In reading Ivan Gazidis's recent statements after appearing on a panel at the Leaders in Football conference, one left with the distinct impression that the perpetuation of Arsenal's self sustaining model was of primary concern, not its football. That and the idealization of the financial fair play rules as some sort of magic bullet. City selling the stadium and jersey naming rights for an outlandish amount have shown there are ways to circumvent those future restrictions.
Gazidis was responding to the real fears that Arsenal could miss out of Champions League football for the first time in 14 years after their dismal start this season.
"We would rather qualify for it but we have got a really stable model that could not just cope but do well and compete."
These forums are watering holes where panelists from rival organizations gather to loudly proclaim their unique selling points to set themselves apart. No doubt, Gazidis was influenced by the setting and sallied forth with that bit of bravado.
The Champions League according to Gazidis may not be essential to Arsenal's survival or even well being but the money gained from mere qualification has increased to the point that it can finance a number of transfers. Clubs loaded with operational costs and high wages therefore look to it as a means of conducting business without borrowing additional money.
Arsenal's self sustaining model is predicated at maximizing revenue at every turn. The £25m obtained from beating Udinese to qualify for the CL group stage just paid for Mikel Arteta, Per Mertesacker, and Park Chu Young. Last year's figures were skewed nicely by the one time Highbury real estate venture that generated millions of pounds (£156m to be exact). It vaulted Arsenal to first place over Man Utd in revenue generation and profitability (£56m) in the Premiership. A clearer picture of Arsenal's finances that is considerably less flattering should emerge next year. Those diminished figures will be offset by the £65m in bounty from player transfers that will be hard to match in the near future.
The external debt remains at £136m of which £19m is payable as interest and to that add an approximate £100m wage bill (minus Cesc Fabregas, Samir Nasri, Gael Clichy). Arsenal have to generate about £120m to meet just these two requirements. They are relying on three performance driven revenue generators to overcome that number. Last season gate and match-day income (£94m), TV and broadcasting (£85m), and retail (£13m) totaled a little under £200m. A 6% increase in annual ticket prices should inflate that number next year.
A sagging Premiership season with little chance of advancing to the Champions League can depress all three streams. Given the fierce resistance to the rise in ticket prices by season holders and the AST, the continued uninspiring performances could lead to a marked drop off in gate and match day receipts as unhappy fans stay away. No Fabregas and Nasri mean fewer jersey sales with RVP the remaining icon. TV and broadcasting revenue will take a hit once the Champions League no show is factored into the equation.
The potential loss could be mitigated by exploring commercial avenues the way Man Utd have done in the past decade that are now paying off. Utd have capitalized on their success by opening up the market in SE Asia, the ME, SA, and the USA to a huge viewership. They now regularly embark on highly anticipated pre-season tours which prove extremely lucrative. Arsenal too have realized their worth a little belatedly after their Malaysia and China tour proved successful. Given the strong US connections of the Arsenal board, it is surprising that they've failed to market themselves here in any significant way other than a weekly TV digest. All future commercial endeavours however come with a caveat. Arsenal need to maintain their presence in the upper echelons of European football for them to succeed to their fullest. Sponsors might stay away or if they continue might not want to give top dollar to a damaged brand in a tight market.
Gazidis may dismiss the Champions League as immaterial to the club's fortunes because they really don't need the money like others do. If he believes there is a firewall between relinquishing success on the pitch and a self sustaining model then he's gravely mistaken.
"I do believe the effective implementation of some sort of financial fair play system will be good for fans. The country with a model closest to financial fair play is probably Germany and the fan relationships there are good," he said.
There are other ways of assuaging fans. How many coaches has Bayern Munich let go since Wenger joined up in 1996? Nine for 11 dismissals. They've won one CL title and entered the finals twice. On that note they've also won 9 Bundesliga titles and 7 German Cups.
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