Arsenal F.C.

Arsenal’s forced marriage of a football club with a property business to deal with the Emirates Stadium and its associated projects gave rise to a great, unanswered question. Is there money for Arsène Wenger to spend or does the board deny him it?

The answer to that question of course lies in the club’s accounts. And like most things in the game of football, where entrenched opinions are reflexively formed, the answer is more nuanced than might first meet the eye.

The story begins in the summer of 2008, two seasons after Arsenal reached London’s first-ever Champions League final, when bonds, bank loans and debentures owed to fans peaked at £411.3m. The situation was precarious: Arsenal had “only” £93.3m in cash in the bank and had to pay off £134.1m of those loans within the next 12 months.

But the Gunners had ammunition. Having moved in to the Emirates Stadium at the start of the 2007-8 season their property income, from sales of flats in the redeveloped Highbury Stadium, would now begin to flow. And didn’t it just: over the course of the 2009-10 season, when on the pitch two wins from the last seven matches saw Arsenal slip from top place in the Premier League with eight games to go, off the pitch they reaped £156.9m from apartment sales.

So it was that between 1 June 2009 and 31 May 2011 Arsenal generated more income than any other English club. More even than Manchester United, who seem to create cash as easily as the Federal Reserve chairman, Ben Bernanke, at the keyboard of a quantitative- easing terminal.

Yet the way Arsenal dealt with all that income suggests their board is queasier with red ink on the balance sheet than is the Red Devils’ [LINK TO MANCHESTER UNITED ACCOUNTS ANALYSIS HERE]. Despite being an investment-grade entity with secure future cash flows, Arsenal chose not to exploit their financial strength. They neither returned to the bond markets seeking new, cheaper debt in the new ultra-low interest-rate environment, nor did they seek new equity financing from a share issue. (Uncharitably, fans might note how to have doen so would have been dilutive for existing shareholders, the bulk of whom sat in the directors’ box).

Indeed, in paying off those £134.1m of borrowings, there was not a very great deal left over to invest in new players. It meant that although a net £12.3m had been spent in the 2008-9 season as Andriy Arshavin and Samir Nasri joined, with the following year began an era of reckless prudence for Arsenal.

Out went Emmanuel and Adebayor and Kolo Touré to Manchester City, with Thomas Vermaelen the only significant replacement as Arsène Wenger pulled in an incredible (and, from a balance-sheet point of view, far from essential) £15.9m from transfer trading.
Even in 2010-11, transfer investment was marginal, with the net transfer investment of £1.5m making Arsenal the third-lowest transfer-market investors that season. Despite earning more from their football and property operation over the two seasons from 2009 to 2011 than any other club in the Premier League, only Newcastle United, who had effected a fire sale upon relegation to the Championship in the first of those two years, spent less than the Gunners.

Performances on the pitch would ineluctably suffer — most notably on the Wembley pitch as they lost the Carling Cup final to soon-to-be relegated Birmingham City — and players signed with the promise of “paradise” at Arsenal, began to develop itchy feet.