Board Room Happenings

By: Martin | May 7th, 2009

Bit of a slow day, news wise, really, but there has been some board room news lately that I thought I’d take a crack at. Chelsea fans are still livid at the poor refereeing from yesterday, and I’m pretty sure someone from Chelsea just got another yellow card. There were some bad decisions made, and Chelsea were the better team. It was funny–to me, last night was really a perfect microcosm of what Chelsea are all about. The good: thoughtful, tactical, physical play–I watched Barcelona hang up 6 goals on Madrid last weekend, and if anyone but Casillas had been in goal it may have been 8 or 9–they’re just an amazing collection of talent and skill, and to basically keep them from even having a decent scoring opportunity for as long as Chelsea did is amazing. I’m honestly not sure there’s another team in the world that could have done that. But then, the bad: Anelka diving to get Abidal sent off, Drogba diving and pretending to be injured 5-7 times a game, constantly berating and whinging to the ref. I’ve honestly never seen anything like the abuse piled on the ref at the end of the match last night, it was unbelievable. So Chelsea probably deserves to be playing in Rome in a few weeks, but it’s Barca instead. I, for one, am glad–Barcelona-ManU will be a fun game to watch, I didn’t want to see a rematch of last year’s final, and while I hate that it wouldn’t be in an Arsenal shirt, I’d still dearly love to see Thierry Henry holding that trophy over his head.

Anyway, on to actual Arsenal stuff. Arsenal chairman Peter Hill-Wood has said Arsene Wenger’s job is not in jeopardy, and that, while Wenger’s contract is up after next season, all he has to do is say the word to get an extension. Nothing surprising, but definitely good news that we’re willing to stay the course with Wenger. Bigger news, I think, is that Hill-Wood said that he would back Wenger in the transfer market this summer and that he would have money to spend, although he declined to say how much. Wenger had previously said that he was forced to rely on his young players this year because of financial limitations.

Deja vu, right? I swear at this point they’re just recycling this exact same story year after year. Every year management claims Wenger has money to spend, and every year money doesn’t get spent. It seems to me that there are two possible explanations here:

1. The Arsenal board are giving Wenger money to spend, but he’s choosing not to spend it, and is now lying to cover up his own folly over the summer.
2. The Arsenal board is lying, they actually are imposing pretty serious limitations on Wenger’s spending, and he’s having to build a team on the cheap.

We can’t really know, obviously, but I’m inclined to go with option # 2. It’s no secret that the club had to borrow a substantial amount of money to pay for the new stadium, and while we still have the 6th highest revenue of any club, paying off the stadium debt eats up a lot of that. Furthermore, I think the club sunk a lot of resources into the Highbury Stadium development project, redeveloping the old stadium into an upscale condominium complex, which of course went online just as the real estate market and global economy went down the crapper. Furthermore, as I’ve said many times, unlike United, Liverpool, and Chelsea (and Manchester City, Newcastle, and others) we don’t have a single sugar daddy owner who can pour his own cash into the club b/c it’s his personal hobby. The owners of the club are shareholders, and like any corporate venture, if the company makes money, they make money; if the company loses money, they have to pay it off. It makes a huge difference financially, and I think the club is run with an eye towards the bottom line. If the board isn’t out to just make a profit, I think they’re definitely concerned with at least breaking even.

I guess I just couldn’t fathom why Wenger would out and out refuse to spend money that was made available to him. I know he believes in bringing along young talent instead of bringing in veterans, but so what? You can buy young talent with money, too. You can’t convince me that the Arsenal board said, “Here, Arsene, take this £30 million and go spend it.” And he looked around at all the young talent in the world and couldn’t find a single 20 year-old that he’d like to have and said, “no thanks, you keep the money.” It just doesn’t sound plausible to me.

I think the stats bear this out–look at our main transfers from last year:

Sales:
Hleb: £11.9million
Gilberto: undisclosed (rumored to be around £2 million)
Diarra: £5.5 million (+ another £5 million when Portsmouth sold him to Real Madrid in January)

Total: £19 million

Buys:
Nasri: £12.7 million
Ramsey: £4.8
Bischoff: not disclosed
Silvestre: £750,000

Total: £18.25 million plus Bischoff, which I can’t imagine was all that much given his injury history and the fact that he hadn’t really played much at all for Werder Bremen

So there you basically have a break-even, transfer-wise. I think this is more or less the directive given to Wenger, that he needs to raise a buck to spend a buck. Of course, there was the Arshavin thing in January, where Arsenal spent £15 million without selling anyone. First, I would point out that we did receive the sell-on money for Diarra, which made the actual outlay on Arshavin £10 million. Second, I think at that point the club was faring so badly that the board was looking at the very real possibility that we would miss out on the Champions League next year, which between gate receipts and media revenue brings in around £40 million per year. I think they had a sit-down with Wenger and came to the conclusion that it was worth spending £10 million at that point to make sure they got back to the group stages in 2010-2011 (which isn’t guaranteed even if we finish 4th).

So I think the objective facts support the idea that the board wants the club not to lose money. And let me make this very clear–I am NOT saying that’s a bad thing, or that they’re greedy, or anything like that. They’ve put a lot of money into the club, and if they don’t expect a big profit, they definitely can’t be expected to lose money. This doesn’t mean they don’t care about football, or the club, or anything like that. Frankly, for the most part, their interests probably dovetail in a lot of respects–making the Champions League is profitable, and good for the club. Winning trophies and finishing high in the league is profitable and good for the club. It just bears pointing out that while everyone likes to say “Stop being so cheap, voyeur!,” etc., I think he’s in a very, very different situation than are Ferguson, Rafa, and [name of whoever's managing Chelsea this week]. Hopefully we’ll see a day when we get enough of the stadium debt paid off and finish the Highbury redevelopment project when the club will be able to spend a little more revenue on the pitch. But until then, I still think Wenger’s going to have to roughly break even on his transfers, which makes it difficult to make any sudden, dramatic improvements to the squad. So I guess I’m not really buying Hill-Wood’s claim that they’ll give Wenger a bunch of money to spend–I think it’s just PR to avoid the fan backlash that would happen if he came out and said, “well, we’re not losing money on this thing, so Wenger’s got to raise his own money.”

The other big board room news was that American Stan Kroenke, a real estate developer who married a Wal-Mart heiress. He has more money than you or me. He owns a number of American sports teams (NFL’s St. Louis Rams, NBA’s Denver Nuggets, NHL’s Colorado Avalanche, and MLS’s Colorado Rapids), and owns a substantial share in Arsenal. He’s been buying up shares the last couple of years, and has been one of the club’s directors since June. On May 1, he bought some more shares, increasing his stake in the club to 28.3%, making him the largest shareholder of the club. If he gets to 30%, I believe he has to formally launch a takeover bid. However, he has agreed not to buy more than 29.99% of the club’s shares until at least September 2009.

I think there’s a decent chance he could acquire a majority stake in the club over the next couple of years, which would have a big impact on the club. The directors, who control 45% of the club and of which he is one, have a lock-down agreement that they can’t sell their shares without first offering it to someone else on the board until 2012. This was specifically designed to counter Alisher Usmanov and David Dein’s move to take over the club last summer–but since they don’t have a seat on the board, they would have to go outside of the club to buy up enough shares to take control.

I don’t know how I feel about it, but I’m going to choose to see it in a positive light. He’s been a good owner and good businessman over here, and, at the very least, would be far less unsavory than Usmanov. American owners in the EPL have a mixed, but on the whole, good, track record. Manchester United has obviously been very successful under the Glazers, Randy Lerner has done a model job at Aston Villa, and despite all the fans’ bitching, Liverpool hasn’t done too bad since Hicks & Gillett took over.

If he gets control and decides to spend a little money on the club, increasing the transfer budget, that wouldn’t be a bad thing, would it? Maybe we’d lose our moral high ground, but I’d trade righteousness for trophies any day. And he also owns his own television station here in the states that broadcast the games of all his teams–I don’t think he’d be able to get out of the packaged Setanta and Fox Soccer deals, but it is possible we’d start to see more Arsenal-specific media content over here. Nothing can destroy a franchise quite like a bad owner, but he’s got a pretty good track record of being a good sports owner and a sensible guy, so if we’re going to have a single owner calling the shots at Arsenal, I guess I’d just as soon it be him. He’s also got the support of the Arsenal Supporters Trust, who have no agenda but the club’s well-being, and which I think carries quite a bit of weight.