Crisis

Postby UFGN » Sun Jan 13, 2019 11:37 am

I think this needs capitals

DO NOT RELY ON THE FIGURES RELEASED TO COMPANIES HOUSE

THEY ARE SIMPLY A SNAP SHOT PROVIDED TO FULFIL A LEGAL REQUIREMENT

COMPANIES ROUTINELY MANIPULATE THESE FIGURES, AND EVEN IF ACCURATE, THEY'RE STILL ONLY A VERY LIMITED VIEW OF THE FINANCES


I can see that this is going to have to be reiterated regularly
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Re: Arsenal's Financial Crisis

Postby PairyGrows » Sun Jan 13, 2019 11:45 am

UFGN wrote:I think this needs capitals

DO NOT RELY ON THE FIGURES RELEASED TO COMPANIES HOUSE

THEY ARE SIMPLY A SNAP SHOT PROVIDED TO FULFIL A LEGAL REQUIREMENT

COMPANIES ROUTINELY MANIPULATE THESE FIGURES, AND EVEN IF ACCURATE, THEY'RE STILL ONLY A VERY LIMITED VIEW OF THE FINANCES


I can see that this is going to have to be reiterated regularly


What do you think is the actual state of affairs?
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Re: Arsenal's Financial Crisis

Postby Godlop » Sun Jan 13, 2019 11:45 am

PairyGrows wrote:I'm not convinced we have cash reserves of £300m lying around somewhere. Where's this coming from? None of the financial figures I've seen indicate anything remotely like this. Granted, we won't know anything concrete about Arsenal's finances anymore since Kroenke wants to disclose as little as possible as late as possible.

Getting rid of our best players is simply not a tenable solution. If we get rid of our best players, we'll have to replace them with inferior players, further lowering the competitiveness of the squad. Unless our recruitment is perfect (a la Leicester), our squad is going to be less competitive and thus less likely to challenge the other top six sides.


We don't have to get rid of our best players.
Lacazette, Torreira,Bellerin and Auba are on reasonable contracts.

Players like Özil, Micky, Elneny and Jenkinson that earn money for doing nothing are the ones we need to get rid of.
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Re: Arsenal's Financial Crisis

Postby UFGN » Sun Jan 13, 2019 11:49 am

PairyGrows wrote:
UFGN wrote:I think this needs capitals

DO NOT RELY ON THE FIGURES RELEASED TO COMPANIES HOUSE

THEY ARE SIMPLY A SNAP SHOT PROVIDED TO FULFIL A LEGAL REQUIREMENT

COMPANIES ROUTINELY MANIPULATE THESE FIGURES, AND EVEN IF ACCURATE, THEY'RE STILL ONLY A VERY LIMITED VIEW OF THE FINANCES


I can see that this is going to have to be reiterated regularly


What do you think is the actual state of affairs?


I have no idea
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Re: Arsenal's Financial Crisis

Postby PairyGrows » Sun Jan 13, 2019 12:50 pm

UFGN wrote:
PairyGrows wrote:
UFGN wrote:I think this needs capitals

DO NOT RELY ON THE FIGURES RELEASED TO COMPANIES HOUSE

THEY ARE SIMPLY A SNAP SHOT PROVIDED TO FULFIL A LEGAL REQUIREMENT

COMPANIES ROUTINELY MANIPULATE THESE FIGURES, AND EVEN IF ACCURATE, THEY'RE STILL ONLY A VERY LIMITED VIEW OF THE FINANCES


I can see that this is going to have to be reiterated regularly


What do you think is the actual state of affairs?


I have no idea


Well, I happen to think the figures give are reliable enough to point us to the general direction as to where the club are financially.
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Re: Arsenal's Financial Crisis

Postby UFGN » Sun Jan 13, 2019 1:15 pm

PairyGrows wrote:
UFGN wrote:
PairyGrows wrote:
UFGN wrote:I think this needs capitals

DO NOT RELY ON THE FIGURES RELEASED TO COMPANIES HOUSE

THEY ARE SIMPLY A SNAP SHOT PROVIDED TO FULFIL A LEGAL REQUIREMENT

COMPANIES ROUTINELY MANIPULATE THESE FIGURES, AND EVEN IF ACCURATE, THEY'RE STILL ONLY A VERY LIMITED VIEW OF THE FINANCES


I can see that this is going to have to be reiterated regularly


What do you think is the actual state of affairs?


I have no idea


Well, I happen to think the figures give are reliable enough to point us to the general direction as to where the club are financially.


You just need to be aware that those figures show either an accurate figure, or the figures which the Club want to display

Even relatively small businesses do this. They show their best face, or whichever face it suits them to show.... sometimes they wish to paint a positive picture, sometimes a negative one, sometimes an accurate one
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Re: Arsenal's Financial Crisis

Postby Fran Solo » Sun Jan 13, 2019 1:27 pm

I don't think there's any financial crisis. The owner just don't want us to spend. That's different, isn't it?
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Re: Arsenal's Financial Crisis

Postby Luzh 22 » Sun Jan 13, 2019 1:30 pm

PairyGrows wrote:I'm not convinced we have cash reserves of £300m lying around somewhere. Where's this coming from? None of the financial figures I've seen indicate anything remotely like this. Granted, we won't know anything concrete about Arsenal's finances anymore since Kroenke wants to disclose as little as possible as late as possible.

Getting rid of our best players is simply not a tenable solution. If we get rid of our best players, we'll have to replace them with inferior players, further lowering the competitiveness of the squad. Unless our recruitment is perfect (a la Leicester), our squad is going to be less competitive and thus less likely to challenge the other top six sides.



It's all there in previous financial reports if you care to go through them. Unless SK has taken cash out of the club, it's still there, as there have not been any operating loses yet...
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Re: Arsenal's Financial Crisis

Postby Santi » Sun Jan 13, 2019 1:33 pm

Pretty hard to magic 200m in cash reserves no matter what picture you want to show. It's not like it's a 1 day view, they get audited.

Anyway, if we still have any of the reserves left then I think our issue will be resolved in the summer. You can use commercial revenue to supplement the ~7m increase in wages each year allowed by the PL, we're getting a big boost so if we have the cash already to buy the players...we will be able to afford their wages in the summer.
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Re: Arsenal's Financial Crisis

Postby Luzh 22 » Sun Jan 13, 2019 1:35 pm

is that supposed to say magic away? ^
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Re: Arsenal's Financial Crisis

Postby Santi » Sun Jan 13, 2019 1:50 pm

No, was in response to UFGN. They can't just make huge reserves appear out of thin air for the reports.
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Re: Arsenal's Financial Crisis

Postby Luzh 22 » Sun Jan 13, 2019 1:57 pm

AFAIK only tax related finances have to be reported to companies house. Operating cash flow is not one.
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