Arsenal: Profit or Ambition, Where Does the Truth Lie?

H Andel@Gol Iath @gol_iathAnalyst IIISeptember 10, 2012

On Feb. 28, 2011, BBC published this entry on their website:

Premier League football club Arsenal recorded a £2.5m ($4m) loss in the half year to December 2010, largely on the back of reduced player revenues.

There were no major player sales in summer 2010, unlike in previous years when the club made a big-name sale.

The loss contrasts with a £29.2m profit in the corresponding period a year earlier.

The results come a day after the London club lost the Carling Cup final by 2-1 to Birmingham at Wembley.

This entry—this fact—is very important for our purpose, which is to answer the question in regard to whether or not Arsenal have a pile of cash stashed somewhere, which, Midas-like, they are unwilling to spend, hamstrung as they are by their stingy foreign manager, Arsene Wenger.

The exact period in question affords us the objectivity needed in answering this question. We know that this is before the end of the 2010-11 season, shortly before the transfer debacle involving Cesc Fabregas and Samir Nasri.

We also know that this follows the period of frustration when Arsenal should have bought Chris Samba, Phil Jagielka or Gary Cahill in January to patch up their leaky defense, as unanimously supposed by every "knowledgeable" fan.

Based on this fact, therefore, it is plain that Arsenal didn't have the cash to make any purchases that January, not without having to have sold any unwanted player.

This is important because this affords the objective person a level of understanding regarding the financial situation of the club at the time.

It answers the question of why Arsenal didn't buy that January.

It also debunks the insinuation and punctures the rumor that there was plenty of cash stashed away somewhere, the use of which was prevented only by Wenger's lack of will or his now bad habit of stinginess. 


In the supposition of many fans, had Chris Samba been bought in the January transfer window of 2011, he'd have saved Arsenal's season. But was the money there to make the purchase? Getty Images.

This fact also brings us to the summer transfer window.

But before we consider this, let's anticipate the retort of the cynics. Was this report an effort at damage control for not winning the League Cup, exonerating, as it seemed to do, the lack of spending the previous month?

It may well be.

But given that the raw data, which constitutes every financial report is readily available for perusal and auditing, both by Arsenal's own Supporters Trust and outside analysts, it is hard to see how Arsenal could get away with blatant distortion of their finances.

In any case, the exact amounts of what the club earns through its avenues of income—match-day earning, broadcasting, player sales and commercial—are readily known. I do not see that it is easy for Arsenal, or any other club for that matter, to distort its finances, just so as simply to escape criticism from its own fans.

In the time that elapsed between the report quoted by the BBC and the end-of-year report in May, we should expect to see a few differences, just because cash movement would be different. This is only logical.

Here's the summary of the report, courtesy of


Represented here is what I always urge those who insinuate that there's cash lying miraculously in the coffers of the club to determine.

I tell them to first determine the club's earnings (which we must note means group earnings). Here we see that it is £255,692,000.

This is more clearly represented here:

I then tell them to contrast this with the club's operating costs. Here we see that it is £233,786,000.

The breakdown is as follows:

I then tell them to find the difference between the two figures, because this will constitute the supposed cash in hand that is lying there unused. Here we find it to be £21,906,000

This, of course, is before taxation. The real cash in hand (or profit) we find to be £12,633,000. This is the amount Arsenal had in the summer of 2011 before the sales of Fabregas and Nasri.

In July, Arsenal bought Gervinho for £10.8 million. If £12,633,000 was really what Arsenal had at this point, what we have left from this amount is £1,833. But having bought Carl Jenkinson in June for  £1 million, it means this money was basically spent.

On Aug. 8, Arsenal bought Alex Oxlade-Chamberlain from Southampton for £12 million. This was shortly before the sale of Cesc Fabregas on On Aug. 15, 2011 for an initial £23 million. 

Going by this account, we can see that the purchase of AOC was in lieu of cash in hand, and that it was only the sale of Fabregas that covered this.

This is remarkable since Wenger's preference was not to sell Fabregas. In this light, the purchase of AOC without operating cash in hand hardly represented stinginess or lack of ambition.

I should note here (and very strongly) that my analysis is based on the 2010-11 financial report. Was there any cash reserve not represented in this account?

I don't know. I will welcome the contribution (and the correction) of any reader who knows.

So far as I can determine, this represents the true financial situation of the club at this time.

Accounting, therefore, for the money used to buy AOC, Arsenal could only retain about £11 million of the money made from the Fabregas sale.

On Aug. 24, Arsenal sold Samir Nasri to Manchester City for £25 million. We all, however, know the circumstances surrounding this sale. Adding this to the £11 million remaining from the Fabregas sale, we find the total to be £36 million.

This coincides with the analysis of the much-respected Swiss Ramble, who, in fact, has it four million lower. Note that he analyzes this about a year later.

Let's continue with the £36 million cash in hand with which Arsenal headed into the transfer dateline of 2011.

On dateline day, Arsenal bought Mikel Arteta for £10 million, Per Mertesacker for £8 million and Andre Santos for about £6 Million. This is a combine £24 million, and this does not account for the wages of loaned Yossi Benayoun nor of any of the six new signings.

So of the £36 million, not accounting for the wages of new signings or of the general increase in wages of the existing squad, we have £12 million left. 

We know, though, that players like Thomas Vermaelen, Francis Coquelin and Tomas Rosicky (and, I believe, Robin van Persie, as well) received increases in wages.

All of this (new player wages) and increases in wages of existing ones must be accounted for, of course, and this has to come from the remaining £12 million or thereabout.

If we assume that three of the new players received about £60,000 a week, this already accounts for about £9 million of the £12 million, leaving £3 million to account for the wages of the remaining new players and for increases in other wages.

We, of course, are basing this analysis on the cash in hand, having accounted for other wages in the operational cost shown above.

Talking of other wages, consider the following:


It presents the wages of other staff, including the directors.

Here we can determine whether or not the directors are simply there to enrich themselves, or annually to divert monies into their own pockets.

From the foregoing, we can see that the idea that Arsenal routinely have monies lying around, which they refuse to spend, is not only baseless but nonsensical and demonstrates the ignorance of the rumor mongers and agitators.

Having said that, there is an aspect of this in which genuine confusion creeps in. Refer again to the graphic from the Swiss Ramble above.

In the final row and column, he totals what Arsenal have made in profits over six years. He finds that it is £88.5 million.

The person who merely stops there (or even with the 32.6 million of 2011) without taking into account expenditures gets the false impression that a great deal of profit has been made, which, however, hasn't been put to proper use. That, of course, is far from the reality, as we've demonstrated above.

(And we can do so also using the account of any year.)

With this confusion in mind, Swiss Ramble asks the question, "where has all the money gone?"

And here is his answer:

Given that Arsenal have been so profitable for so long, it begs the question what the club has done with all that lovely cash - £389 million from operating activities in the last six years. Looking at the cash flow statement, it is clear that very little has been spent on bringing in new players with net player registrations of just £14 million.

Unsurprisingly, it’s all about the new stadium, property and other infrastructure (e.g. the new medical centre at London Colney) with £180 million going on capital expenditure and £111 million on loan interest. Since these loans peaked in 2008, another £156 million (net) has been used to repay debt. And of course the cash balances continue to rise…

Following the elimination of the property debt, the only outstanding debt is effectively the “mortgage” on the Emirates Stadium. At the 2011 year-end, this was represented by gross debt of £258 million comprising long-term bonds and debentures. In the last six months, this has been reduced by another £6 million, while net debt has risen by £39 million from £98 million to £137 million, almost entirely due to the £45 million reduction in cash discussed above.

Now this is where I will turn to strong language.

There are those who resort to making false accusations and insinuations, who, when they come across my attempt to shed light on less-than-clear situations, accuse me of delusion. That is, I'm merely dreaming, imagining the best of worlds when the reality easily isn't so.

The reality for them is that Arsenal have money, money serially and routinely diverted by the board members for their own unethical use. All of this is penciled into the column called "lack of ambition." 

In this telling, it is lack of ambition, not want of cash that has stopped Arsenal from signing the stars. When challenged to present the evidence for their accusation, they resort to abuse, and make more insinuations using the generic "suggests."

Any person acquainted with Arsenal's history even at a superficial level knows that competitiveness in the transfer market for the club stopped in 2006, the year the club moved into the new Emirates Stadium.

Hitherto, Arsenal competed favorably with Manchester United. In fact, it can reasonably be argued that they were the club poised to do what Manchester United did to Liverpool. This is because whatever monies Arsenal earned then went into the purchase of players.

It is the new stadium that has made Arsenal what it is today. Getty Images.

Building a new stadium, as I pointed out in my series on Robin van Persie and money, was necessary to position the club for a better future.

With a tiny stadium, Arsenal had stagnated financially. In fact, Tottenham Hotspur were ahead of them. As soon as the stadium was completed, Arsenal's value jumped and the club immediately joined the league of wealthy clubs.

So it is either ignorance or malignant hatred that would cause a person to embrace, on the one hand, Arsenal's new-found status as a wealthy club, but, on the other, reject or disregard the reason for this.

In other words, I don't want to hear about the stadium that makes Arsenal what they are today, but I want the benefit thereof. I find this invidious and objectionable.

Let it be false dichotomy or call it whatever you want, I have little regard for such "fans." If you are a true fan, you'd seek to understand the going-ons surrounding the club; where there's darkness, you'd seek light, and where there's obscurity, understanding.



This is the fourth part of a series.

Find the other parts here:

Part I: Theo Walcott Situation Highlights the Problem at Arsenal, Part I

Part II: Why Walcott's Contract Highlights the Problem at Arsenal

Part III: Bacary Sagna and the Case of a Selling Club


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