One of the first things you notice about Arsenal these days is that they are, at the same time, part of England’s financial and commercial elite and yet staggering underachievers.
Last season’s second place finish might have been a step in the right direction for a club who had finished either third or fourth every year since 2005, but the reality is that second place represents a missed opportunity – and when you look at their points total, was it really a step forward? Last season, Arsenal amassed 71 points, which is their lowest total since 2012. They’ve finished below that mark only six times in the Arsene Wenger era. It surely can’t be seen, then, as one of Wenger’s greatest seasons of the past decade.
Despite the failings, one of his great strengths over that period of time is his ability to work under financial constraints. The club financed a new stadium, and in doing so had to keep costs low. Wenger then managed to keep the club’s net spend to a minimum whilst producing teams to keep the club in the Champions League, whose prize money represented a vital financial resource.
In the last four years, the approach has changed, as Arsenal have averaged a £49m net spend over the past four years, compared to just £6m in the seven years before that. That’s according to football business blog the Swiss Ramble, who yesterday published a breakdown of Arsenal’s finances and analysed the marked difference in Arsenal’s transfer spending over the last four seasons compared to the seven seasons before that.
On the back of such an impressively comprehensive look at Arsenal’s finances, we thought we’d add our own observations to the discussion.
Firstly, it must be noted that Arsenal’s position as one football’s commercial behemoths shouldn’t be under-represented. Arsenal is a name known around the world, and their position as the main rivals to Manchester United in the early 2000s, when the English Premiership – as it was then – was becoming the globalised superpower that it is today is perhaps key to that position.
That puts Arsenal on an even footing with the likes of Bayern Munich, and on the same playing field – even if it’s not quite a level one – with the likes of Real Madrid and Barcelona and Manchester United. In terms of prestige, Arsenal are up there with the biggest clubs in world football.
That prestige represents a huge global audience for the club, as can be seen from their reach on digital media. Arsenal are behind only Manchester United and Chelsea in terms of digital reach in the Premier League, according to a recent comparison by German analysts Result Sports. They are also the second-most googled team in the Premier League, not too far behind Manchester United, but quite a bit ahead of third-placed Liverpool
Of course, online presence doesn’t translate directly into revenue, but it does two things to help the club: firstly, it creates greater ability to monetise their social media accounts by attracting sponsors who want to reach Arsenal’s audience, and secondly the global reach of a football club represents increased direct commercial opportunities abroad as well as at home by engaging with the audience at their disposal. Having a great online presence amounts to more than just great advertising.
But what Swiss Ramble points out – and Result’s findings also highlight – is that Arsenal are competing in a much more competitive league than most in Europe. The new TV rights deal has boosted the ability of English clubs to buy players; but more importantly, it has allowed the mid-table clubs in England to keep hold of their best players. The result is a much more competitive league as most clubs have strengthened this season, and will only weaken their sides for huge sums of cash.
The Premier League has a combined digital reach of over 398m (p.21 of the PDF) – that is, their number of followers across all their social media platforms – whilst clubs in Germany (p.19) have over 92m, France (p.24) is just over 64m and Serie A (p.23) is over 107m. The only league that comes close to England is – unsurprisingly – Spain (p.22) but that’s a league that is dominated by two clubs, at least on digital media.
If you were to take Real Madrid and Barcelona out of the list, then Spain reaches just over 39m fans. (Obviously taking Madrid and Barcelona out of the findings would take away the main selling point that Spanish football has on a commercial level, but for the purposes of showing the Premier League’s more even spread, it highlights the point quite nicely)
Why am I telling you about Arsenal’s presence on social media compared with other clubs around Europe?
Well, digital audience represents a marketing and commercial audience – it is one of the ways in which the club can raise money beyond its matchday revenue and the money it makes from competing in competitions. Few other clubs around Europe can come close to Arsenal in these categories. In fact, the CIES Football observatory observed last week that Arsenal’s squad is the eighth most expensively assembled in Europe’s top five leagues – which essentially means in the world.
That doesn’t always translate into footballing success, but it does show that Arsenal are spending money. Yet the presence of so many English clubs on that list (five of the top ten, nine of the top 20) shows that having money in England doesn’t necessarily mean having success in the league.
That’s not to say that the distribution of wealth in England makes it likely for a team like Leicester to win the Premier League again – there are still haves and have-nots. But what it does mean is that bigger clubs face tougher tests week to week, compared to the games that Real Madrid and Barcelona face have. The cream may still rise to the top, but how close to the top you get depends on how well you do against the smaller clubs but in England, the smaller clubs aren’t all that small.
As pointed out by the Swiss Ramble’s article, it is also a myth that Arsenal have completely paid off their new stadium debt. One of the common explanations for Arsenal’s increased spending is that they no longer have to pay for the Emirates Stadium. The reality is that their stadium debt is only half paid off. And the club has had to repay both debt and interest on their stadium – as the Ramble says, “[s]ince 2007 Arsenal have produced a very healthy £722 million operating cash flow, though a draining £251 million has had to be used for stadium financing”.
What does all this mean? Well Arsenal are – fairly obviously – in a healthy financial position, but the nature of the Premier League means that their finances and their prestige don’t translate success. Last season’s ‘progress’ only highlights the issue: Arsenal’s spending has increased massively in the last few years, yet their best league position in over a decade came during a season when they didn’t buy one outfield player in the preceding summer transfer window – had they spent the sort of money last season that they’ve spent this season, we may be calling them champions. At the very least, you’d expect that their points tally would have increased, not decreased.
There’s a long-term nature to footballing finances and success – clubs plan over periods of years, not months.
This season, Arsenal have spent the money, and they seem to have spent it in the right areas. If Alexis Sanchez really is good enough to be a world class striker – as opposed to the world class winger we know he is – then Arsene Wenger will find himself with a top goalkeeper, central defender, defensive midfielder, attacking midfielder and striker: the spine of a top team. Combine that with talent from wide areas like an in-form Theo Walcott and exciting youthful players like Hector Bellerin and you have a team to match the off-field prestige and financial muscle that Arsenal possess. They now have the kind of squad that the clubs around them in all of the studies mentioned possess.
It’s just taken them four years of spending to assemble that kind of squad.