Arsenal’s Financially Prudent Ways (or Is Arsenal Just Cheap?)

May 7, 2008 | 133 Comments

Like most others on this site, I have been frustrated by the frugality of our favorite club and manager. Once when my frustration reached a boil, I posted an article here suggesting that the present board members were cheap and wanted to keep as much money in their pockets as possible so, by contrast, to the other big English teams, Arsenal never bought established and expensive stars.

Now, with the transfer window about to open and with news that Flamini has left Arsenal for Milan for what appears to be purely financial reasons as well as rumors that Hleb would be leaving for Inter for similar reasons (not to mention the club’s stringent 1-year policy with respect to players older than 30), I felt my ire growing again. And this only grew with talk pervading this site as well as others that Gilberto might be kept for another season simply to assist in the transition from Flamini to another “youngster.”

If last summer’s transfers are any guide, we cannot expect any real big name purchases by Arsenal this upcoming transfer window. By contrast, I look at the team likely to win the Premiership and perhaps even the Champions League, ManU. After winning the EPL last year, that team did not stand still and spent a reported 60 million pounds on Hargreaves, Anderson, Nani, and Tevez (players and depth that Arsenal would never have considered purchasing under any circumstances much less after finishing on top of the table.) No wonder then that ManU had the depth to last throughout the year and triumph when it counted most in the Premier League and the Champions League (the only 2 trophies the top teams really care about when push comes to shove).

The frustration only grows when club reps state that Arsene has as much money as he needs to spend on new players only to be followed by a statement by Wenger that he needs to be frugal and not splash the cash. This leads to speculation as to whether Wenger is stubborn and is intent to prove he can win on the cheap with his gameplan or is it that the club tells the world one thing while providing Wenger with a pittance of what it says is available to him. I certainly don’t know. So what is the story here? Is Arsenal cheap? Is Arsenal skint? Is Wenger stubborn as a mule? Is this year his last chance to do it his way as many here and elsewhere advocate? And if we don’t win the EPL next year, do we get a manager who will spend the money on established stars like Torres, Tevez, Mascherano, etc.

The answer is not really clear to me (although I really hope it never comes down to Wenger being forced out because Arsenal did not win silverware in a given year so long as Arsenal is properly competitive). But what I find fascinating is that at this frustrating juncture where one season is over (and we have nothing left for which to play) and the next season is more than 3 months away (without any assurance we will get the big-name striker, midfielder, left winger, leftback, goalkeeper, and/or name any other position that we desparately need), I go on to the Sports Illustrated website and find an article by Gavin Hamilton of World Soccer magazine titled “In The Red” that states the following regarding ManU, the team which right now we all seem to envy at least in terms of results and accomplishments:

As Manchester United prepare to face Chelsea in the first all-English Champions League final in Moscow on May 21, it might appear that everything is fine and dandy with the club’s owners, the Glazer family.

Scratch beneath the surface, though, and a very different story emerges. This week it was revealed that the club suffered a £58 million loss last year and now owe a total of £764 million to their various creditors. The accounts for the year ending in June 2007 also disclosed that United owe £56 million in outstanding transfer fee instalments to other clubs.

Most worrying for the Glazers is the news that they still owe £152 million to hedge funds at a rate of interest of 14.25 percent. With a recession threatening to engulf the world’s financial markets, the Glazers cannot find anyone willing to take on the debt at a more reasonable interest rate. The hedge fund loans were the most controversial element of the financial package used by the Glazers to fund their takeover of United. This “leveraged” buyout loaded liabilities onto a club which had previously been debt-free. Now the Glazers are struggling to re-finance.

The Champions League final will thus be a battle between the free-spending oligarch in Chelsea’s Roman Abramovich and the credit-crunched Glazer. While the English media speculate that the Russian billionaire will use a slice of his £12 billion fortune on a world-record bid for Lionel Messi, United fans must contend with the news that the Glazers only paid off £42 million of the £81 million in interest due on their debts last year. The outstanding interest payments, accrued to the hedge funds, have been rolled over, to be repaid in 2016 — or whenever the Glazers can re-schedule their debts.”

Interesting, I think.

Posted by villagegunner | Filed Under Mailbag